Cannabis could become Africa’s forbidden green gold, as African governments open up to the cultivation and processing of the stimulant for medicinal use.
Southern Africa presently leads in the adoption of the crop, with central and eastern Africa on its coat-tails in the race to secure a slice of the $345 billion global market, according to analysts New Frontier Data.
Above the production level, a value chain is emerging with US and Canadian firms listing in their domestic bourses to raise capital despite the sluggish market performance of stocks already listed.
Zambia last week became the latest African government to approve controlled production of the crop for export. The country hopes to supplement earnings from copper which accounts for 70 per cent of its export earnings, but has recently fallen on hard times following a slump in commodity prices. This has left the country in a debt hole, and its rather ambitious target of generating $30 billion of foreign exchange from cannabis — hemp when grown for fibre — has stirred interest at home and abroad.
“Cabinet at its sitting on December 4, 2019 gave approval, in principle, to the ministerial technical committee for the cultivation, processing and exporting of cannabis for economic and medicinal purposes,” Zambia’s chief government spokesperson Dora Siliya said.
According to sources, the excitement started at the Cabinet meeting where the approval was granted with three ministries — health, agriculture and trade — competing to regulate the trade.
Investors in the industry will require at least $30,000 to secure a licence. Safeguards on the cultivation, processing and export of the crop will be overseen by the Zambia National Service, a military wing with interest in agriculture, infrastructure and property.
Growing of and consumption of cannabis for recreation is illegal in most African countries. As of 2018, medical cannabis was illegal in all but three countries — Lesotho, South Africa and Zimbabwe. In the case of recreation, only South Africa allows private cultivation and consumption.
Still Africa produces 38,000 tonnes of cannabis each year, according to the organisation Prohibition Partners, which tracks the sector.
“Despite its illegality, many agricultural workers have turned to cannabis farming as the only way to earn enough money to provide for the basic needs of their families,” said Daragh Anglim, the managing director of Prohibition Partners in the African Cannabis Report released in March.
This is more so where high unemployment and falling demand for tobacco crops as a result of health concerns have hit rural economies hard in countries like Zimbabwe and Malawi. The report adds that local start-ups and foreign companies are attracted to the sector by affordable land and low-cost labour.
The cannabis industry in Morocco, for instance, is estimated at $10 billion and employs 800,000 people, according to the Morocco Network for Industrial and Medicinal Use of Cannabis.
However, Prohibition Partners says the cultivation of cannabis for medicinal purposes is unlikely to help the continent’s ailing health sector because of poverty.
“Even if medicinal cannabis were to be legalised across the continent, access to products could be significantly thwarted without the support of NGOs, charities and other donors who provide a significant proportion of the region’s healthcare supplies,” Mr Anglim said.
In countries that have legalised cultivation of marijuana for medical use, it is grown under tight control often in greenhouses, designated acreages or specified regions. Zimbabwe restricts permits to citizens and residents to prevent use of the weed for recreation.
It is not clear to what extent this has helped because the prevalence rate for use of cannabis in Africa is 13.2 per cent, among the highest in the world.
In Lesotho, which became the first African country to legalise weed in 2017, it is grown by the Medi Kingdom through an eponymous holding company. In a promo it says it aims to be “the world’s most ethical cannabis API supplier”.
API is short for active pharmaceutical ingredient, the healing component in cannabis resin. It is also exported as cannabis flower or crude extracted oil. The country is developing 35,000 square metres for growing the crop in greenhouses.
Prohibition Partners estimates the market value of cannabis in Africa could be $7.1 billion by 2023, with only $800 million of it being for medicinal purposes. However, this projection is only based on eight markets — South Africa, Zimbabwe, Lesotho, Nigeria, Morocco, Malawi, Ghana, eSwatini and Zambia. It also assumes a fully legal and regulated cannabis industry.
The $6.3 billion left for forbidden recreation use is largely trafficked with eSwatini, Ghana, Mozambique and Nigeria the key hubs, and South Africa the major market, according to the United Nations Office on Drugs and Crime (UNODC). Countries like Ghana, Nigeria, Zambia and South Africa are targeting exports to Europe, with Italy, Netherlands and the UK as key destinations.
Campaigns for legalisation of weed as an economic activity are now increasing, with the Ghana standards body arguing that it could increase national income significantly.
In Kenya, the Africa Cannabis Association was formed in December 2018 to lobby through the National Assembly for legalisation of cannabis for “health supplements and environmental conservation”.
But not everyone is convinced. Ghana’s Mental Health Authority fears that legalising cannabis would see alarming cases of mental disorders. Its officials argue that such legalisation should come with the introduction of a mental health levy to fund the social cost of the drug.
In its push to have marijuana legalised, the eSwatini National Assembly argued in 2017 that cannabis could earn the country $1.63 billion. It also set up a committee to research on an appropriate legislation.
The growth of cannabis has increased in countries like the Democratic Republic of Congo and Tanzania, where farmers see it as a more lucrative use of land. The report shows that a 100-kilogramme sack of cannabis fetched between $96 and $128, more than two times the $54 price per sack of maize.
A research study in 2008 also showed that one acre of cannabis earned small-scale farmers in Tanzania $200 per acre, compared with between $20 and $30 per acre for maize, sugarcane and other food crops.
New Frontier Data says Zimbabwe has a cannabis consumer spending value of $200 million. If legalised, the knowledge firm says the sector could create 90,000 jobs and raise $19 million annually within five years. Zimbabwe legalised medical marijuana in April 2018, joining 60 other countries across the world.
According to a 2016 study in the US on how regulated medical cannabis markets impact on healthcare spending, states with medical cannabis saw reductions of between 11 per cent and 15 per cent in prescriptions for pain relievers, treatment for seizures and other types of medication.
The study identified Alzheimer’s, Parkinson’s disease, epilepsy, migraines, anxiety, depression, arthritis and chronic pain as areas in which medical cannabis can help reduce public health expenditure. Data from other countries shows that spending on neurological issues and chronic pain reduced by 10 per cent with medical cannabis use.