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Lowest-Cost Strategy Will Hurt Africa says Leading Analyst

Africa urgently needs to co-ordinate a continental framework to regulate cannabis or it is going to miss out on massive economic opportunities. This is the view of New Frontier Data’s John Kagai, speaking from Nairobi at the Cheeba Cannabis Craft Summit on 25 February 2021. 

“Africa is in danger of missing out on a seat at the value-add table which is where the future value will be.” He said a generation could miss out on the economic windfall cannabis offered unless African governments woke up to international trends.

Ten years ago, in the US, flower sales dominated the market, whereas today value-added cannabis products accounted for 50% of the market. He said Africans should take note that value-added products would bring the most benefits and an opportunity to establish African brands for the international market.

He said that Africa’s strategy for cannabis should be built around hemp and how CBD could be used to benefit Africans themselves.  He said although the US was going through massive cannabis reform, African producers should not get their hopes up that there would be any export market there soon. Europe is going to be the most likely export destination for Africans for some time to come.”

“The THC market for African cannabis is always going to be massive, but it’s mostly illegal. Hemp will in time be much bigger. It may not be as glamourous as medical or recreational cannabis, but it is the most versatile crop and regulating it is far easier than high THC products. If African governments could co-operate to set up regional biomass hubs, there could be a seismic impact economically”.

He called on African governments to create continent-wide working groups to assess how cannabis could be used for the benefit of all Africans with benefits for entrepreneurs in agriculture and health care.

Kagai said Africa was overly-obsessed with cultivation and export to the detriment of developing holistic strategies around cannabis. He said the continent’s apparent strategy of being the world’s lowest-cost producer was putting it into unnecessary competition with South America and south-east Asia: “don’t hinge your strategy on cheap labours; it’s not where the world is going”. He added that the African approach to cannabis seemed to be that it was good for everyone else but not Africans. “Why are we not focusing on developing a medical cannabis market for Africa. Healthcare is such an issue here and medical applications don’t have to be developed at a GMP level.

Africa, he said, should rather embrace technology and look at ways of adding value to raw flower. “The cannabis industry in 10 years-time is not going to be where it is today”.  He said that consumer demand was growing for more nuanced cannabis products than straight flower and that Africa should anticipate where the international market was going.

“Education is what the African cannabis industry needs right now”, said Kagai, mainly:

  • Helping stakeholders understand the value chain, particularly in support services;
  • Technical training and expertise in setting up value-added services.

 

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