Accra:Executives of COCOBOD and its subsidiary Cocoa Capital PLC are grappling with a significant funding shortfall, falling GHS610 million short of their GHc4 billion target in a recent commercial paper issuance. This shortfall represents 15% of the intended funding, with only GHc3.39 billion raised so far.
According to Ghana Web, the funds from this first tranche were intended to finance cocoa bean purchases from farmers through Licensed Buying Companies (LBCs) and to address some of the GHc4 billion arrears reportedly owed to these companies. However, the shortfall presents operational challenges, as LBCs require immediate cash flow to purchase beans at the increased farm gate price, while also needing funds to settle previous season's arrears.
Industry sources indicate that COCOBOD is considering three alternatives to address the funding gap. One option is to reopen the first tranche to capture additional domestic liquidity, which would need to occur swiftly to be effective. Another possibility is to absorb the shortfall into the upcoming second and third tranches of the broader GHS14 billion purchase facility. These tranches are planned to fund subsequent months of the 2026/27 crop season, though exact dates and amounts are yet to be confirmed.
Regardless of the chosen strategy, COCOBOD may need to increase the coupon rate for investors, potentially raising costs and reducing profit margins. The decision on how to proceed will be influenced by immediate funding needs and market conditions.