IFC Unlocks $200m Cocoa Finance and Expands Farmer Funding in Ghana
A new financing arrangement involving the International Finance Corporation (IFC) could unlock up to $200 million for cocoa purchases in Ghana, while a separate deal with agricultural technology company Complete Farmer will expand access to farm inputs and financing.
The two partnerships with Absa Bank Ghana and Complete Farmer are aimed at tackling financing constraints at different points in the agricultural value chain.
Under the agreement with Absa, IFC and the Private Sector Window of the Global Agriculture and Food Security Program (GAFSP) will provide up to $50 million in an unfunded risk participation facility.
The facility will enable Absa to provide up to $200 million in financing to Licensed Buying Companies (LBCs) to purchase traceable cocoa from farmers during the buying season.
The financing is expected to support more than 139,000 smallholder cocoa farmers.
Cocoa remains one of Ghana’s main export commodities, with about 800,000 registered farmers and millions of people dependent on the industry for their livelihoods.
For LBCs, access to working capital is particularly important during the buying season when large volumes of cocoa have to be purchased from farmers. The IFC-backed facility is designed to ease some of that financing pressure.
Absa Bank Ghana Managing Director Edward Nartey Botchway said the partnership would support LBCs to purchase traceable cocoa throughout the buying season.
The arrangement also links the financing to more sustainable farming practices aligned with the Paris Agreement on climate change.
The second transaction is focused on farm-level financing.
IFC, working with the Belgian Investment Fund for Developing Countries (BIFT), is providing $2.4 million in convertible financing to Complete Farmer to expand its input financing and agronomy services.
A further $660,000 in advisory and grant support will be used to strengthen the company’s systems and capacity to expand farmer financing.
Complete Farmer operates a digital platform connecting farmers with buyers, financial institutions, input suppliers and agricultural service providers.
The company currently has a network of more than 72,000 farmers, operates across eight regions in Ghana and has eight fulfilment centres. It also operates in Togo.
The IFC partnership is expected to help Complete Farmer expand its reach and support 240,000 farmers by 2030, including by facilitating access to finance.
Complete Farmer Chief Executive Officer Desmond Koney said the company’s technology and farmer data would help it expand its input financing model and give more farmers access to the resources needed for production.
The two transactions address different financing needs but point to a wider challenge facing Ghanaian agriculture.
Farmers need money for inputs before production, while buying companies need working capital to purchase crops after harvest. Limited access to finance at either stage can affect production, trading and farmers’ access to markets.
The Absa facility uses IFC’s risk-sharing support to increase the bank’s capacity to lend to cocoa buyers. The Complete Farmer investment, meanwhile, provides capital and technical support to expand a technology-based financing model for farmers.
IFC Division Director for West Africa Gulf of Guinea Nathalie Kouassi Akon said the partnerships were intended to address financing gaps across the agricultural value chain, from cocoa purchases to farmers’ access to inputs, services and buyers.
The scale of the financing will ultimately depend on how much of the committed funding reaches farmers and agricultural businesses and whether it improves their ability to produce and trade profitably.
For Ghana’s agricultural sector, the immediate focus will be on whether the financing helps LBCs maintain cocoa purchases during the buying season and enables more farmers to obtain inputs and services when they need them.
