A digital platform has emerged to transform the Cocoa purchasing and monitoring process in Ghana.
The platform has created a cashless mode for cash movement for Licensed Buying Companies (LBCs). Also, a means to electronically monitor the movement of cocoa from the rural area to the seaport. The CocoaAsempa software (to wit, good news about Cocoa in the Akan language) is a game-changer.
Introduced on the market in the 2019/2020 Cocoa season, CocoaAsempa software has made a significant mark for LBCs and their staff, financiers and guarantors and could even do same for the regulator.
Cocoa is the second foreign exchange earner for Ghana prior to the emergence of oil. In 2019, earnings from Cocoa was US$ 2.29 billion, coming behind oil and gold (Bank of Ghana Report, May 2020) in first and second places respectively.
Purchasing the Cocoa Beans
The Government of Ghana buys the cocoa beans from local farmers through its regulator the COCOBOD, and sells the cocoa beans to foreign buyers. COCOBOD however, outsources the purchasing of the freah beans from the rural growing areas to LBCs. The LBCs duty is to purchase the cocoa from the cocoa farmers, gather them and transport the cocoa beans to the sea ports, where the regulator takes over. This model guarantees a ready market for the farmers
For the 2019/2020 Cocoa season, the government raised an amount of US$1.3 billion as a syndicated loan for the mobilization of cocoa beans for export. This is how much money passes through the system mostly as cash from LBCs to farmers. As COCOBOD provides the money as seed funds to the LBCs to purchase the cocoa for export.
Cash-Heavy Operations
However, purchasing Cocoa for export is mostly a cash-heavy activity with physical cash passed on from the LBCs main offices to the farmers. The huge sums of monies involved is what makes the processes prone to robbery. Though a few leading LBCs have taken the cashless initiative, the larger cross-section of the cocoa buying environment is still cash heavy.
The report at the end of the main crop season (October 2019 to March 2020), highlighted nine benefits reaped by users of the Cocoasempa software. In providing a secured and robust system for the purchasing of cocoa beans in Ghana
The Benefit of a Life-Saver
The major benefit of the CocoaAsempa software is the secured means of operations it has provided for players in the cocoa purchasing process. The software has contributed to saving the lives of the LBC operatives who physically visit the farms to buy cocoa beans from farmers. This activity, mainly performed by Purchasing Clerks and/or District Managers (Officers) is largely prone to attacks from armed robbers, leading to loss of lives, or incurring life-threatening injuries.
Incidences of armed robbery occur during the peak buying season. The motive is to rob the officers off the monies earmarked for the purchase of cocoa beans. They carry cash, sometimes packed in sacks and transported over long distances to pay farmers who have harvested their cocoa awaiting purchases. This is what attracts the robbers who can kill for their ‘booty’. Such deaths are recorded almost every year within the cocoa season.
The Murders
In a narrated account of one of the deaths recorded in the current year, a District Manager of one LBCs had received a stash of cash the previous day which he had managed to distribute to purchase cocoa beans. Armed robbers showed up the following day hoping to meet up with that day’s cash. Unfortunately, the District Manager did not have any cash that day. The robbers murdered him. A precious life was lost. In 2018/19 season, an Operations Manager of another LBC recounted how he lost a district manager to robbery. Others who survived had to deal with long-lasting injuries. In such situations, monies are lost, but that is only secondary, compared to the loss of human lives.
The Insurance Function
The CocoaAsempa software additionally caught the eye of one foremost insurance company. They adopted the software as a condition for bond guarantees in insuring the entire cocoa purchasing activity of LBCs. The software enabled them to control disbursement of funds, while at the same time monitoring the delivery of cocoa to the port for the government to take over for export.
The Experience
Being the first year in operation (2019/20 season), four (4) LBCs signed onto CocoaAsempa, and used it excellently. Three more LBCs signed on at the latter stages of the 2019/20 peak season. They look forward to a full deployment during the 2020/21 peak season, having piloted the system during the light crop season. The managers of the software expect more LBCs to sign on for the 2020/21 cocoa season.
The software was designed by the risk management company, TBM Risks Consult. The Managing Director of TBM Risks Consult, Mr. Yaw Antwi, intimated that growing up in a cocoa producing area, the urge to do something to curb the inherent risks in the cocoa value chain was a key motivation. ‘The primary exciting factor here is the fact that decent people would go out to work not holding any such fear of such baseless attacks that rob them of their lives’, he said. ‘Of course, there are many more benefits, but the life-saving function of the Cocoasempa software is dear to us’, he concluded.
The CocoaAsempa software as stated earlier has registered nine huge benefits to LBCs, guarantors and financiers. The benefits would be serialized in the next episodes of the Cocoasempa diaries.
