The Acting CEO of Ghana Cocoa Board (COCOBOD) has raised concerns about the potential extinction of indigenous Licensed Buying Companies (LBCs). Dr. Randy Anerley Abbey stated that the current cocoa financing model is putting local operators at a disadvantage in the market. He explained during an interview on Joy News’ PM Express Business Edition this Thursday, “Something is happening with the LBCs, especially the indigenous ones, which is related to the fact that we are not utilising the syndicated loan.”
He explained that Cocobod will not be seeking a syndicated loan for the 2025/2026 cocoa season, and while there’s uncertainty over the 2026/2027 season, the absence of the usual syndicated financing is already creating distress. “We’re still doing the 60-40 with the buyers. So it’s the reason why I went to Europe and North America to meet the buyers and all that,” he said. Under the syndicated loan arrangement, Cocobod typically creates a “seed fund”.
This money is disbursed to the LBCs to finance the purchase of cocoa beans from farmers. Without that facility, Dr. Abbey says, indigenous firms are stranded. “But 2024/25, low syndicated loans, so no seed fund,” he said. “Now the indigenous LBCs are unable to operate because there’s no seed money.”
He acknowledged that while forgoing the syndicated loan may save Cocobod significant financing costs, it is having devastating consequences for local players. “Mind you, because of where the prices are today, if we were to go for a syndicated loan, Cocobod will be looking at maybe GH¢3 billion or GH¢3.5 billion,” he noted.
“And because of the nature of our finances, you even have banks asking for 8% to 10% on $1.” With financing conditions this harsh, Abbey said the local buying companies—most of which depend on Cocobod’s seed funding—have been left to struggle. “One of the things we’ve done is to engage the central bank, and they asked for a follow-up letter. I’ve done that,” he said.
Dr. Abbey revealed that during his discussions with the Bank of Ghana, he proposed a practical and urgent measure to prevent a potential collapse. “What I communicated to the central bank during our engagement was this: you have the Cash Reserve Ratio, where all banks deposit 25% of their deposits at the central bank. This amount is idle and not being utilized,” he explained. “We have a critical industry—the local Licensed Buying Companies (LBCs)—that are struggling to survive. I suggested that we consider allocating 2% or 3% of this Cash Reserve Ratio specifically to support indigenous LBCs.”
He added that the funds could be ring-fenced specifically for cocoa purchases. “We can restrict it to cocoa purchases, just to ensure that they also don’t go using it for oil, tin tomatoes and all those things.” Dr. Abbey says he remains hopeful for a positive response from the central bank. But he also warns that time is running out. “If we continue with this financing model, I fear that most of them might go extinct.”
By: Abubakar Ibrahim