After Lesotho and Zimbabwe, among others, Rwanda is embarking on the cultivation of therapeutic cannabis.
Lesotho was the first to take the plunge, authorizing the cultivation of cannabis for therapeutic use in 2017. In the process, other African countries have engaged, like Zimbabwe, Uganda or Zambia. And now Rwanda.
An interest that owes nothing to chance. More and more countries in the world allow the therapeutic use of cannabis (CBD – cannabidiol – extract of the plant is non-psychoactive), and this very promising market attracts a lot of private capital.
Rwanda is also dreaming of taking its share of a cake valued at tens of billions of dollars worldwide. But for all that, the country is not opening the door to consumption. Health Minister Daniel Ngamije said the crops will be fully exported and sold to the pharmaceutical industry. “Cannabis production will be controlled by strict measures in dedicated areas and farmers will need to have special permission”, did he declare.
Initially, it is thanks to these authorizations, in fact production licenses, that countries intend to make money. In Zimbabwe, the authorities were asking for $ 50,000 for a production right valid for one year. An amount that did not put off investors. According to the Minister of Agriculture, 200 were interested and only 37 licenses were granted.
Lots of money for a sector with huge announced potential. According to a study, the legal cannabis market in the United States is estimated at 12 billion dollars. The leader of the therapeutic cannabis sector, the Canadian Canopy Growth, was valued on the stock market in 2018 at nearly $ 10 billion. As more countries allow the use of CBD, the industry expects demand to surge. The global market could reach $ 56 billion in 2026.
Unlike CBD, the numbers make you dizzy. And the often very poor African countries see many opportunities there. Tax resources, as we have said, but also an axis of economic development in countries where agriculture is still essential.
In Lesotho, a country of two million inhabitants, the public authorities already announced 3 000 jobs in ten companies in 2019. Medigrow, the largest producer, has invested 17 million euros to install 5,000 m² of greenhouses in the mountains, and plans twenty times more in the years to come.
But the idyllic picture has its limits. The entry ticket to be able to produce is far too expensive for small farmers, who cannot financially align themselves and embark on the adventure. This represents a double danger. On the one hand, great frustration for those who feel left out of Eldorado. Especially since hemp grows very easily and without fertilizer. On the other hand, the risk is also to see the development of the illegal production of non-therapeutic cannabis.
Lastly and above all, is the future of this culture sustainable when countries all over the world enter into competition? Fatally, an increase in production will lead to a fall in the prices of the raw material. Consequently, the price of licenses risks being considered too high by investors.
Other signs can also cause concern. In particular that the market would only be a financial bubble. Thus, Canopy Growth, the leader, is reducing the sails. The Canadian company will cut about 85 positions. In Africa, “Canopy Growth has entered into an agreement which aims to transfer ownership of all of its African operations to a local company with the objective of ceasing operations in South Africa and Lesotho”, announcement a company press release. In Canada, Latin America and the United States, the company is closing cultivation units due to the abundance of raw material.
As if the goose that laid the golden eggs had already uttered her swan song !