The evolution of African policy and interests in legal cannabis production continues

Last week, the Rwandan cabinet approved regulatory guidelines for the production and processing of medicinal cannabis for export. Including Rwanda there are now ten countries in the region clearly positioning themselves to benefit from this nascent (legal) industry. Among them, Eswatini, Ghana, Kenya, Lesotho, Malawi, Morocco, South Africa, Zambia, Zimbabwe and now Rwanda. Six of the ten are in the Southern African Development Community (SADC), which has already become an established site for textiles and auto industry FDI targeting northern hemisphere demand. 

Significance: There are 54 countries in Africa, 46 in Sub-Saharan Africa and ten that have now taken steps to facilitate medicinal cannabis export and adopt an at least nominal commitment to local value addition (with the exception of South Africa none have signalled a weakening in their prohibition of recreational use). As such, African interests have emerged and are emerging in the development of this global industry. But in the absence of efforts to coordinate those interests they will operate more like a race than a concert. In that context, Lesotho benefits from having been first out of the blocks (granting its first licenses for cultivation in 2017), its competitive tax regime (across corporate income tax rates, general contributions and tariff rates) and its comparatively low cost of labour. However, Rwandan labour costs are lower. Apart from South Africa, Rwanda also outperforms all the other countries on logistics. Here, Lesotho is at the other end of the scale. But in focusing a special economic zone on this industry, Lesotho has a potentially effective, potentially attractive ‘work around’ for its logistical constraints. These competitiveness factors become particularly important when it comes the strategic goals of local beneficiation and attracting FDI.

Conclusion: African interests and African ambitions with respect to the legal cannabis industry have surfaced. They face sizeable risk/return pivot points on the immediate horizon. For example, the scheduled December 2020 United Nations vote on the rescheduling of cannabis and cannabis-related substances, and the potential for protectionist policies in consumer markets (already adopted in Canada, and already producing a number of divestments). Thus far, however Africa’s aspiring producer states are in competition for investment and operate separately on the international stage. Neither is there coordination with potentially sympathetic policy advocates from the Diaspora that have engaged with decision makers on issues of equity, representation and generational justice in the intended export markets.

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