This week, reports ricocheted around the commodities world. Ghana is producing too much cocoa, thanks to its largest harvest ever. One part weather compliance, another part increased prices for farmers, and the cocoa crop didn’t disappoint. Unfortunately, due to Covid-19, demand did. The Ghana Cocoa Board did right by the industry, helping farmers produce more efficiently, but they couldn’t solve one problem in particular: the world just wasn’t consuming chocolate in the volumes necessary to take advantage of the innovative techniques employed.
While farmers enjoyed a monetary boon, thanks to a $400 premium added to each ton of cocoa sourced from Ghana and Ivory Coast, their drive to increase production is only half the equation. Once the cocoa is produced, it then needs a ready consumer base. No matter how productivity is increased, the bottom line is that cocoa is only worth what consumers will pay. Greater yield with lower demand simply isn’t a recipe for success. Of course, it can be argued that demand was hurt by the pandemic and, as the pandemic begins to recede, the desire for chocolate will expand. Maybe. But, what if the economic answer could be found by fragmenting specialties?
It seems to me that Ghana could benefit by expanding the breadth of their economy. The country’s top exports have volatile markets, especially in light of the pandemic. Gems and precious metals, oil, and cocoa each respond to consumer demand. Maybe that’s a signal that it is time to export knowledge. Unlike cocoa, the pandemic has hastened the world’s move towards digital payments. Central banks across the globe, including in Ghana and Nigeria, are moving with vigor to develop, test, and implement a central bank digital currency (CBDC). As the world moves towards digital currencies and assets, it will completely upend the way we interact with money. And that transformation will create a bustling fintech segment that needs new innovations to continue to enhance the technology infrastructure.
Ghana, which has already announced that it is working to develop its own CBDC, is among a handful of nations which aim to be early adopters in the space. CBDCs, like cryptocurrencies, are based on blockchain technologies. Those technologies are expansive, and there are nearly infinite places available for tech wizards to find themselves a niche. While Ghana doesn’t have the natural infrastructure of Tel Aviv or Silicon Valley, the time is ripe for the country to take advantage of its early adopter status in the CBDC realm.
Double down on digital currencies and develop a culture of technological innovation. Encourage innovative startups with a healthy mixture of private and public sector support, including through the university system. The time to build towards Ghana’s future should begin today. Technology certainly isn’t a replacement for agriculture. But, developing your technological core can certainly provide benefits, especially for the years when agriculture takes a hit. And, who knows – maybe one of those tech innovators will find a niche working in conjunction with farmers to enhance their processes even further.