Karen Kwarteng, Head of Global Market Sales at Stanbic Bank Ghana, says the adjustment of the farmgate price of cocoa is important in curtailing the smuggling of the commodity.
She said, “getting the price right is crucial” to discourage smuggling and stabilise cocoa production.
Speaking in an interview with CNBC Africa she stated that, “in a strategic push towards enhancing economic stability, Ghana is rolling out two crucial initiatives namely: increasing the income of its cocoa farmers and restructuring $13 billion of its international bonds.”
These dual actions represented a critical moment for the country as it seeks to fortify its financial standing and safeguard its agricultural backbone.
Recognising the vital role of cocoa in the economy, the fixed farmgate price paid to cocoa farmers has been increased by nearly 45 per cent.
The rise, from around GH¢33,000 to over GH¢48,000 (approximately $3,070), marks one of the largest boosts in recent memory.
“This move is more than just an economic adjustment and it is designed to combat a growing issue: the smuggling of cocoa beans to neighboring countries where farmers can fetch higher prices,” she said.
She said, “For years, the illicit trafficking of cocoa deprived the country of valuable exports, impacting both the economy and farmers’ livelihoods.”
In collaboration with Ivory Coast, the world’s largest cocoa producer, Ghana aims to harmonise farm prices and create a united front to prevent trafficking rings from taking advantage of price disparities between the two countries.
The raised farmgate price is also seen as a necessary response to pressures on the cedi, which has faced depreciation in recent months. By giving farmers a fairer share of the profits, the government hopes to stabilise production levels and ensure that the cocoa industry one of the country’s largest employers – remains robust.
In addition to increasing farmgate prices, Ghana has introduced a new funding model through the Cocoa Board (Cocobod), which is aimed at ensuring swift access to funds to farmers.
The model includes provisions to set aside funds for interest payments, reflecting a proactive approach to safeguarding farmer welfare.
This combination of increased prices and financial backing signals a strong commitment to sustaining cocoa production and supporting one of the nation’s most crucial industries.
On the international stage, the country is making headway with its debt restructuring efforts.
October 9th has been set as the date to issue new international bonds, offering bondholders a chance to either accept a haircut on principal or opt for adjustments in coupon interest rates.
The deadline for accepting this offer is September 30th to accept the offer.
The terms appear to be gaining traction among investors. This step is part of a broader initiative to restructure $13 billion in international bonds, aligning with the country’s goals under the International Monetary Fund’s (IMF) Extended Credit Facility programme.
With investor confidence rising, both domestic and international stakeholders are viewing the terms favorably, which bodes well for the country’s long-term financial health.
Ms Kwarteng emphasised the importance of Ghana’s bond restructuring process, noting that it represents a significant milestone in the country’s commitment to financial stability.
According to her, “The deal is expected to enhance investor confidence while reducing debt burdens, a critical aspect of Ghana’s economic strategy.”
