It’s been eight years since Lesotho legalized cannabis for export. It was the first African country to do this and immediately attracted substantial foreign investment with an estimated US$200 million ploughed into the country by Canadian multinational Canopy Growth to seed a new export industry. Since then 10 other African countries have legalized the export of medical and industrial cannabis, with Botswana’s new president announcing last year that his country would follow suite.

All Dressed Up But Nowhere to Go

On the face of it, Africa is blessed with the natural resources and economies of scale to potentially be a major player in the medical and industrial cannabis markets. It has ample sun and water, relatively cheap power, globally recognized landraces, inexpensive labour and a cannabis growing culture far older than that of the First World. There is also no shortage of international capital available for investment in African cannabis should authorities establish the right regulatory environment.

Since the African legalization wave began in 2017, billions of dollars have been invested in the sector, particularly in South Africa where the first export licenses were issued in 2020. However, the revenue generated has not yet provided anything near the returns investors may have been hoping for. Neither have exports contributed much to the coffers of those governments that have legalized.

To provide some context, the 1,6 tons of illegal cannabis confiscated last week in Mpumulanga between White River and Louw’s Creek on the eSwatini border was probably more than all the legal cannabis exported from Africa (with the exception of South Africa and Morocco) to Europe in the last year.

The problem is a structural one, borne from a colonial mindset amongst African policymakers, that cannabis remains a narcotic to the point that its medical benefits have been overlooked.

As international affairs analyst Hamish Sneyd has pointed out, the motivation for legalization in Africa has been purely economic, not people-centred. Countries like Malawi and Zimbabwe are seeking to develop cannabis as an export commodity to replace declining tobacco revenues, while in Uganda and Rwanda, the export market has been limited to an elite with close ties to government officials.

But as most African exporters have discovered, getting product into Europe is not easy, given the high quality and consistent standards required.  The export of cannabis flower without any value-add is a self-limiting game, and without a local market to develop medical cannabis brands and products, Africa will remain an exporter of raw materials to the developed world, much like the minerals sector where there is limited local beneficiation.

It's safe to say African cannabis development has reached an impasse. There has been limited revenue from exports and no cohesive approach to developing a domestic market. So where to now?

 No African country has considered implementing a domestic public health medical cannabis programme for the benefit of its citizens – or, with the exception of South Africa – looked at legalizing regulated adult-use. This is despite the fact that Africa’s cannabis consumption is growing faster than any other region in the world and that it produces perhaps up to a quarter of the world’s illegal cannabis production.

One of the complications is that Africa is facing a growing substance abuse crisis with the widespread use amongst the youth of dangerous new drug cocktails, many of which include cannabis as an ingredient. This has prompted a renewed ‘war against drugs’, which in many cases is an onslaught against traditional growers.

Until such time as African policymakers consider the overwhelming evidence that cannabis is effective in treating conditions such as arthritis, insomnia, epilepsy, anxiety, and pain relief for symptoms of terminal illness, there will be limited upside for investment in medical cannabis in Africa.

Industrial cannabis, also known as hemp, offers more opportunities for investors interested in Africa. However, regulatory hurdles and high start-up costs have not encouraged local investment while outreach programmes to include small scale farmers in the production chain are still in their infancy in Malawi, Zimbabwe, Rwanda and South Africa.  

Africa faces an additional challenge in that low-THC cannabis grown in certain environments tend to have a ‘THC spike’,  they naturally produce more THC than European regulatins allow, which puts a ceiling on export potential.

Again, as in the case of medical cannabis, the creation of local markets for hemp products would encourage investment further up the value chain than just cultivation. However, no African government has considered issuing tenders for hemp clothing, for instance, to incentivise local producers.  Hemp-based foodstuff is one of the biggest opportunities in the market, but regulatory hurdles remain because of the definition of cannabis as a drug.

In summary, Africa’s cannabis impasse, will remain in place for the foreseeable future. The only way that African countries will be able to break through to another level on the world stage will be by opening up domestic markets to cannabis products.

Despite the current impasse, there still many opportunities in the African cannabis market. The problem is that international pharmaceutical companies are far better placed to take advantage of these opportunities than African companies are.  This will remain the case until African governments look to offer their own citizens a regulated cannabis market where products can be developed and tested – and then put into the world market.

#