Many analysts found a reason to lambast South African President Cyril Ramaphosa 2022 State of the Nation Address. But on a high (pun intended), the address’ strong push for liberalization of the cannabis industry for economic purposes is one of the key levers for rural economic growth.
I have written in this blog about cannabis collaboratively with Professor Mzukisi Qobo.
Cannabis could, indeed, be a catalyst for revitalizing rural communities that are economically marginalized and excluded from the agriculture value chains and create opportunities for canna-tourism, especially in rural Eastern Cape, KwaZulu-Natal and Limpopo.
South Africa still can build a competitive edge in the cannabis industry even though countries such as Lesotho are the first movers. Lesotho is building its cannabis economy on the back of low-cost labour, water abundance, relatively affordable electricity and high altitude, which reduces costs associated with pest management, thereby positioning the country as a key supplier of an organic variety of cannabis.
South Africa’s competitive advantage could be built on the back of a transparent and predictable regulatory framework; an open investment regime; strong research and development support; knowledge networks that bring together university researchers, centres of excellence, and other industry players; product quality and standards authority; and low-cost licensing regime.
Yet still, there could be ample opportunities to build regional value chains of hemp products within the Southern African Customs Union and develop harmonized standards on medical research and clinical trials.
There are real opportunities for new entrepreneurs in this sector. These include cultivation and production; hydroponics; industrial hemp (fuels, chemicals, environmentally friendly plastics, biodegradable nappies, sanitary pads and textiles); compound isolation and new strand development; seed distribution; logistics and transportation; retail outlets or dispensaries and clinical trials and medical research, among others.
But what we need to be thoughtful about is a practical means of ensuring that production and value chains don’t mainly develop in areas that have always been the leading agriculture zones and urban areas where there is better access to investment.
The communities of the Mpondoland region of the Eastern Cape that the President noted in the SONA have indeed been growing this plant in the shadows of the law for many years and should benefit from its liberalization. But does the government have a clear plan of mobilizing investment and value chain development to these regions, or much will be left to market forces to determine?
I fear that these areas are likely to be left out of the commercial value chains if it’s the latter. New high-tech agriculture production methods might enable high yields in the urban region and already commercial agriculture zones. Importantly, the value chain development and specific seed varieties for a range of products also mean that the establishment costs of a cannabis industry could be higher.
The Eastern Cape, KwaZulu-Natal and Limpopo provincial departments should take the lead on this and lobby their national colleagues to refine and craft the regulation to push for investment in these provinces.
I am singling them out because they are high poverty and unemployment regions of South Africa. Therefore, if the goal for cannabis is to rejuvenate the rural economic conditions and activate job creation, then it makes sense to set policy in a way that favours them deliberately.
