Analysis and Summary of Cocoa in Ghana and Nigeria

BUSINESS STRATEGY 1
BUSINESS STRATEGY
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BUSINESS STRATEGY 2
Analysis and summary of cocoa in Ghana and Nigeria
Cocoa is the most important export crop in Ghana and accounts for 8.2 percent of the
nation’s GDP and 30% of the total earnings by exports (Asante-Poku & Angelucci , 2013). The
total production of cocoa doubled from 450,000 in 2000 to 900,000 tons in 2010 (Asante-Poku &
Angelucci , 2013). The main export destinations include countries in the European Union, the
UNITED states and Japan. Cocoa in Ghana is an important item as it contributes 25% of Ghana’s
foreign exchange and is subject to the policy interventions by the state including export tax,
licensing procedures and input subsidies (Asante-Poku & Angelucci , 2013).
On the other hand, Cocoa is the leading agricultural product in Nigeria and thus
important to the economy of Nigeria. Nigeria is currently ranked fourth among the leading
producers of cocoa in the world (Olaya, 2016). In 1970, Nigeria was the second largest producer
of cocoa in the world, however, following hefty investments in the oil sector, Nigeria’s share of
world production dropped 2010, cocoa accounted for 0.3% of the GDP from agricultural
products (Olaya, 2016).
PESTEL analysis
Political
As compared to Nigeria, Ghana’s government is solely involved from production to marketing.
For instance, in Ghana, the cocoa producer’s price is not liberalized and the COCOBOD fixes
the price (Gupta, 2013). However, in Nigeria the cocoa industry is liberalized following
recommendations by world Banks as the cocoa were ineffective in their operations.
Economic

BUSINESS STRATEGY 3
The stability of domestic currency to international currencies affects farmers of cocoa in
both countries to a large extent (Sridhar, et al., 2016). For instance, weakened domestic
currencies affect the price of coffee as it reduces the expected revenues hurting the farmers as the
cost of production increases. Strong domestic currencies mean better revenues for the farmers’
exports. Recently, due to inflation in both countries and weakened domestic currencies, the
farmers reap limited profits from the cash crop.
Legal factors
A country like Ghana has only allowed COCOBOD to sell cocoa on behalf of the farmers
or to other small industries for domestic production. In contrast, Nigeria has liberalized the trade
allowing farmers to sell their cocoa through other intermediaries who sell the cocoa to exporters.
In Ghana again, child labor was employed in the past, however, following stringent rules, it is
illegal to use child labor in cocoa farms.
Social factors
The perception of the people regarding cocoa as health drink has promoted local
consumption of cocoa in both Ghana and Nigeria. It has been reported that cocoa has substantial
levels of antioxidants of flavinols associated with cardiovascular health benefits.
Technological factors
Initially the entire process of cocoa production from planting to harvesting involved
traditional approaches. However, with farm mechanization farmers have their farms tilled and
prepared to have the cocoa seedlings transplanted in large scale farming. The process of value
addition to the cocoa product for export is now embraced in Ghana and Nigeria, this leads to
better prices being fetched in the global markets.