Ghana’s cocoa sector, a cornerstone of its economy, faces mounting financial turmoil as the World Bank calls for urgent governance reforms to address spiraling debts and operational inefficiencies.
In its 2024 review of public sector finances, the institution highlighted unsustainable losses driven by soaring loan rollover costs, bloated operational expenditures, and costly quasi-fiscal initiatives like fertilizer subsidies and rural infrastructure projects.
The report underscores a critical need for modernization, noting that the sector’s current trajectory risks destabilizing Ghana’s agricultural economy. A proposed turnaround strategy aims to curb spending by scaling back cocoa road projects, phasing out fertilizer subsidies for farmers, and revising how producer prices are determined. However, the World Bank emphasized that these measures alone will fall short without a comprehensive overhaul of the Ghana Cocoa Board (COCOBOD), the state agency overseeing the industry.
Analysts warn that COCOBOD’s outdated governance framework—a relic of colonial-era structures—has left the sector ill-equipped to manage modern financial pressures. Decades of subsidizing inputs and funding community projects through cocoa revenues have strained liquidity, with debts now threatening the livelihoods of over 800,000 smallholder farmers. Critics argue that while fiscal discipline is necessary, abrupt cuts to farmer support programs could trigger social unrest in rural regions dependent on cocoa.
The World Bank’s push for reform arrives as Ghana grapples with broader economic challenges, including inflation and a debt-to-GDP ratio exceeding 80%. The cocoa sector’s struggles compound these issues, jeopardizing the country’s position as the world’s second-largest producer of the commodity.
Observers note that modernizing COCOBOD will require political will to dismantle entrenched interests. Previous attempts to streamline operations, such as digitizing supply chains, have seen limited success. For Ghana, the path forward hinges on balancing fiscal responsibility with equitable support for farmers—a delicate act that could redefine the nation’s role in the global cocoa market.
As stakeholders await details of the proposed reforms, questions linger about transparency and accountability. Without swift, structural changes, the sector’s debts may soon outweigh its iconic status as the “golden bean” of Ghana’s economy.
