President John Dramani Mahama, in his State of the Nation Address, painted a stark picture of Ghana’s economic landscape, highlighting the substantial debt burden inherited from the previous Akufo-Addo administration. He revealed a staggering total public debt of GHS721 billion, a figure that underscores the significant financial challenges facing the nation. Beyond the general public debt, Mahama pointed to the precarious financial positions of key state-owned enterprises, specifically the Electricity Company of Ghana (ECG) and the Ghana Cocoa Board (COCOBOD), both of which are grappling with substantial debt loads. This accumulated debt significantly restricts the government’s ability to invest in critical sectors like infrastructure, education, and healthcare, hindering economic growth and development. The President emphasized the urgency of addressing these financial challenges to ensure the long-term stability and prosperity of the nation.
The President provided specific figures to illustrate the depth of the debt crisis. The ECG, responsible for providing electricity to the nation, carries a debt burden of GHS68 billion, a figure that reflects the challenges within the energy sector and the potential for disruptions in power supply. COCOBOD, the institution responsible for managing Ghana’s cocoa industry, a crucial sector for the national economy, is saddled with a total debt of GHS32.5 billion. Of this amount, GHS9.7 billion is due for payment by the end of September 2025, representing a significant short-term financial obligation that could strain the institution’s resources and impact its ability to support cocoa farmers. This detailed breakdown of the debt burden highlights the magnitude of the financial challenges facing these key state-owned enterprises and the potential repercussions for the broader economy.
Delving deeper into the challenges facing COCOBOD, President Mahama revealed that the institution had been unable to supply 333,767 metric tons of cocoa during the 2023/2024 season, despite having already pre-sold the cocoa at a price of $2,600 per ton. This inability to meet contractual obligations forced the previous management to roll over these contracts into the 2024/2025 season. This deferral, however, comes at a significant cost. Due to fluctuations in the global cocoa market, the rolled-over contracts will result in a substantial loss of revenue for COCOBOD and Ghanaian cocoa farmers.
The financial ramifications of the rolled-over contracts are substantial. President Mahama explained that for every ton of cocoa delivered in the 2024/2025 season to fulfill the rolled-over contracts, COCOBOD and Ghanaian cocoa farmers will lose $4,000 in revenue compared to the original agreed-upon price. This significant loss translates to a substantial reduction in income for both COCOBOD and the cocoa farmers who rely on the institution for support and price stability. This shortfall further exacerbates the financial challenges facing COCOBOD and underscores the broader economic implications of the cocoa industry’s struggles.
The implications of this debt burden extend beyond the immediate financial challenges. The substantial debt owed by key state-owned enterprises like ECG and COCOBOD limits their ability to invest in critical infrastructure upgrades and expansion projects. This, in turn, hinders their capacity to provide efficient and reliable services to the Ghanaian population. For ECG, this translates to potential disruptions in electricity supply, which can have a cascading effect on businesses and households. For COCOBOD, the debt burden limits its ability to support cocoa farmers, potentially impacting cocoa production and the overall contribution of the cocoa industry to the national economy.
In summary, President Mahama’s address revealed a concerning economic situation characterized by a high public debt level and significant financial challenges facing key state-owned enterprises. The accumulated debt limits the government’s capacity to invest in essential sectors and hinders the ability of institutions like ECG and COCOBOD to provide vital services. The situation with COCOBOD, particularly the rolled-over cocoa contracts and the resulting revenue loss, underscores the interconnectedness of these challenges and the potential for broader economic repercussions. Addressing these financial issues is crucial for ensuring Ghana’s long-term economic stability and prosperity.
