Why isn’t it easy to be green?
Legal cannabis could make SA a fortune
● The recent report by the statistician-general on the unemployment rate shows SA is far from reaching a turning point where it will create jobs instead of shedding them year after year.
The country is fast approaching an unemployment rate of 30%. This implies that there will soon be more than 12-million working-age South Africans wandering the streets looking for jobs.
In his recent medium-term budget policy statement, the minister of finance painted a bleak picture of SA’s finances. He said SA must make adjustments to its finances to reduce the chances of having ratings agency Moody’s further downgrade SA as an investment destination.
Indeed, a downgrade to junk status would exacerbate the already high interest payments SA is making on its huge debt, estimated at more than 60% of its GDP.
But, other than talk of restructuring the country’s finances to attract investment, very little, if anything, was said about how SA will change its economic fortunes.
There is a need to change the economy from one of high indebtedness, slow growth and endless job-shedding to an economy with new and vibrant industries that promote growth and inclusivity.
During the investment conference held in Sandton on November 5, more than R350bn worth of new investments was said to have been pledged.
The said investments are expected to generate more than 420,000 jobs over the next five years. Sadly, historical data tells us that SA is likely to shed more jobs during the same period, which will bring to zero the net effect of these investments on job numbers.
During his opening address at the conference, President Cyril Ramaphosa made reference to the need for rapid industrialisation.
This is a welcome statement from the president as it at least begins to open up the correct debate about solutions to the country’s economic problems. Indeed, rapid industrialisation is what SA needs to grow and diversify the economy.
However, this is easier said than done. To achieve real industrialisation there has to be a deliberate effort to develop a coherent and substantiated strategy on how virgin and groundbreaking industries with greater potential to promote inclusivity will be created.
Directing investments at renewal projects and the incremental growth of existing industries and factories is not sufficient.
We need something that will give the economy an exponential, rather than a linear low-gradient growth trajectory.
New industries are possible. One such industry with great potential to create jobs in the labourintensive agriculture and manufacturing sectors is the cannabis industry.
Africa, and SA in particular, offer the best climatic conditions to competitively grow and process dagga into a variety of products.
As it stands, SA is said to be supplying 27% of the world dagga demand, albeit illegally.
A cannabis industry would cut across all sectors of the economy and provide an opportunity to replace a number of environmentally unfriendly products dominating our daily consumption.
Cannabis can serve as a raw material in many sectors, such as medicine (pharmaceutical and nutraceuticals), energy (biofuels), textile (fibre), aviation and automotive industries (composites), foods and beverages, cosmetics, agriculture (rotation crop), water and sanitation
(purification), biodegradables for packaging and more.
The Agricultural Research Council has done intensive research to determine South African arable land spaces where cannabis farms can be established.
It is disheartening to learn that there is currently no official programme within the government on how the opportunities arising from cannabis will be harnessed to create a sunrise industry that becomes an engine of growth and redistribution.
The government should be coming to the party by way of fast-tracking the legislation required to open up this industry.
It must make sure that the participation of the previously disenfranchised and poor communities in the industry is protected and promoted.
Only one of the five medical cannabis licences issued by the department of health is held by a black-owned company, and, even then, it enjoys no special assistance from the state to commercialise the licence. Instead, it has to compete with the others from its position of weakness, thanks to economic discrimination.
The cannabis industry is but one of the examples of myriad opportunities to industrialise and diversify economic participation.
The government should support efforts by black private sector players seeking to perform feasibility studies and the attendant process to develop new economic value chains, instead of leaving them to their own devices.
Established corporations are, by design, not interested in investing in new and disruptive economic value chains, even if such value chains could place SA in a position to compete globally in certain nontraditional sectors.
The time has come for economic planners in the government to reach out and extend their conversations about changing the structure and function of the economy for the greater good of the country.
Such conversations cannot be limited to international investors and ratings agencies if we are genuine about our commitment to growth and inclusivity.
Mukhwanazi is MD of Ntiyiso Industrialisation Consulting, a subsidiary of the Ntiyiso Consulting Group