Africa’s legal cannabis market could be worth over $US 7.1 billion annually by 2023
Africa’s legal cannabis industry could be worth more than $US 7.1 billion annually by 2023 if legislation is introduced in a number of the continent’s major markets, according to research gathered for The African Cannabis Report™, released today.
The first detailed report on the legal cannabis industry in Africa finds that the continent could reap significant rewards through the legalisation of cannabis. The report includes detailed market value forecasts, regulatory timeline analysis, consumption data and healthcare analyses for 9 key markets. A complex and challenging region, the African market is newly emerging, and despite a conservative regulatory approach to cannabis, the industry shows signs of promise.
Cultivating an industry
Although widely grown across the continent (indeed Africa is estimated to produce at least 38,000 tonnes of cannabis per year) cannabis is illegal in most African countries. High unemployment rates and a global decline in demand for tobacco crops has hit these economies hard. However, the region has a wealth of experience in cannabis cultivation; despite its illegality, many agricultural workers have turned to cannabis farming as the only way to earn enough money to provide for the basic needs of their families.
International demand offers a strong opportunity to unlock the potential value of Africa’s legally produced cannabis, which could be worth up to $7.1 billion annually by 2023 – the bulk of which will come from the production sector.
With affordable land, low-cost labour and an experienced agricultural workforce, Africa offers enormous opportunity to local start-ups and foreign companies looking to expand. However, an inadequate healthcare system means that even if medicinal cannabis were to be legalised across the continent, access to products would be limited.
Uncertainty over access
Companies and entrepreneurs seeking to invest in the cannabis industry in Africa face other structural hurdles. The region has an extremely high rate of HIV/AIDS (more than one-fifth of all adults are estimated to suffer from the immune deficiency condition). Although there is evidence to suggest medical cannabis can support in the treatment of the virus, cannabis may not present itself as a priority treatment.
In addition, a heavy reliance on donor-supported healthcare funding will likely limit patient access to cannabis in the short-term. For instance, UNICEF reports that Malawi’s health sector is 80% funded by foreign donors, which may choose to prioritise vaccinations and other preventative treatments before shifting their attention to medical cannabis supplies.
Should legislation change, NGOs, charities and other donors who provide a significant proportion of the region’s healthcare supplies will be an essential partner in providing access to legal medicinal cannabis products due to the inaccessibility of healthcare services.
High consumption rates
Supply will remain an issue in the short-term but demand in the region is sky-rocketing. Annual prevalence rates of cannabis use in Africa (13.2%) cement the region as having one of the highest consumption rates around the world. In fact, Africa is home to five of the world’s top 30 countries for cannabis prevalence among adult populations with Nigeria (no.3), Zambia (no.10), Madagascar (no.14), Egypt (no.25) and Sierra Leone (no.30) all making the leaderboard.
With over 76 million black market cannabis users, Africa has a huge potential consumer base, but prices are expected to remain low throughout the region.
Prioritising local needs
Cannabis remains an attractive proposition for international companies seeking to expand their footprint in a region where land and labour is low-cost. Because of the poor economic
conditions faced by many African countries, any legalisation of cannabis in the region will have a duty to safeguard local interests. In this respect, Zimbabwe could become a regional blueprint as licence applications can only come from those who can prove citizenship or residency.
To learn more about the newly emerging African cannabis industry, and examine the opportunities and challenges presented by the conservative legislative climate and complex healthcare systems, download The African Cannabis Report™, released today.