Cocoa Farmers Pension Scheme: A Major Boost to Sustainable Cocoa Production in Ghana
COCOBOD
Ghana is set to roll out the ambitious Cocoa Farmers Pension Scheme which has been on the radar since 1984.
Section 26 of the Ghana Cocoa Board (COCOBOD) Law 1984 (PNDC Law 81) mandates COCOBOD to establish a contributory insurance scheme for the country’s hardworking cocoa farmers within the framework of the Social Security Scheme ostensibly to ensure that the cocoa farmer could also enjoy a well-deserved pension upon retirement.
Globally, it is nearly impossible for one to have a conversation about Ghana without mentioning the country’s vibrant cocoa sector.
For decades, cocoa has remained one of Ghana’s main exports and has been central to the country’s debates on capital financing, credit guarantees, development, reforms, and poverty alleviation strategies dating to the colonial era.
Undoubtedly, cocoa has put Ghana on the world map more than any other export commodity, making the country the second leading producer of cocoa and the producer of premium quality cocoa globally.
For this role played by cocoa, it is a well-known fact that Ghana’s burgeoning economy is anchored on cocoa production. In fact, cocoa is the life blood of Ghana’s economy and it is undeniable that Ghana’s economy cannot survive without the crop.
In 2021 alone, cocoa contributed about GHS3. 1 billion ($533 Million) to Ghana’s Gross Domestic Product (GDP), accounting for over 10% of the country’s GDP.
Ghana’s cocoa subsector alone employs over one million farmers and nearly 4.5 million others in the cocoa value chain. This amply illustrates the importance of cocoa to Ghana and likewise cocoa farmers.
Against this background, it stands to reason that the future of the cultivators of the crop should be prioritized, hence the idea of a pension scheme for cocoa farmers. A pension scheme for cocoa farmers is therefore an essential consideration.
Unfortunately, 40 years after the promulgation of the COCOBOD Law 1984 (PNDC Law 81), various governments have come and gone without giving law the much-needed oxygen to become a reality.
The roll out this year, therefore, records in history, as a bold commitment aimed at providing for the pension of cocoa farmers across the country. Although its implementation stagnated for 40 years, the decision to roll out the scheme supports the saying, ‘you don’t kill the hen that lays the golden egg’, you rather protect and take good care of it’.
On Tuesday, 1st December 2020, His Excellency, President Nana Addo Dankwa Akufo-Addo took a bold step and launched a pension scheme exclusively for Ghana’s cocoa farmers at a colourful ceremony in Kumasi.
In his keynote address, the President said the establishment of the Cocoa Farmers Pension Scheme was not just in fulfilment of a legal mandate but also falls in line with plans by his government to improve upon the living standards of cocoa farmers in Ghana.
The President further stated that, the Cocoa Farmers Pension Scheme is singularly historic in its provision of a safety net for cocoa farmers in Ghana as it will enable them to make voluntary contributions towards their retirement while COCOBOD makes a supplementary contribution on behalf of the farmers as well.
This, according to him, “guarantees a decent retirement income for our gallant cocoa farmers for life and ensures that they can maintain decent standards of living after retirement.” He therefore entreated all cocoa farmers to sign on to the scheme when the time comes to enjoy the full set of benefits it offers.
Since the historic launching of the cocoa farmers pension scheme by President Akufo-Addo at Kumasi, COCOBOD has been working in tandem with relevant stakeholders like the National Pensions Regulatory Authority (NPRA) as well as cocoa farmer unions across the country to ensure that over 1.5 million cocoa farmers in the country contribute to a pension scheme which will guarantee retirement benefits.
Sequel to this, COCOBOD in 2019 began the development of the Cocoa Management System (CMS), a seamless system that captures the bio-data of all cocoa farmers, their household information, and the shapefiles of individual cultivated cocoa areas.
The implementation of the CMS functions to revolutionize cocoa farming in Ghana and make it attractive to both the financial sector and input suppliers. CMS also aims to promote financial inclusion, the emergence of crop insurance, and the design and implementation of an input credit system in Ghana’s cocoa sector.
It is therefore the successful implementation of the CMS that has made it possible for the cocoa farmers pension scheme to become a reality. Perhaps, one is tempted to conclude that the lack of a credible database on cocoa farmers in Ghana times past could be the reason for the delay in the implementation of this social protection policy for our gallant farmers.
COCOBOD’s nationwide enrolment of cocoa farmers onto the Cocoa Farmers Pension Scheme began in the 2022/2023 crop season to test the robustness of the CMS and its complimentary role in the roll out exercise.
Currently, deduction of farmers’ contribution to the scheme is being piloted in New Edubiase, Wassa Akropong and Tarkwa districts under the strict instructions and directives of COCOBOD, ahead of a nationwide upscalling to the other districts in the 2024/2025 crop year. The modalities of the scheme are set out below:
Modalities of the Cocoa Farmers Pension Scheme
The Cocoa Farmers Pension Scheme is a compulsory scheme which covers all registered cocoa farmers in Ghana.
Contributions
COCOBOD’s contribution to the scheme is at least 1% whereas 5% remains the farmers’ contribution. As part of the fund management, 25% of total contributions would be credited to the personal savings account and the remaining 75% to the retirement account of registered cocoa farmers.
Farmers’ contributions include the mandatory 5% as well as voluntary contributions where the farmer has the option of selecting from 2.5%, 5%, 7.5% or 10% of cocoa sales in addition to the mandatory 5% contribution.
Benefits
1. Retirement Benefits
On retirement, cocoa farmers would receive a lump sum equal to the balance in their personal savings account. They would also receive monthly pensions payments from their retirement accounts which is guaranteed for 15 years
2. Survivor Benefits
The remaining benefits of deceased cocoa farmers would be paid to his/her nominated beneficiaries.
3. Limited Withdrawal Benefits
A farmer may be allowed to withdraw up to 25% of their Personal Savings Account Balance after the initial 5 years. They may also withdraw 20% of Personal Savings Account balance every 2 years after the first withdrawal.
4. Insured Benefits
The scheme provides for a term life insurance cover purchased from a life insurance company.
Governance
The scheme is governed by an 11-member Board of Trustees appointed by the Government of Ghana in consultation with COCOBOD.
The 11-member Board of Trustees includes 4 Chief Farmers. The scheme is duly registered with the NPRA. All the trustees are licensed by NPRA. The scheme would be administered by service providers who are independent of COCOBOD.
It is imperative to note that there is no age requirement to participate in the scheme. The scheme is compulsory for all registered cocoa farmers contributions would be by deduction from sales at the point of sale of the cocoa.
If a member joins before age 50, he/she qualifies for retirement benefit at age 55 that is if a member joins after age 50 then the member would qualify for retirement after contributing for 5 years.
Conclusion
Apart from the existential threat of climate change to cocoa production coupled with the threat of illegal mining (Galamsey) as well as pests and diseases, one major challenge of Ghana’s cocoa sector is the threat of ageing cocoa farmers.
There are a lot of abandoned cocoa farms due to the fact that their owners are aged and cannot undertake the arduous task of farm maintenance. The pension holds the potential to attract the youth to venture into cocoa farming.
In this way, the youth will become the next generation of cocoa farmers under the firm belief that decent retirement and pension benefits await them when they retire from active farming.
This assurance will also address the phenomenon where the youth in rural Ghana migrate to urban centres in search of jobs which ordinarily do not exist.
While it is important to applaud His Excellency the President, Nana Addo Dankwa Akufo-Addo and the COCOBOD under the leadership of Chief Executive of COCOBOD, Hon. Joseph Boahen Aidoo for working tirelessly to ensure that the Cocoa Farmers Pension Scheme becomes a reality, cocoa farmers across the country deserve a pat on their shoulders for the support, cooperation and patience.
Also worth commending are the actors within the cocoa value chain who have played various roles in this milestone. Cocoa farmers are eternally grateful for this important milestone in the chequered history of Ghana’s cocoa industry.
God bless our cocoa farmers. Long live the cocoa sector.
May God bless our homeland Ghana and make her great and strong.
Written by:
Felix Kwame Quainoo (With support from the CFPS Implementation Task Force)
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