The African Cannabis Economy

The African Cannabis Economy

In today’s blog, guest contributor Jessica Steinberg discusses South Africa’s cannabis economy with Tandadzo (Tando) Matanda, Founding Director of Zambezi Investment Fund. This is the second installment of Jessica’s in-depth series on the African cannabis landscape.


Africa’s cannabis industry and the circular economy

Cannabis legalization trends are sparking hope. A kind of hope that flows from African government officials and decision-makers eager to explore the role of cannabis in driving economic development to global investors eager to realize the potential within the African cannabis economy. The rapid legalization of cannabis can be seen as a true opportunity to drive the circular economy forward.

Cannabis has great potential in the ‘blue’ circular economy. This concept goes beyond “green” incentives that often contribute to higher costs for green solutions – compared to the hidden subsidies and environmental costs of petrochemical products.” Bruce Ryan, Founder of CannaSystems Canada

According to Mckinsey research compiled in “The Circular Economy: Moving from Theory to Practice”,

Three major principles govern the circular economy: 1. Preserve and enhance natural capital by controlling finite stocks and balancing the flow of renewable resources. 2. Optimize resource yields by circulating products, components, and materials in use at the highest possible levels at all times. 3. Make the system more effective by eliminating negative externalities.

What does this mean for African cannabis? Political and business leaders can choose to accept only the most sustainable and forward-thinking policy, research and best practices based on current trends in consumer behaviour. The 2018 Edelman Earned Brand study reveals that 64% of consumers around the world make purchases based on belief. Sustainable cannabis production can connect with a new generation of conscious consumers, and the future created by Africa’s cannabis economy can become accessible, affordable and equitable.

In order to find out more about the African perspective on cannabis and the circular economy, I spoke to Tando Matanda, a Zimbabwe-born, Cambridge educated social activist and venture capitalist. As Founding Director of investment advisory firm Zambezi Investment Fund, Tando is committed to setting the standard for sustainable production practices and high-quality medical cannabis, by utilising state of the art cultivation methods that leveraging the region’s agricultural ecosystems and ecological advantages. Members of the Zambezi Investment Fund are committed to creating shared value in the communities in which they operate.

“There is no better chance than with African cannabis to right the wrongs we have experienced and avoid the creation of yet another exploitative crop built on neo-colonial value-chains and structures.” -Tando Matanda

When our conversation began, Tando asked me to elaborate on how CannaTech plans to “seize this once in a lifetime opportunity in cannabis? How can we, together, create the first agricultural value chain that isn’t exploitative of developing countries and that truly empowers the people in these countries and regions?”

Part of this answer entails looking beyond the financial advantages of investing in a high-potential emerging market, and not dwelling excessively on the exemplary ecological conditions. We need to appreciate the potential of Africa and her countries to welcome a “blue wave” that will lead to a genuine “blue” circular economy. If we refine our approach and really connect with the needs of the people, including producers and consumers, affected by our cannabis ventures, we can leverage technology to turn the whole cannabis plant into regenerative revenue beyond just the financial numbers.

Laboratories, R&D facilities and infrastructure for logistics and traceability can not only increase product quality and buyer trust, but such resources can also minimize, or hopefully completely eliminate negative environmental impacts. Managing our impact on employees, customers and suppliers can further achieve the goals of a circular economy – and place cannabis innovation ahead of the curve when it comes to realizing the positive impact. 

Tando continued with emphasizing the facts that, “‘We need to make sure that Africa is not just producing the raw material, or churning out commodity items that get shipped abroad with little value-addition. This is what we did for tobacco, which is why Zimbabwe is the fourth largest producer in the world and gets pennies in relation to the value of that industry. The agricultural trail of tobacco – pennies received for billions earned –  cannot be adapted to the cannabis industry. That’s something Africa cannot afford to do again.” 

African cannabis economy

For Matanda, this is about equitability. She wants to see the cannabis opportunity propel a conversation about driving wealth creation and access to it. She wants much of the value creation across Africa’s cannabis economy to benefit the continent itself, its natural environment, and its people. 

She added that “we need to set a foundation for African cannabis to become an example of how a fair, equitable and transparent agricultural value chain operates. We need to leverage all the resources at our disposal, of which technology is but one, to illustrate a new standard.”

Exploring medical cannabis as a product cultivated and processed in Africa raises the question of where that supply will go. Economy-driven conversations suggest Africa, similar to Latin America, should become a supply hub. The potential for lower production costs, including those due to favourable climatic factors, is attractive to some. The role Africa will play in driving demand, however, is a lot more contentious. 

With increased accessibility driving industry growth, Matanda suggests that consideration must be placed on how to ensure that African medical cannabis has a role in the continent’s future healthcare system:  “In most nations, the dialogue around production is far ahead of that around its usage within the country. Both Zimbabwe and Lesotho have only legalized medical cannabis for export. So where does that leave the millions of patients who could benefit from accessing cannabis locally?”

Matanda continues by sharing that, “There should always be an allocated proportion for local demand, at a price that is affordable, which the government can set as needed. With a focus on value addition and R&D across the continent, we could ensure the development of strains, types and cannabinoids that reflect the needs of the local market.” 

Meanwhile, she acknowledges that export is inevitable, “We live in a globalized world and a capitalist society, so it’s not particularly fair for it to be said that producer X must sell internally to local markets when export markets will be more lucrative. We must not, however, ignore the potential of the African market. Particularly given that this century Africa will see its population triple and account for 40% of the world – from 17% currently. This opportunity goes beyond THC and CBD, beyond pain and anxiety. Cannabis can, and does, change lives for the better.  Antibacterial cannabinoids, for instance, will likely play a critical role in saving millions of lives across the continent, but we will need to have a long-term focus on value addition and research.”

While we examine the opportunities found in the potential of African cannabis, let us not forget the importance of respecting the land on which it grows. Although progress has been made with regards to the protection of human rights, and movements that have led to liberation from colonialism – let us not forget that for many of the people affected by our investments see our initiatives as corporate colonialism. We need to, together, focus on creating collaborative solutions, and as the Zambezi Fund emphasizes, utilizing globally-recognized best-practices. Some of the ways we can measure and manage our impact include utilizing the IRIS impact metrics, completing the B Impact Assessment and applying for our ventures to become certified as B Corporations, businesses that balance purpose and profit.

It’s important for the wider global cannabis community to share resources, both financial and scientific, while also valuing the lived experiences of the people and communities impacted by our initiatives. That’s why here at CannaTech, we’re launching what is intended to become a meaningful dialogue with our local stakeholders, for whom Tando Matanda is a shining beacon of hope.

Join us in Cape Town as we accelerate cannabis innovation together for a circular economy.

 

cannabis economy Tando
Cannabis economy Jess

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