Ghana’s cocoa sub-sector has experienced a significant contraction of 26% in the third quarter of 2024, marking its fifth consecutive decline. This downturn is in stark contrast to the overall economy, which achieved a robust growth rate of 7.2% during the same timeframe.
When excluding the effects of oil, Ghana’s economy expanded to GHȼ254 billion in current terms, an increase from GHȼ194 billion in the same quarter of 2023.
The difficulties within the cocoa sub-sector began in the third quarter of 2023 and have escalated considerably in early 2024. The first quarter of this year recorded the sector’s most severe contraction at 20.2%. Unfortunately, expectations for recovery have been thwarted, as contractions of 26% were noted in both the second and third quarters of 2024.
This ongoing decline raises significant concerns regarding the future of one of Ghana’s vital export commodities, which plays a crucial role in supporting the rural economy and contributing to foreign exchange earnings.
Professor Lord Mensah, a Finance Lecturer at the University of Ghana Business School, has voiced serious concerns about the implications of this situation for the country’s foreign exchange reserves. In an interview, he urged the government to redirect its focus towards the cocoa sector to restore its stability.
The focus has shifted towards gold rather than cocoa. While both commodities contribute to export revenues, cocoa offers greater liquidity. Historically, the cocoa industry has generated substantial inflows, ranging from $1 billion to $2 billion each year; however, recent trends indicate a decline in these inflows, adversely affecting our foreign exchange reserves, he noted.
Professor Mensah underscored the importance of implementing strategic policies and investing in the cocoa sector.
“Cocoa serves as a liquid asset. It is possible to secure loans against unexported cocoa beans, with repayment occurring after the exports are finalized. It is essential to protect this sector, allocate resources judiciously, and enhance policies to ensure its continued success,” he stated.
The ongoing downturn in the cocoa sub-sector necessitates policy measures to safeguard this crucial component of Ghana’s economy.
