South Africa sitting on a ‘gold mine’ for jobs and economic growth

 ·15 Jan 2025

While international coverage of the cannabis industry may be cooling off, there is still plenty of room for growth and opportunity in South Africa.

If long-promised regulatory adjustments come to fruition, and the country learns from international missteps, South Africa can create a thriving industry that supports rural communities, drives investment, and positions the country as a leader in cannabis production.

These are the views presented by Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and member of President Cyril Ramaphosa’s Presidential Economic Advisory Council.

Sihlobo outlined that there has been a shift in global perceptions of the cannabis industry, noting that recent international coverage lacks the enthusiasm it once had.

A January 2025 article in The Economist, titled “America’s marijuana industry is wilting,” reflects this decline.

He noted that the initial surge in investment was fueled by political promises of reform, but once in office, these changes have often failed to materialise, leaving the US cannabis industry grappling with unclear regulations and ongoing competition from the illicit trade.

South African context

For many in South Africa working on the Cannabis and Hemp Master Plans, Sihlobo said that these global developments are worth monitoring to not repeat their mistakes.

South Africa has made significant strides in cannabis legislation, legalising medicinal marijuana in 2017, decriminalising private use in 2018, and publishing a National Cannabis Master Plan in 2021.

In May 2024, President Ramaphosa signed the Cannabis for Private Purposes Act, establishing a legal framework for private use and cultivation, positioning South Africa as a trailblazer on the continent in this regard.

However, the Act still currently imposes significant restrictions on the legal cultivation and commercial trade of cannabis.

As a result, many in the industry have been largely hindered by limited funding, complicated and expensive regulatory processes, and inconsistent regulatory reforms.

Sihlobo highlights that South Africa has “been slow in providing a new and clear regulatory path for this plant, and the licensing price has been somewhat prohibitive for some people.”

The Department of Trade, Industry and Competition (DTIC) officially become the coordinating entity of the country’s ambitious Cannabis Masterplan at the end of 2024.

Like the plans that have been in place since 2018, the master plan seeks to establish a comprehensive framework for the different commercial elements of the industry.

In its presentation to Parliament, the DTIC emphasised that numerous legal, regulatory, and licensing matters need to be resolved before the commercialisation of the cannabis industry in South Africa can be realised.

As a result, legislation to create a more enabling commercial environment for cannabis is expected to be tabled in Parliament sometime in 2025.

The mixed messaging and bureaucratic delays has meant that many businesses have jumped the gun.

“What is often puzzling for me in South Africa is the proliferation of cannabis shops and various products that retailers place on shelves – do people have clear regulations or licenses to put up all these stores?” questioned Sihlobo.

While broadly supportive of the cannabis industry, Sihlobo emphasised that the regulations must be duly followed.

“When we finally progress with regulations, I still believe that cannabis could be a catalyst for revitalising rural communities that are economically marginalised and excluded from the agriculture value chains,” said Sihlobo.

Wandile Sihlobo

Additionally, he said that it could also create opportunities for ‘cannatourism’, 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,” said Sihlobo.

Lesotho is building its cannabis economy on the back of low-cost labour, water abundance, relatively affordable electricity and high altitude; positioning the country as a key supplier of an organic variety of cannabis.

Sihlobo said that South Africa’s competitive advantage could and must 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.

With that said, the Agbiz Chief Economist emphasises that the country needs to consider practical ways to ensure that production and value chains do not mainly develop in areas that have always been the leading agricultural zones and urban areas with better access to investment.

“The communities of the Mpondoland region of the Eastern Cape have been growing this plant in the shadows of the law for many years and should benefit from its liberalisation.”

“But, does the government have a clear plan for mobilising investment and value chain development in these regions?” asked Sihlobo.

Eastern Cape Premier Oscar Mabuyane has long been an avid supporter of cannabis production as a stimulant for industrial and economic growth in the province, however laments the slow pace of progress.

“We are concerned by the slow progress of the country’s policymakers in expediting the full implementation… of an enabling cannabis regulation framework that encompasses the commercial exploitation of whole plant, all purposes legislation,” Mabuyane previously said.

Sihlobo suggested that Eastern Cape, KwaZulu-Natal, and Limpopo provincial agricultural departments lead and lobby their national colleagues to refine and craft the regulation to encourage investment in these provinces.

By learning from global setbacks and refining its regulatory framework, the Agbiz Chief Economist believes that South Africa can create a thriving industry that supports rural communities, drives investment, and positions the country as a leader in cannabis production.


Read: The one thing South Africa really has to get right in 2025

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