RE-IMAGINE GHANA By Dr. H. Aku KwapongCocobod is AWAM!

Ghana’s Cocoa Suicide: The Madness of Clinging to a Colonial Corpse.

Let’s be brutally honest. The Ghana Cocoa Board is nothing more than a zombie institution, a relic of a bygone era that should have been buried 50 years ago. It is the ghost of the Association of West African Merchants (AWAM)—the colonial contraption the British used to swindle our forefathers. When we gained independence, we did not dismantle this tool of extraction; we simply painted it in the colors of the national flag and gave it a new name. We replaced a foreign master with a domestic one, and the result for the farmer has been the same: servitude.

And so here we are, and every so often in economics, you encounter a natural experiment so perfect it’s almost cruel. Two countries, nearly identical in culture, climate, and population, start at the same place. One embraces basic market principles. The other clings to a state-run monopoly. Decades later, one is a global powerhouse in its main export, while the other is a case study in decline, its flagship industry teetering on the edge of collapse.

I’m talking, of course, about Côte d’Ivoire and Ghana, and the commodity that defines them: cocoa. The recent implosion of Ghana’s Cocoa Board (COCOBOD) – a bankruptcy in all but name, with over $2 billion in debt and an inability to pay its own farmers during a historic price boom – isn’t a surprise. It’s the bill coming due for 50 years of bad economics. It’s a tragic, infuriating, and entirely unforced error.

To understand the depth of this failure, we must first confront a painful historical truth. When the British colonial masters sought to extract wealth from our cocoa farmers, they established the Association of West African Merchants (AWAM). This cartel, comprised of Lebanese and other non-indigenous business people, was designed to swindle farmers by creating an illusion of alignment while coercing them into selling their cocoa at exploitative prices. Farmers rebelled against this colonial contraption. Yet, when Ghana gained independence, what farmers hoped would be scrapped became a government-sanctioned iteration of AWAM. Today, Licensed Buying Companies (LBCs) buy beans for a state that remains the sole authority to export. Where, precisely, is the independence in this arrangement? It is a question that cuts to the heart of Ghana’s post-colonial economic identity.

This historical echo is not merely academic. It is a fact written in the stark, unforgiving language of numbers. It tells a story not just of mismanagement, but of a deliberate, decades-long choice to suppress the very market forces that could have created widespread prosperity.

A tale of two economies: The great divergence

Let’s be clear: Ghana and Côte d’Ivoire are economic twins. They have similar populations (34 million vs. 31 million) and share the same ethnic groups. In the 1960s, Ghana was the dominant force, producing almost three times as much cocoa as its neighbor. Today, the roles have reversed with a vengeance.

Look at the production numbers across major export crops. It’s not just about cocoa; it’s a story of broad-based agricultural stagnation in Ghana compared to dynamism in Côte d’Ivoire.

Source: Latest available data from FAOSTAT, USDA, and industry reports.

Today, Ivory Coast is producing about 3-4x the amount of Cocoa that Ghana.”, while in 1964 Ghana produced almost 3 times what Ivory Coast produced then.

This isn’t a statistical anomaly. It’s a systemic failure. Côte d’Ivoire has become a diversified agricultural export powerhouse, while Ghana has failed to keep pace in every single one of these key cash crops. The reason for this divergence isn’t culture or climate; it’s policy.

The great reversal: A tale of two brothers

In the 1960s, Ghana was the undisputed king of cocoa, producing nearly three times as much as our neighbor, Côte d’Ivoire. Today, the situation is a national humiliation. Côte d’Ivoire, our brother nation with a similar population and culture, now produces four times as much cocoa as Ghana. They are the world’s largest producer and the world’s largest grinder. We are a laggard, a case study in self-inflicted economic decline.

What happened? Did Ivorian farmers suddenly discover a magical fertilizer? Did their soil become more fertile? No. The answer is simple and damning: in the 1990s, Côte d’Ivoire had the courage to kill its colonial ghost. It dismantled its state monopoly and liberalized its market. It invited competition, investment, and expertise. Global giants like Cargill, Barry Callebaut, and Olam flocked to Abidjan, building massive processing plants and creating a dynamic, competitive ecosystem.

Ghana, meanwhile, doubled down on its state-controlled model. We clung to the fiction that a committee of politically appointed board members, party chairmen, sitting MPs, and deputy ministers with zero experience in risk management – could somehow outsmart the global commodities market. The result was not just stagnation; it was the creation of a system perfectly designed to fail.

This system, where the state is the sole buyer and exporter, is a monopsony. It is designed to extract value, not create it. It keeps farmers poor, stifles innovation, and funnels money into a bloated bureaucracy and politically motivated projects like the infamous “cocoa roads.”

Cocobod today boasts a total workforce of over 10,000 employees with a total payroll costs of about $12 million a month, compared to Conseil du Café-Cacao’s workforce of about 550 employees. The value destruction is immense. Farmers in Ghana receive as little as 55% of the export price for their beans, while their counterparts in more liberalized markets get 70-75%. That difference is the cost of our national delusion.

The value chain: Two models, two outcomes

The core difference lies in how each country structures its cocoa market. It’s a textbook contrast between a state-controlled monopsony and a liberalized, competitive market.

What this shows is a fundamental difference in economic philosophy. Ghana’s model is about control. The state sits at the center, dictating prices and acting as the sole gateway to the world market. Côte d’Ivoire’s model is about competition. The state acts as a regulator (the Conseil du Café-Cacao), but it allows private firms to compete, invest, and innovate at every stage past the farm gate.

How did we get here? A half-century of divergent paths

This wasn’t an overnight change. It was a slow-motion divergence driven by key policy decisions.

• 1960s-1970s: Ghana’s COCOBOD acted as a tool of state extraction, heavily taxing farmers and offering low prices. This led to smuggling and declining production. Meanwhile, Côte d’Ivoire pursued a pro-expansion model with more favorable prices, and it overtook Ghana by the late 1970s.
• 1980s: Ghana introduced some reforms, allowing private LBCs, but kept the COCOBOD export monopoly. It was a half-measure.
• 1990s: The Great Divide. This was the critical decade. Under pressure from the World Bank and IMF, Côte d’Ivoire made the courageous decision to dismantle its state marketing board, CAISTAB. It fully liberalized its cocoa market. The result was an explosion of private investment. Ghana, however, kept its monopoly.
• 2000s-2020s: The gap widened. Multinationals built huge processing plants in Abidjan, not Accra. A vibrant ecosystem of local Ivorian exporters emerged—firms like ADM Cocoa SIFCA, AFIMEX, and NESKAO—competing alongside the global players. In Ghana, no such ecosystem could develop because there was only one legal exporter: the state.

Côte d’Ivoire’s Exporters & Traders

These companies are licensed to purchase cocoa beans from farmers and export to international buyers. Many are locally registered or have strong local operations.

• ADM Cocoa SIFCA – Local agribusiness exporter and part of a major Ivorian group.
• AFIMEX – Registered Ivorian cocoa exporter.
• AFRECO – Local exporter in the cocoa trade.
• AIT – Ivorian cocoa exporter (formerly part of Bracodi).
• Outspan Ivoire – Domestic cocoa shipping/export operations.
• Societe Awajis Services (SAS) – Local exporter involved in cocoa bean shipments.
• Africa Sourcing – Major Ivorian export agent sourcing cocoa beans locally.

Note: While many international multinationals have Ivorian subsidiaries, some of the names above are more locally or regionally incorporated entities responsible for cocoa bean exports though they may also be part of larger networks.

Côte d’Ivoire’s Local Cooperative Exporters

While not “companies” in the private-corporate sense, many agricultural cooperatives serve as export agents and are legally incorporated entities that buy from farmers and sell to licensed exporters:

• Examples include various CA… COOP CA cooperatives (e.g., CAADA Coop CA, CADB Coop CA, etc.).

These cooperatives often operate village collection points and intermediate sales to larger exporters.

The illusion of control and the cost of inaction

Proponents of the COCOBOD model talk about “price stability” and “quality control.” But what the recent crisis reveals is that this is an illusion. The “stability” was simply the quiet suppression of farmer income, and the “control” was a brittle system that shattered the moment it faced a real-world stress test.

The recent $1 billion loss wasn’t an accident; it was the logical conclusion of a system run by political appointees with no skin in the game and no expertise in risk management. A private company that made such a catastrophic error would go bankrupt. At COCOBOD, it’s just another Tuesday, another problem to be papered over with another government loan.

This brings us to the final, terrifying point. The greatest danger now is that Ghanaian policymakers will misdiagnose this systemic crisis as a mere “operational issue.” They will fire a few people, get a bailout, and carry on as before. But the world is not standing still. Côte d’Ivoire, Ecuador, and Indonesia are all market-driven and gaining share. If Ghana continues to cling to its failed colonial model, it is not just risking another crisis. It is choosing, deliberately and irrationally, to preside over the slow, agonizing death of its most important industry. And that is not just bad policy; it’s a form of economic madness.

The governance charade: Operational oversight or economic malpractice?

So, how does such a self-defeating system sustain itself? The answer lies in the operational oversight structure; a setup so fundamentally flawed it borders on the absurd.

When you look at the composition of the COCOBOD board – a committee staffed with the Governor of the Bank of Ghana, the Minister of Finance, a long history of sitting MPs, chiefs, and queen mothers – and then you remember that this body is supposed to provide oversight for a multi-billion dollar commodity trading operation that requires sophisticated capital market syndications and hedging on the COMEX futures exchange, you have to ask yourself a very serious question: Are we out of our minds?

This isn’t a community development committee. It’s the oversight body for what should be a high-frequency, high-stakes financial trading house. The skills required are not in political negotiation or stakeholder management; they are in quantitative finance, derivatives pricing, and global logistics. To staff this board with politicians and traditional leaders is a category error of epic proportions.

I suppose the argument for having the Governor and the Minister of Finance on the board is to leverage COCOBOD as a centralized foreign exchange earning platform. But this reveals a profound, almost willful, misunderstanding of how a modern open economy actually works. The foreign exchange that has historically come in through COCOBOD has been funneled centrally through the Bank of Ghana and then preferentially distributed based on political needs, not economic logic. This isn’t a secret; it’s common knowledge that this centralized FX has been allocated for everything from buying houses abroad and paying foreign school fees to, in some lucky instances, actual business investment. It’s a recipe for capital flight and cronyism, not economic development.

Here’s the thing: if we had simply allowed our farmers, or even the Licensed Buying Companies, to sell directly on exchanges either inside or outside Ghana, that foreign exchange would have flowed directly into the real economy through normal commercial banking channels. It would have benefited the cocoa sector and the broader economy organically. In fact, if we were truly bold and believed in the premium quality of our cocoa, we could have created a domestic market for it priced in our own currency, the Cedi. This would have forced global buyers to purchase Cedis to acquire our cocoa, creating a natural and efficient demand for our currency and stabilizing the exchange rate far more effectively than any central bank intervention.

The entire setup is a charade. It uses the language of national interest to justify a system of extraction and political patronage. The conclusion is inescapable: COCOBOD needs to be drastically downsized to a pure regulator. All its other functions—buying, selling, marketing, financing—must be outsourced to a liberalized, competitive market. Only then will the madness end.

The path forward: From state monopoly to a market of cocoa barons

So what, then, is to be done? The diagnosis is clear, but a diagnosis without a prescription is just an autopsy. The good news is that Ghana does not need to look abroad for a model of how to successfully liberalize a major commodity sector. It has a stunningly successful example right at home: the gold industry.

For decades, Ghana’s gold sector has been a liberalized, private-led market. It has attracted billions in foreign investment from major multinationals, and just as importantly, it has energized a dynamic small-scale mining sector that, for all its challenges, is creating real wealth for many Ghanaians. The result? Ghana is now Africa’s number one gold producer. The contrast with cocoa, where a state monopoly has presided over stagnation and decline, could not be more stark.

The path forward for cocoa is to learn the lessons from our own success. It is time to dismantle the colonial-era AWAM institution of COCOBOD and transform the entire cocoa sector into a private-led market that allows Ghanaian entrepreneurs, a new generation of cocoa barons – to thrive.

Here is what that transformation looks like, built on eight pillars of reform:

1. Radically Downsize COCOBOD into a Pure Regulator. The first, non-negotiable step is to put COCOBOD on a radical diet. It must be stripped of all its commercial functions – buying, selling, marketing, and financing. Its new, focused mandate should be that of a lean, effective regulator responsible for quality control, research, and market oversight.
2. Fix the Price Mechanism. The state must get out of the business of price-fixing. The goal should be to ensure farmers receive at least 70% of the FOB price, up from the current 55%. This is achieved not by state decree, but by allowing competitive buyers to bid up the price at the farm gate.
3. Boost Domestic Processing. A real industrial policy isn’t about subsidies; it’s about creating a competitive environment. The goal should be to increase local processing from a meager 23% to a respectable 40-50% by removing energy-sector distortions and allowing processors to source beans competitively. Provide the incentives and see your local investors partner to bring in much needed international partners. Your brothers next door are doing it.
4. Modernize and De-Risk Production. This means confronting the real issues killing our farms. It includes tackling the Cocoa Swollen Shoot Virus (CSSVD) disease head-on, but it also requires a uniquely Ghanaian solution to a uniquely Ghanaian problem: the pervasive threat of illegal mining (galamsey), a risk our Ivorian counterparts do not face at the same scale. The answer is not just more enforcement, but smarter institutions. This is where we can innovate by establishing, for the first time, Cocoa Land Trusts. This system would allow farmers and producers to voluntarily register their farms, placing the land title into a protected trust. In exchange for this, the state would provide legal and physical protection for that land, putting it in escrow against the encroachment of galamsey. This solves two problems at once: it directly de-risks the land from environmental destruction, and it finally provides the secure land tenure that farmers need to invest for the long term.
5. Unleash the Private Sector. A liberalized market creates opportunity. It allows a new generation of Ghanaian “cocoa barons” to build businesses in logistics, warehousing, transportation, and trading. It means empowering Licensed Buying Companies (LBCs) to become real traders, not just agents of the state.
6. Build a Real Regulatory Architecture. A liberalized market needs a referee. This means establishing an independent Cocoa Regulatory Authority (CRA), separate from the political fray, with the power to enforce contracts, ensure fair competition, and oversee compliance with international standards like the EU Deforestation Regulation (EUDR).
7. Transform the Financing Model. The era of the single, massive syndicated loan, a system that encourages reckless behavior, must end. It should be replaced with a diversified ecosystem of commercial bank lending, warehouse receipt financing, and a domestic derivatives market on the Ghana Commodity Exchange (GCX) where farmers and traders can manage their own risk.
8. Implement a Phased, Credible Roadmap. This isn’t a revolution that happens overnight. It’s a structured, 5-to-10-year transition. Phase one involves laying the legal and regulatory groundwork. Phase two involves gradual liberalization. Phase three is the move to a fully competitive market. This requires a clear timeline, measurable KPIs, and the political will to see it through.

For too long, we have been told that only the state can be trusted to manage our most precious commodity. I guess our brothers farming in Côte d’Ivoire have super powers our parents don’t have. But the billion-dollar collapse of COCOBOD has proven that to be a catastrophic lie. The truth is that markets, when properly regulated, are far more efficient, innovative, and ultimately more profitable for the nation than any state-run monopoly.

Make no mistake: if we fail to fundamentally reform now, the Ghanaian cocoa industry will be irrelevant within two decades. It will be a historical footnote, a tragic story of a nation that inherited a golden goose and chose to strangle it because it couldn’t let go of its colonial chains. So let me remind you of the trend again I showed, below:

This is not a call for a lawless free-for-all. It is a call for a smart, modern, and Ghanaian form of capitalism, one that trusts its own people to build, to compete, and to win. The choice is clear: we can continue to worship the ghost of a colonial trading company, or we can finally set our farmers and entrepreneurs free. One path leads to inevitable decline. The other leads to a renaissance. It’s time to choose wisely.

The choice is stark. We can continue to worship the corpse of a failed colonial model, presiding over a slow, painful, and inevitable decline. Or, we can finally embrace the economic logic of the 21st century, dismantle the ghost of AWAM, and unleash the entrepreneurial spirit of our farmers in a free, competitive, and transparent market. The path to prosperity is clear. The only question is whether we have the courage to take it.

Hene Aku Kwapong, CDD Ghana Fellow, Ecobank Ghana Board Member, Former Head of Management for Royal Bank of Scotland EMEA Credit Markets, formerly of Deutsche Bank, Microsoft, GE Capital and NY Economic Development Corporation.

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