Africa’s cannabis revolution has generated renewed hope and billion-dollar future market valuations, reports CBD-Intel
Africa is in a cannabis race. From Lesotho to Morocco the cannabis revolution has renewed economic hopes. Legalised cannabis had a dismal future on the continent even less than a decade ago, but the past five years have witnessed a massive policy shift on cannabis. Many ailing African economies are turning to hemp and cannabis cultivation in a bid to turn around their economic fortunes, in particular those that were heavily reliant on tobacco production – such as Malawi and Zimbabwe – and have been heavily affected by global anti-smoking efforts.
Multiple reports suggest a Pan-African hemp/cannabis economy could be worth billions of dollars over the coming years, albeit in an ideal, optimistic scenario. Grand View Research puts a figure of $70.6bn by 2028, with a projected market expansion CAGR of 26.7% from 2021 to 2028. Prohibition Partners suggests the legal cannabis sector, covering regulated markets in eSwatini, Ghana, Lesotho, Malawi, Morocco, Nigeria, South Africa, Zambia and Zimbabwe, will be worth $7.1bn by 2023. A 2019 report from New Frontier Data suggested African hemp and cannabis together made a $37.3bn contribution to the combined global market – representing a 11% share of the market’s overall value.
However, growth assumptions such as these assume an implementation of regulatory regimes will happen relatively smoothly. Reality has not matched that so far. For instance, in Zambia, exorbitant cultivation licences have been blamed for holding back the country’s efforts to start cultivation and production of cannabinoids.
Daniel Tonga, a Zambian economist told CBD-Intel that while the law in Zambia makes cannabis cultivation legal, the country’s expensive cannabis cultivation licences are sending a negative message, where local players perceive the industry as being promoted for rich multinational companies. “Small scale farmers have for long been complaining of the exorbitant licence fees, however, the authorities have done nothing to consider the farmers’ concerns,” said Tonga.
In Malawi it could perhaps be argued that the opposite has occurred. The country has awarded cannabis cultivation licences to 36 companies but only four have started cultivation. This, according to Ketulo Salipira director general at Malawi’s Cannabis Regulatory Authority (CRA), is because of the expensive nature of cannabis cultivation. “Cannabis cultivation requires huge investment. We have awarded around 36 cultivation licences but mostly the farmers have failed to start cultivation because they don’t have enough resources to start growing,” Salipira said.
In Zimbabwe, it may be a different issue entirely. The country has lofty ambitions of becoming a major regional player in the cannabinoid production industry. It registered over 57 companies to grow medicinal cannabis and over 20 companies to grow hemp, following a change in state ownership stipulations. However only ten of the 57 licensed companies (seven cannabis and three hemp) have started cannabis cultivation so far.
Zorodzai Maroveke, vice-president of the Cannabis Industries Association of Zimbabwe (CIAZ) says this is because most companies that were licensed to grow the plant are not active.
“The industry is failing to grow because most of the licensed companies are dormant, and most of the licensed companies are registered in Zimbabwe, with most of them having majority foreign shareholding and minority local shareholding,” Maroveke told CBD-Intel in an October interview.
In South Africa, generally considered to be the biggest potential African cannabinoid market at this time both in terms of potential production and in terms of potential domestic consumption, the legal status of cannabis remains a legislative work in progress. Despite the 2018 South Africa Constitutional Court’s revolutionary ruling that permitted cannabis smoking in the home on privacy grounds, the country is yet to sign the Cannabis for Private Purpose Bill into law.
The government has already published guidelines for medical cannabis and has since drafted a master plan for the industrialisation and sale of cannabis, paving the way for legal licences. There has, however, been criticism from some industry players and cannabis advocates on the slow pace the country is taking to actualise the industry.
There may be more success in Morocco, which has also recently embraced legal medical cannabis cultivation. The new law only allows medicinal, cosmeceutical and industrial use of the plant and criminalises its recreational use, which has drawn some criticism in a country with heavy illicit production already in existence.
The story is similar in Eswatini, a country with a popular recreational variety, Swazi Gold, commonly being produced already. It too will only permit the production and processing of medical cannabis and industrial hemp, with some quarters doubting the cost benefits of the plant to the country.
In a bid to strengthen its foreign exchange earnings, Rwanda’s legislature recently legalised the use of medical cannabis. The Rwandan government anticipates cannabis cultivation will generate substantial employment opportunities and export revenue to the country.
These successes, small though they are, represent positive steps in the development of the cannabinoid sector across Africa. Other countries have faced greater opposition.
Ghana joined the list of African countries that have legalised cannabis cultivation in 2020. However, the state-led sector has been met with a vociferous backlash from government officials, mental health experts and the Christian Council of Ghana.
Similarly in Uganda, a country that is reported to have more than 2.6m cannabis users, anti-cannabis advocates including the country’s first lady Janet Museveni are reported to have strongly opposed attempts to legalise cannabis cultivation, which they described as ‘satanic’ and a threat to the country’s younger generation.
Despite the opposition, growing interest from industry players including Uganda’s richest businessman, Sudhir Ruparelia, resulted into the country legalising hemp cultivation. In 2019 Uganda spent more than US$264,000 to secure high-quality cannabis seeds. Following approval from the European Union, Uganda, which has one of the stringent laws curbing the use of cannabis, managed to secure buyers from Germany and Canada in 2019.
Perhaps the biggest success thus far remains Lesotho, the first African country to legalise cannabis cultivation. It has started to become a major producer of legally grown medical cannabis in Africa. In 2018 alone, three Canadian cannabis firms – Supreme Cannabis, Canopy Growth and Aphria – invested around $31.5m in Lesotho. MG Health – a local company 10% owned by Supreme – was the first African based cannabis firm to get EU Good Manufacturing Practices (GMP) certification and intends to increase its workforce from around 350 to somewhere nearer 3,000 as it strives for full production capacity.
What This Means: The economic logic of legalising and regulating hemp and cannabinoid production looks attractive to many African governments that like the idea of potentially vast export revenues that could compensate for falling revenues and employment from tobacco production. However, as with other parts of the world, there is strong opposition to cannabinoids that variously cites health, moral and/or religious objections. Medical cannabis production is likely to be an acceptable compromise in these cases.
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