The International Monetary Fund has called on Ghana to speed up reforms at COCOBOD, warning that growing stress in the cocoa sector now poses risks beyond agriculture and could affect the country’s broader economic stability.
Responding to questions on recent developments in the sector, IMF Communications Director Julie Kozack said Ghana’s cocoa industry is under pressure from depressed global prices, falling domestic production and liquidity constraints at COCOBOD. She described cocoa as “macrocritical,” noting that it contributes close to 10 percent of Ghana’s export revenue and supports about 800,000 farming households.
For decades, cocoa has served as a key pillar of Ghana’s external position. It provides essential foreign exchange earnings, supports rural employment and anchors a financing model in which COCOBOD raises funds each season to purchase cocoa beans and manage the supply chain. When the system functions well, it helps cushion the economy against shocks. When it comes under strain, the impact can quickly spread to foreign exchange availability, fiscal pressures and investor confidence.
The IMF pointed to three major pressures weighing on the sector.
The first is the external shock from lower global cocoa prices, which has reduced export earnings and narrowed margins that help keep the domestic supply chain functioning. In an economy where foreign exchange stability depends heavily on export inflows, weaker cocoa receipts can intensify balance of payments pressures, especially when other inflows such as portfolio investments or access to international capital markets remain uncertain.
The second challenge is declining domestic production. Structural issues including ageing farms, low replanting rates, disease, climate variability and rising input costs have reduced output over time. Price differences with neighbouring countries have also encouraged cross-border smuggling. As production drops, the fixed costs of procurement and logistics become heavier per tonne, further weakening the system.
The third and most immediate concern is liquidity. Even when prices and production are under pressure, a well-funded buyer can keep the chain moving. However, when the main purchasing institution faces cash constraints, payments slow, purchasing capacity tightens and financing costs rise. This can undermine farmer confidence and affect decisions on farm maintenance and investment, ultimately worsening future production.
The IMF said these vulnerabilities have been consistently flagged under Ghana’s Extended Credit Facility programme and stressed that cocoa-sector risks are closely tied to the broader macroeconomic stabilisation agenda.
At the centre of the Fund’s recommendation is the decisive implementation of COCOBOD’s turnaround strategy. This includes ending quasi-fiscal activities, securing lower-cost financing and introducing key structural reforms.
Quasi-fiscal activities refer to obligations that resemble government spending but are carried on COCOBOD’s balance sheet rather than being fully reflected in the national budget. Over time, such practices can weaken the institution’s finances and increase borrowing costs. The IMF believes that stabilising the cocoa sector requires cleaning up these embedded financial pressures.
Lower-cost and more reliable financing is also considered essential. COCOBOD’s annual purchasing programme depends heavily on borrowed funds. If financing is expensive or vulnerable to market volatility, it becomes harder to pay farmers promptly, invest in productivity or manage price swings effectively.
Although the IMF did not list specific reforms in detail, they are likely to include stronger governance, improved transparency around costs and liabilities, tighter operational controls and policies that prioritise productivity and quality improvements.
The Fund acknowledged that the government has announced stabilisation measures and said that, if fully implemented, they would mark an important step forward. However, it emphasised that credibility depends on execution and measurable outcomes.
For policymakers, the message is clear. Even if Ghana records improving macroeconomic indicators, sustained weakness in a macrocritical export sector like cocoa could undermine external stability. Accelerating reforms at COCOBOD, the IMF suggests, is essential to ensure that cocoa remains a stabilising force rather than a drag on the country’s economic recovery.
