It is the high time for rural growth amid cannabis liberalisation push

Many analysts found a reason to lambast President Cyril Ramaphosa’s State of the Nation Address (Sona).

But on a high (pun intended), the address’ strong push for liberalisation of the cannabis industry for economic purposes is one of the key levers for rural economic growth.

Cannabis could, indeed, be a catalyst for revitalising rural communities that are economically marginalised and excluded from the agriculture value chains and create opportunities for canna-tourism – especially in rural Eastern Cape, KwaZuluNatal and Limpopo.

South Africa still can build a competitive edge in the cannabis industry, even though countries such as Lesotho are the first movers.

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Lesotho is building its cannabis economy on the back of low-cost labour, water abundance, relatively affordable electricity and high altitude, which reduces costs associated with pest management, thereby positioning the country as a key supplier of an organic variety of cannabis.

South Africa’s competitive advantage could 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 lowcost licensing regime.

Yet still, there could be ample opportunities to build regional value chains of hemp products within the Southern African Customs Union and develop harmonised standards on medical research and clinical trials.

There are real opportunities for new entrepreneurs in this sector.

These include cultivation and production; hydroponics; industrial hemp (fuels, chemicals, environmentally friendly plastics, biodegradable nappies, sanitary pads and textiles); compound isolation and new strands of development; seed distribution; logistics and transportation; retail outlets or dispensaries; and clinical trials and medical research, among others.

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But what we need to be thoughtful about is a practical means of ensuring production and value chains don’t mainly develop in areas that have always been the leading agriculture zones and urban areas where there is better access to investment.

The communities of the Mpondoland region of the Eastern Cape that Ramaphosa noted in his Sona have indeed 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 of mobilising investment and value chain development to these regions, or much will be left to market forces to determine?

I fear that these areas are likely to be left out of the commercial value chains if it’s the latter.

New high-tech agriculture production methods might enable high yields in the urban region and already commercial agriculture zones.

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Importantly, the value chain development and specific seed varieties for a range of products also mean the establishment costs of a cannabis industry could be higher.

The Eastern Cape, KwaZulu-Natal and Limpopo provincial departments should take the lead on this and lobby their national colleagues to refine and craft the regulations to push for investment in these provinces.

I am singling them out because they are high poverty and unemployment regions of South Africa.

Therefore, if the goal for cannabis is to rejuvenate the rural economic conditions and activate job creation, then it makes sense to set policy in a way that favours them deliberately.

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Wandile Sihlobo is the chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and author of Finding Common Ground: Land, Equity, and Agriculture.