COCOBOD’s Operations Pose Significant Fiscal Threat to Ghana – World Bank

Randy Abbey

A latest World Bank report on Ghana’s Public Finance Review has identified that the operations of the Ghana Cocoa Board (COCOBOD) is posing large risks to the country.

This observation from the World Bank says the state-owned institution overseeing the country’s cocoa industry has been grappling with increasing financial losses and operation inefficiencies which is a threat to the government’s fiscal consolidation agenda.

Already the government of President John Dramani Mahama has announced his priority of fiscal consolidation. His aim is to reduce public spending, minimize waste, stay within budget, and drastically reduce debt accumulation while increasing revenue mobilization to create fiscal space for economic transformation.

However, the World Bank contends that what it describes as the “quasi operations” of COCOBOD is a threat to this aim of the government. The report indicates that some operational expenditures of COCOBOD such as spending on cocoa roads, fertilizers, pesticides, and others are major challenges requiring drastic attention.

For instance, outstanding cocoa road contracts entered by COCOBOD as of the end of 2024 hit GHC21 billion equivalent to US$1.3 billion.

“The Board is a state-owned company solely responsible for Ghana’s cocoa industry, controlling the purchase, marketing, and export of all cocoa beans produced in the country. It has accumulated large losses due to high rollover cost of outstanding cocoa bills, high operational costs, and elevated quasi-fiscal operations (for example, fertilizer provision and rural roads development),” portions of the report cited Accra Street Journal read.

“It also poses large fiscal risks,” the report further emphasized.

Many analysts confirm that the high debts accumulated by COCOBOD coupled with its inefficient spending continue to drain the board’s resources which compel the government sometimes to intervene to keep it afloat.

To restore profitability and ensure long-term financial sustainability, the World Bank is welcoming COCOBOD’s turnaround strategy that focuses on expenditure consolidation.

One of the key measures under consideration is rationalizing cocoa roads by reducing the scope of such projects to minimize fiscal exposure. Additionally, the Board plans to phase out fertilizer input subsidies gradually, easing financial strain while encouraging more sustainable farming practices.

COCOBOD’s Operations Posing Significant Fiscal Threat to Ghana – World Bank
Another critical reform involves reviewing the producer price review mechanism to align producer prices with global market conditions, ensuring long-term stability and competitiveness for the industry.

To complement these expenditure control efforts, COCOBOD is also focusing on enhancing fiscal discipline by implementing stricter financial controls and improving operational efficiency to cut wasteful spending. These measures aim to prevent further financial mismanagement and promote accountability within the Board.

COCOBOD is one of the largest foreign exchange earners for the country but without bold and effective interventions, the continued financial struggles could further strain public finances, making it even more challenging for the government to meet its broader economic and developmental goals.

Meanwhile, newly appointed acting Chief Executive Officer (CEO) of the Ghana Cocoa Board (COCOBOD), Dr. Randy Abbey, has said enhancing cocoa production through large-scale farming is a top priority for his administration.

Source: Accra Street Journal

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