Last week, on September 1, COCOBOD began servicing its securitized debt, which was restructured in 2023 under the second phase of the controversial, yet necessary Domestic Debt Exchange Programme, DDEP.
Ghana’s cocoa industry regulator paid out GHc2 billion (about US$166 million) in coupon payments on its restructured short term cocoa bills, now classified as longer term bonds, in a move analysts say is critical to restoring investor confidence after the country’s sweeping domestic debt restructuring.
The payment was made as COCOBOD expects some US$4 billion in inflows before the end of this year, from international buyers under a new pre-financing arrangement as part of a pre-financing model initiated in 2024/25, where international traders provide upfront funds to support Licensed Buying Companies (LBCs) in procuring beans.
Past cocoa syndications averaged about US$1.3 billion to US$1.4 billion.
Following the first payment on the long term bonds restructured from short term bills two years ago COCOBOD has assured bondholders it will meet coupon obligations of GHc1.9 billion due in 2026 and 2027, alongside repayment of the principal.
COCOBOD has faced mounting debt in recent years, with total liabilities standing at GHc33billion (equivalent to about US$2 billion) in May with outstanding debts to agrochemical suppliers exceeding US$400 million.
About GHc7.93 billion of COCOBOD short-term “Cocoa Bills” were put into the exchange about 97.38% of the total tendered. The Cocoa Bills were swapped into five new Cocoa Bonds, maturing one per year, each being bullet redemptions with no nominal haircut to principal and a coupon rate of 13%. By restructuring its debt, COCOBOD is expected to lower its debt servicing costs and improve its credit profile, enhancing its ability to raise fresh capital for upcoming crop seasons.
In recent months, the board has embarked on aggressive measures to clear arrears and stabilize its finances to support purchases from cocoa farmers.
Cocoa is a major contributor to Ghana’s economy, accounting for approximately 4-6% of GDP, depending on the methodology employed, and around 30% of export earnings.
However, these debt servicing gains are being threatened by impending new European Union regulations.
The European Union Regulation on Deforestation-Free Products (EUDR) aims to prevent EU consumption from driving deforestation or forest degradation. It applies to high-risk commodities—including cocoa, along with cattle, coffee, soy, palm oil, timber, rubber, and their derivatives like chocolate and furniture.
To export cocoa products to the EU market (or export them), operators must prove that the products were not produced on land deforested after 31 December 2020, they comply with relevant national laws in the country of origin (e.g., forestry, labor, land rights) and they are covered by a Due Diligence Statement, which includes geolocation data, risk assessment, and mitigation steps. Passed in June 2023 implementation begins on December 30 2025 for large and medium companies and June 30 2026 for micro- and small-sized enterprises.
Consequent to the impending implementation of this new regulation, Ghana must demonstrate that its cocoa is free from deforestation and officially documented. This includes collecting geolocation data, mapping farms, and issuing due diligence statements throughout the supply chain.
To this end COCOBOD has already developed and piloted a traceability system mapping cocoa farm (polygon mapping), integrating GPS data, QR tagging, and end-to-end tracking from farm to export.
However, Ghana’s smallholder cocoa farmers may struggle with the costs and logistics of implementing traceability systems (smartphones, data connectivity, digital literacy) and they have limited capacity to adopt new technologies and generate necessary documentation.
Failing to meet EUDR standards such as exporting cocoa from deforested areas or lacking traceability could result in export restrictions to the EU, financial penalties, and loss of market access. Meeting EUDR criteria ensures continued access to EU markets which is critical since the EU is a major destination for Ghana’s cocoa.
