Global interest in Southern Africa’s black gold
Publish date: 15 August 2019
Issue Number: 673
Diary: Legalbrief Forensic
Category: Trade
‘Herb is the healing of a nation, alcohol is the destruction.’ Those are the words of reggae great Bob Marley on his vice of choice which remains the world's most widely produced, trafficked and consumed drug (with an estimated 250m users). And Legalbrief reports that Southern Africa’s fertile soil has made the growing of cannabis a popular and lucrative industry. So much so, that SA and its neighbours are tabling or amending legislation to address the licensing of marijuana products and, particularly, cannabis oil which is now in high demand across the world because of its healing abilities. Consultancy firm Prohibition Partners has noted that Africa’s legal cannabis industry could generate more than $$7.1bn annually by 2023 if a number of the continent’s major markets open up and mirror the trend of legalisation seen in the US, Canada and Europe.
Lesotho became the first African country to legalise marijuana farming in 2017. Its decision to view marijuana as a source of national revenue rather than petty crime marks a shift in a region where marijuana is widely used and regularly illegally exported across borders. A report on the African Exponent site notes that the landlocked kingdom is hoping to become one of the world's largest exporters of medicinal cannabis and a British firm last month opened a processing plant which was officiated by King Letsie III. ‘We are poised to become of the lowest cost producers of medical cannabis extracts in the world,’ said local businessman Sam Matekane, who has invested in the venture. However, an amaBhungane investigation has revealed an intricate medicinal cannabis trade triangle connecting Lesotho, neighbouring SA and the UK. Two senior Lesotho Health Ministry officials, who oversee cannabis industry licensing, are linked to a company that plans to manufacture medicinal cannabis in the kingdom. London-listed Afriag Global PLC announced in an interim results statement last year that it had appointed the ministry's director of pharmaceuticals, Germina Mphoso, and its legal officer, Masello Sello, to a technical committee ‘responsible for reviewing potential investments within the medicinal cannabis sector and reporting to the company's board on a regular basis’. Afriag Global (Pty) Ltd, a Lesotho company associated with the London-listed Afriag, has been licenced to produce medicinal cannabis. Lesotho's Health Minister Nkaku Kabi and Principal Secretary for Health Lefu Manyokolo said they were unaware of the appointments.
One of the shareholders in both the London and Lesotho versions of Afriag is controversial businessman Paul de Robillard who was allegedly implicated in a 2010 tax probe in SA as a member of a tobacco smuggling ring. Also linked to the Lesotho venture is Durban-based businessman Yusuf Kajee, De Robillard's business partner and a former business associate of Jacob Zuma's eldest son, Edward Zuma. The Sunday Times in 2014 reported that De Robillard was a key figure in a SARS probe into tobacco smuggling – although he denies any role in the tobacco underworld.
The cash-strapped Zimbabwean Government last week said it would amend its laws to allow industrial production and export of cannabis in a desperate effort to boost its foreign currency earnings. Business Day reports that Information Minister Monica Mutsvangwa said the country was looking to make cannabis exports a top foreign currency earner and to compete with tobacco, which is the country’s largest export earner outside mining. ‘The crop can be a good substitute to the leading export crop tobacco, which is facing possibilities of being banned internationally due to its adverse effects on health,’ she said. A report on the IoL site notes that Zimbabwe in 2017 allowed investors to apply for licences to grow cannabis for medicinal purposes. Ivory Medical has already been granted the greenlight to grow medicinal cannabis at a prison facility in Zimbabwe under a partnership involving the Ministry of Health and funded by NSK Holdings, other international investors, and Portuguese technical farming support firm, Symtomax.
This positive assessment is echoed by Wits Business School academic Mzukisi Qobo and the Agricultural Business Chamber of SA’s Wandile Sihlobo, who believe the cannabis sector promises to be the new avenue for growth and job creation in SA ‘and the sooner a predictable policy and legislative framework is promulgated, the better for the country’s economic fortunes’. They believe the thrust of policy should be a balance between equity and a liberal investment regime; a value-chain approach; a bias towards uplifting rural communities; and provision of financial and non-financial support for new black entrepreneurs. In an analysis in Business Day, the authors point to the fact that the City of Cape Town is freeing up land for medical cannabis. This is after Parliament promulgated a legislative framework as required by the 2018 Zondo judgment in Minister of Justice & Constitutional Development and Others v Prince. However, they note that SA has been slow in taking advantage of the Zondo judgment to spawn a clear policy framework that could catalyse the economic uses of cannabis. The authors argue that cannabis could be a ‘catalyst’ for revitalising rural communities – especially in the Eastern Cape, KZN and Limpopo. ‘If SA tarries longer, it could suffer a late-comer competitive disadvantage in the future,’ they say.
