Kuapa Kokoo

Ghana has been producing cocoa since the mid-19^th century, and today is the world’s second largest cocoa producing country. Until the 1990s, however, the cocoa purchasing system in Ghana was controlled by CocoBod, a state sponsored organization which served as the country’s sole purchaser of the commodity. In 1992, CocoBod liberalized the country’s markets and opened up cocoa sales to state licensed organizations. These organizations eventually sell back to CocoBod, but help make the market somewhat more competitive.

In 1993, Nana Frimpong Abebrese II, an executive board member of CocoBod charged with representing Ghana’s cocoa farmers, was concerned that liberalization left the farmers in a very vulnerable position. He was convinced that a cooperative model, where farmers would also be owners and decision makers, could help. So began Kuapa Kokoo. Soon 22 village-based societies joined the cooperative.

Twin Trading, a British nonprofit interested in fostering community-based economic opportunities in developing countries, offered Nana technical support to help launch Kuapa Kokoo. Demand met supply, and by 1996 Kuapa Kokoo became one of the first commodity cocoa companies to receive fair trade certification. It then established a Trust to manage the fair trade premiums and payments.

Two years later, in 1998, with a £400,000 (US $671,000) loan from The British Department for International Development, Twin Trading, and Kuapa Kokoo teamed up to put together a manufacturing company, The Day Chocolate Company, in the UK, the world’s second-highest chocolate consuming country. Kuapa Kokoo cooperative members owned one-third of the company—a first in the world of cocoa processing—putting the farmers higher up the value chain. The initial loan was repaid in full a few years later, and the farmer ownership share has since grown to 45% because The Body Shop donated its shares to Kuapa Kokoo. Other initial investing partners in Day Chocolate included Comic Relief London and Christian Aid.

For The Body Shop, a global company that tried to pioneer socially responsible behavior, investing in Day Chocolate was a social entrepreneurship opportunity and a way to demonstrate their support for more equitable trade with farmers.

The Day Chocolate Company was eventually renamed Divine Chocolate, and in 2007 it opened its second international operation in the United States. That was also the year that Kuapa Kokoo paid the first round of Divine Chocolate dividends to its members.

The success of Kuapa Kokoo in recent years, however, was temporarily stalled by the collapse of the Ghanaian local currency in 2006, which nearly quadrupled the company’s operating debt load and affected its capital and financial overlay. The company recovered, but posted a weaker performance in 2007. Now that the currency appears to be stabilizing, the company’s numbers are rebounding.