World Bank urges governance reforms to rescue Ghana’s struggling cocoa sector

Ghana’s cocoa sector, a cornerstone of the nation’s economy, has been faltering over the years with cocoa output for the 2023/24 falling to its lowest since 2016.

The Ghana Cocoa Board (COCOBOD), the state-owned entity tasked with managing the industry, is grappling with financial instability, prompting the World Bank to call for urgent governance reforms.

In its latest Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy”, the World Bank outlines a comprehensive turnaround strategy for COCOBOD. Key recommendations include consolidating expenditures, streamlining cocoa road projects, phasing out fertilizer subsidies, reforming the Producer Price Review Mechanism, and enforcing stricter fiscal discipline.

COCOBOD, which oversees the purchase, marketing, and export of cocoa beans, has faced significant financial challenges in recent years. After six consecutive years of losses, the board reported a profit of 2.3 billion cedis for the 2022/23 season. However, this recovery remains fragile, as high operational costs and the financial burden of quasi-fiscal programmes—such as fertilizer subsidies and cocoa road projects—continue to weigh heavily on its balance sheet.

While these initiatives were designed to support farmers and improve infrastructure, their implementation has led to significant financial liabilities. The World Bank warns that without decisive action, these programmes could further destabilize COCOBOD and, by extension, Ghana’s cocoa sector.

The World Bank’s report underscores the need for bold and immediate reforms to restore COCOBOD’s financial health. Key measures include streamlining cocoa road projects, phasing out fertilizer subsidies, reforming the producer price review mechanism and enforcing fiscal discipline.

However, the World Bank emphasises that these measures alone will not be enough. A thorough overhaul of COCOBOD’s governance structure is essential to ensure the sector’s long-term sustainability.