West Africa’s cocoa producing countries; Nigeria, Ghana, and Côte d’Ivoire have formed an alliance to stop exporting cheap raw cocoa beans to encourage local processing. What does this mean for global chocolate makers? Tedd George, Chief Narrative Officer of Kleos Advisory, joins CNBC Africa for this discussion.
Fri, 17 Jul 2026 14:44:27 GMT
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AI Generated Summary
Key Points:
- Nigeria, Ghana and Côte d’Ivoire have formed an alliance to expand domestic cocoa processing and reduce dependence on raw bean exports.
- West Africa produces about 70% of global cocoa output but receives only a small share of the value generated by finished chocolate products.
- Analysts say grinding cocoa into butter, paste and powder offers the clearest route to higher export value and stronger industrial margins.
- Many cocoa processors in the region are operating below capacity because of financing constraints, equipment needs and unreliable power supply.
- The alliance’s longer-term prospects will also depend on how the region manages climate shocks, El Niño risks and the EU’s deforestation compliance regime.
Topics
West Africa cocoaNigeria cocoaGhana cocoaCote d’Ivoire cocoacocoa processingglobal chocolate industrycocoa grindingEU deforestation regulationEl Ninoclimate changefarm gate pricescommodity markets
- Nigeria, Ghana and Côte d’Ivoire have formed an alliance to curb cheap raw cocoa bean exports and expand local processing.
- West Africa produces roughly 70% of the world’s cocoa but captures only about 6% of the value of a finished chocolate bar, according to estimates cited in the interview.
- Industry watchers say the biggest near-term opportunity is in grinding cocoa beans into butter, paste and powder, rather than in manufacturing finished chocolate for export.
- The alliance’s success will depend on power supply, access to beans, fiscal incentives, climate resilience and compliance with the EU’s deforestation rules.
Nigeria, Ghana and Côte d’Ivoire are moving to deepen cooperation in the cocoa sector as they look to stop exporting cheap raw beans and instead build more local processing capacity, a shift that could reshape margins across the global chocolate supply chain if the policy gains traction.
The push is aimed at capturing more value from a crop that remains one of West Africa’s most important export earners. Ted Johns, chief narrative officer at Clio’s Advisory, said the region’s largest cocoa-producing countries account for about 70% of global cocoa output but receive only around 6% of the value of a chocolate bar sold at the end of the chain.
Johns said the real commercial opening is not necessarily in producing finished consumer chocolate in West Africa, where established markets in Europe and North America still dominate demand and branding, but in expanding industrial grinding into cocoa butter, cocoa paste and cocoa powder.
“If you’re literally just buying the beans, grinding them, turning into product, you can increase the value 3, 4, maybe even 5 times, depending on the quality of the product that you’re producing,” Johns said.
That makes grinding the clearest initial target for the new alliance, even as questions remain over the bloc’s roadmap, financing model and implementation timeline.
Johns said Côte d’Ivoire and Ghana already process around 45% of their cocoa beans before export, while Nigeria and Cameroon process closer to 20%, suggesting there is room for a sharp increase if investment and policy support are aligned.
The gap is significant because much of the infrastructure is already in place, but many processors remain underutilized. Some lack financing to buy enough beans, while others need fresh capital for equipment, repairs and plant upgrades.
Johns said the alliance is a strong first step politically, but the decisive factor will be whether governments can translate that declaration into concrete commercial incentives.
“I think definitely a lot of it needs to come down to things like tax breaks and certain incentives,” he said, adding that investors will also need clarity that they can ultimately repatriate capital from projects in what remains a strategic sector for governments.
The challenge extends beyond capital expenditure. Reliable power supply remains a major bottleneck for processors in West Africa, especially for grinding operations that depend on energy-intensive equipment and uninterrupted industrial service.
Still, Johns said examples in Ghana and Côte d’Ivoire show local processors can operate profitably under the right conditions. He said some grinders performed particularly well during the recent period of extremely high cocoa and cocoa product prices.
A further constraint is access to beans. Large trading houses still dominate the cocoa supply chain, and smaller domestic processors often struggle to secure enough raw material to run plants consistently.
Johns said that unless local processors can guarantee supply, they will continue to face the risk of operating below capacity, which raises the prospect of losses and deters fresh investment.
That dynamic means the alliance may need to go beyond headline coordination and address how beans are allocated, financed and delivered to domestic industrial users.
The regional policy push also comes as the cocoa sector faces growing weather and climate risks. Johns warned that the latest El Niño episode could become a “super El Niño,” adding that past events have cut West African cocoa production by as much as 20%.
He said the longer-term threat from climate change may be even more serious because it is not cyclical in the same way. Lower rainfall, drier conditions and more violent rain events are creating repeated stress for farms, while heavy downpours can strip soil and wash away fertilizers and pesticides.
“It all comes down to better husbandry, planting newer and stronger varieties which might be drought resistant or resistant to diseases, and making sure that the farmer is visible in the supply chain,” Johns said.
He added that greater cooperation among producing countries will be necessary not just for pricing and processing strategy, but for sustaining cocoa production itself over the next two decades.
Alongside climate risks, the industry is also preparing for the European Union’s deforestation regulation, which will require companies to show that commodities including cocoa are not linked to deforested land.
Johns said regulators and industry bodies in producing countries, particularly in Côte d’Ivoire and Ghana, insist they are making progress. He pointed to polygon mapping of farms, digital identity cards for farmers and broader tracking systems aimed at meeting the EU’s due diligence requirements.
The bigger issue, he said, will be enforcement once reporting obligations start to bite. Under the EU regime, large companies face reporting requirements first, followed by smaller companies later in the rollout.
Johns said compliance may be costly, but it is ultimately aligned with the long-term survival of the cocoa sector.
“If you have a sustainable system, you have a future for cocoa,” he said. “We need to grow more cocoa on the land we already have, better husbandry, use of inputs, increase the yields, and protect the forest and biodiversity that’s still there in West Africa.”
Prices remain another key variable for both governments and processors. Johns said farm-gate prices in countries such as Ghana and Côte d’Ivoire had to be reduced during the season after what he described as a catastrophic drop in international cocoa prices from the peaks seen last year.
Even so, he said prices have recovered somewhat in recent months and remain above levels seen three to four years ago, even if they are still well below last year’s highs.
He said the near-term outlook for prices appears relatively firm, in part because farmers typically hold back beans around this time of year before the new season begins in September, tightening supply to the market.
That could support prices, but Johns warned that a fresh production shock tied to climate change or El Niño could trigger another period of severe volatility similar to the one seen over the past two years.
In that scenario, he said, speculative traders may benefit from large price swings while farmers remain exposed to the downside.
For global chocolate makers, the West African alliance is unlikely to transform the finished chocolate business overnight. But if it succeeds in pushing more beans into local grinding and strengthens processors’ access to finance, power and supply, it could gradually shift more of the cocoa industry’s value addition closer to the farms that produce the crop.
What investors and manufacturers will be watching next is whether the three governments publish a clear implementation framework, including tax incentives, processor support and rules governing bean access, before the next cocoa season gains momentum.
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