The government of Zimbabwe has created one of the most interesting and potentially hottest cannabis financial “instruments” on the planet. Namely a “Green Fund” that has the backing of critical government agencies—and further specifically that the government hopes will be used to fund cannabis projects.

What this makes this even more remarkable is that the fund, offered by Zida, a óne-stop government shop for both local and foreign investors, is that this is a complete reversal of policy by an agency that is little over a year old. Zida was established to streamline the investment process in Zimbabwe in an effort to bring economic development assistance into the country, one way or another.

Of course, the move speaks volumes about the potential of cannabis across Africa, not to mention the increasingly hot topic of medical cannabis as the ultimate sustainable green investment, particularly in developing economies—no matter where they are.

In Zimbabwe specifically, the government expects to see export earnings from cannabis outstrip those of tobacco (by three times) in the immediate future. Tobacco, up until cannabis, was Zimbabwe’s most valuable export crop. Indeed between September and November last year, the government had issued 44 licenses and total earnings for companies in the vertical are expected to reach a whopping $1.25 billion this year.

Globally the timing is also propitious. It has certainly been a very green spring and summer so far when it comes to reform. The decision by the Zimbabwean government also came literally a month before Morocco decided to legalize medical cannabis and Portugal began debate on yet another “adult use” market in Europe.

Cannabis Reform Along the Belt and Road Initiative?

Cannabis is not a new crop to Africa—indeed many African countries have sourced the cannabis trade for decades (see Morocco). But the normalization of the plant carries new potential for developing economies starved of both development and investment to spur the same. Indeed, one of the biggest problems being faced by hopeful cannabis entrepreneurs in Zimbabwe and beyond is the issue of access to capital. Beyond finding investors (even from abroad), the cost of money (even for a loan to expand an existing business) in the country is much higher than most people in Western and developed countries are used to.

The regulated cannabis industry is nothing if not equity intensive.

It is for this reason that Chinese funds currently utilized to better connect south-south economies including with infrastructure like roads, may also end up in the cannabis industry—indeed long before such reform or cultivation is broadly allowed at home. Or before western investors develop the industry much beyond its early stages.

African Investment Funds and European Interest in the Region

There are, according to High Times research on the issue, several initiatives to raise “green” if not cannabis funds in Africa right now—including of the crypto kind. That said, in a rather shock move to investors in the space, the South African government is about to allow a special tax deduction called Section 12J to expire—basically a tax rebate for funds invested in specially authorized venture funds which had been used by early investors here to fund cannabis ventures. The new Zimbabwean fund may indeed have been authorized to take up the slack of the closing South African investment opportunity.

There are several European family offices with investments in Africa. Most of the larger Canadian companies also invested early in cannabis cultivation experiments in both Lesotho and South Africa.

These projects are beginning to come to fruition – however many early projects are now finding that they need to spend additional money to certify their exports (certainly to Europe). For this reason, the south-south market (including exports within Africa if not to Israel and Australia) is likely to make up the bulk of African exports (for now) – although there are some South African and Lesotho-based firms that have managed to find a foothold in European markets.

The Future of Cannabis in Zimbabwe and Beyond

Lesotho was the first African country to legalize cannabis (in 2017). Since then, Zimbabwe, South Africa, Malawi, eSwatini, Zambia, Uganda, Rwanda, and Ghana have all embarked on some kind of reform. The continent is ideal for the cultivation of cannabis of the outdoor kind—starting with the position of the continent on the globe and the amount of sun the continent receives.

As policy makers look at alternatives to destructive crops (like tobacco production) the future of African production of cannabis looks bright. In the short term, the lack of regulatory conformity elsewhere (in Europe for example) is just one of the many barriers to the development of the industry here (at least for export to the EU).

However, as cannabis is normalized—even throughout Africa—it is clear the plant may have a significant impact on economic development—from medicinal use to hemp materials developed for construction and other purposes.