The negative impact of the COVID-19 pandemic on our economy can be reversed if government, business and society work collectively to establish a sustainable cannabis industry as one of the interventions.
The economy is projected to shrink by not less than 6% in 2020. Just before the pandemic hit our shores in March, the Centre for Development and Enterprise had just published a report looking at South Africa’s growing unemployment rate and what it calls a ‘job bloodbath’. In the report, it is highlighted that the number of employed young people (aged 15-34) fell by more than 500,000 between 2008 and 2019. This was a testimony to the slow growth to non-growth pace of our economy despite the devastating effects caused by the pandemic.
South Africa sits with cannabis-based dossiers for medicine that is proven successful to cure diseases such as diabetes, cancer, sleeping disorders, eating disorders, epilepsy and pain, among many other ailments. The pharmaceutical capacity to exploit is ample and readily available in the country, given that we have manufacturing capabilities for textiles, biofuels, cosmetics, foods and beverages, and in all of these economic sectors, cannabis can be a source of raw material and ingredients.
Moreover, the country is blessed with cannabis greenbelts in Stellenbosch in the Western Cape, the Pondoland in Eastern Cape, Bergville in KwaZulu Natal and other areas in Mpumalanga and Limpopo. There are literally thousands of hectares of arable land across the rest of the country that is suitable to grow cannabis.
The cannabis industry can be subdivided into four main categories: medical (including additives or neurocriticals), recreational (or responsible adult use), seeds, and fibre. Each of these can further be subdivided into multiple categories resulting in over 25,000 everyday products that are consumed locally, across our borders throughout the African continent and all over the globe.
There are thousands of jobs that can be created on the cultivation value chain only. The seed segment of the cultivation value chain is on its own, a multi-billion-dollar business. There are tens if not hundreds of different cannabis seed strains that have been developed in many different parts of the globe. South Africa is well known globally for having developed strains such as Durban Poison amongst others. Durban Poison is very popular in Europe (Netherlands, UK and Germany) as well as in Northern America (California in the USA and in Canada).
A thousand hectares of land requires a minimum of 7,000 farm workers to plant, grow and harvest cannabis. Based on a job creation multiplier of three, this implies that a minimum of 21,000 direct and indirect jobs can be created just on cultivation only. Very quickly a target of 500,000 jobs per annum can be attainable on cultivation alone.
The raw material produced from theses farms can then go into manufacturing of medicines, textiles, auto-mobile composites, bio-fuels, food and beverages, cosmetics, animal feed and further resulting in more jobs and economic growth.
Furthermore, by developing these farms, government will also get the opportunity to test the practicality of their land reform legislation.
Cannabis is the green gold that requires implementation of a thorough and properly coordinated strategy by all stakeholders in the arena of economic development.
The South African cannabis market is estimated to be worth $7 billion by the London-based advisory group Prohibition Partners.
Government needs to move faster in providing the legislative framework. A consideration for government to actively participate in the industry by acquiring not less than 25% equity in the industry as a whole is not a far-fetched idea. A new model for making funding provisions available to the much talked about sovereign fund can be tested.
Development funding institutions such as DBSA and the IDC have the opportunity to provide seed capital funding that can be a catalyst for mobilisation.
The CSIR, together with institutions like the SABS, should be starting to develop various standards for cannabis-based products.
Economic development agencies stationed at each province of the country should be commissioning feasibility studies to ensure projects are investment-ready for take-off in a sustainable manner. Labour formations have an opportunity to test equity-based participation of workers starting at “greenfield” level.
The rich history of cannabis as a plant, coupled with the indigenous knowledge residing with our kingdoms and villagers in the Western Cape (land of the Khoisan), through the Eastern Cape and all the way to Mpumalanga, presents a tourism route opportunity that can positively impact the tourism Industry.
South Africans should brace themselves for a cannabis industry that will explode as soon as it meets with its source of ignition. Let cannabis be part of the solution to free our people from the wickedness of unemployment, inequality, poverty and diseases.
Auntony Mukhwanazi is the managing director of Ntiyiso Industrialisation Consulting.