Africa’s Promising Untapped Potential for Hemp Production

By Trevor Yahn-Grode, Data Analyst, New Frontier Data

African nations are increasingly embracing cannabis production. To varying degrees since 2017, seven African countries (i.e., Lesotho, South Africa, Eswatini, Rwanda, Zimbabwe, Uganda, and Malawi) have legalized cannabis. The primary motivation among each of those governments is to tap the plant’s potential for economic development. As example, in 2019, New Frontier Data analysis estimated that within five years, a legal cannabis market in Zimbabwe could employ 75,000 people and generate more than $19 billion USD in tax revenue.

For now, high-THC cannabis usage is quite prevalent on the continent – six countries each contain domestic cannabis markets exceeding $1 billion USD apiece – and now lawmakers are gearing up to cash in on cannabis’ tax revenue potential.

While the health of legal markets varies significantly by country, overall they have drawn large amounts of foreign investment from United States and Canadian companies. In addition to the economic activity related to cannabinoid consumption, a growing cannabis industry– both high-THC cannabis and CBD hemp – is helping to drive innovation in industrial products. Industrial cannabis applications are natural byproducts of increased cannabis production since the existence of large amounts of otherwise wasted materials (i.e., stalks and seeds) creates an incentive to monetize them. Thus, increasing consumer demand for CBD or high-THC cannabis on the continent can simultaneously drive market adoption of industrial hemp products.

A Green Industrial Revolution

Africa is home to some of the world’s fastest-growing economies. Throughout the continent, countries are quickly industrializing and growing, with Africa set to experience the largest population increase of any continent over the next 30 years (e.g., an additional 1.9 billion people are projected by 2050[1]).

While the rapid industrialization is being welcomed by African governments for the attendant economic stimulus, it also draws concerns from environmental activists who point out that should today’s developing countries undergo industrialization in the same manner that such unfolded in the West and Asia, it will prove catastrophic in the scope of global carbon emissions. Therefore, significant interests reside in the development of carbon-neutral replacements for traditional materials in industries such as construction, textile production, and plastics manufacturing. It is in those hemp products that hopes seek niches to decarbonize economies (or better yet avoid carbonizing altogether) without destroying them.

Hemp-based construction materials are especially attractive both for African countries experiencing rapid population growth, and to accommodate the building boom required to house, employ, and entertain expanding populations. Construction projects on the continent exceeded $500 billion in 2019[2] and are accordingly expected to grow as countries continue to develop economically.

Regional Hotspots Developing

Southern Africa is becoming a hotspot of cannabis production. Since Lesotho initiated cannabis reform, countries in its region were the first to take notice and to consider their own possibilities for reforms. Unsurprisingly, trends spread geographically among regions typically sharing similar cultural attitudes toward cannabis, economy, trade, and/or climate. In the U.S., the first states to legalize recreational cannabis were concentrated in the West (e.g., Colorado, Washington, Oregon, and California) before legalization spread to other areas of the country. New Frontier Data expects the same dynamic in Africa.

Despite passage of legalization measures, African cannabis producers face many obstacles to developing functioning markets. Lack of infrastructure, outdated farming techniques, and corruption are all complicating factors. However, due to the large market potential of cannabinoid products, and the environmentally friendly industrial products to be produced from the byproducts of cannabinoid production, hemp can significantly contribute to both the economic and industrial development of African countries.

[1] https://population.un.org/wpp/Download/Standard/Population/

[2] https://www.statista.com/statistics/1086023/african-construction-projects-value/#:~:text=Value%20of%20African%20of%20construction%20projects%202014%2D2018&text=In%202018%2C%20there%20was%20482,dollars%20in%20the%20previous%20year.