Zimbabwe initiates “Green Industry Fund” to attract foreign cannabis investors

The Zimbabwean government has created one of the most interesting and potentially hottest cannabis “financial instruments” on the planet. Namely a “green fund” supported by critical government agencies – and in particular that the government hopes to fund cannabis projects.

More notably, the fund offered by Zida, a one-stop government shop for local and overseas investors, is that it is a complete reversal of the policy of an agency a little over a year old. Zida was formed to streamline the investment process in Zimbabwe to bring economic development aid to the country in one way or another.

Of course, this 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, especially in developing countries – no matter where they are.

In Zimbabwe in particular, the government expects cannabis export revenues to triple that of tobacco in the near future. Up to cannabis, tobacco was Zimbabwe’s most valuable export crop. In fact, the government issued 44 licenses between September and November last year, and total revenue for companies in the industry is projected to hit a whopping $ 1.25 billion this year.

The timing is also good globally. So far, it has certainly been a very green spring and summer when it comes to reforms. The decision by the Zimbabwean government also came literally a month before Morocco decided to legalize medical cannabis and Portugal started a debate about another market for “adult use” in Europe.

Cannabis Reform Along the Belt and Road Initiative?

Cannabis is not a new crop for Africa – many African countries have procured the cannabis trade for decades (see Morocco). But normalizing the plant holds new potential for developing countries that lack both the development and the investment to fuel it. In fact, one of the biggest problems hopeful cannabis entrepreneurs face in Zimbabwe and beyond is access to capital. Apart from the fact that investors (also from abroad) are found, the cost of money (also for a loan to expand an existing company) in the country is much higher than most people in western and developed countries are used to.

The regulated cannabis industry is nothing more than equity intensive.

For this reason, Chinese funds that are currently being used to better connect south-south economies with infrastructure such as roads can end up in the cannabis industry – long before such reform or domestic cultivation is generally allowed. Or before Western investors develop the industry well beyond its early stages.

African investment funds and European interest in the region

According to a High Times study on the subject, there are currently several initiatives in place to raise “green”, if not all, cannabis funds in Africa – including the crypto-type. However, in a rather shocking move for investors in this space, the South African government is in the process of phasing out a special tax withholding called Section 12J – basically a tax refund for funds invested in specially approved venture funds that were used by investors earlier in order Fund cannabis companies. The new Zimbabwean fund may in fact have been authorized to fill the gap in the closing South African investment opportunity.

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

These projects are starting to bear fruit – however, many early projects are now finding that they will have to spend extra money to certify their exports (especially to Europe). Because of this, the South-South market (including exports within Africa, if not to Israel and Australia) will likely (for now) account for the bulk of African exports – although some South African and Lesotho-based companies have made it into European markets To gain a foothold.

The future of cannabis in Zimbabwe and beyond

Lesotho was the first African country to legalize cannabis (2017). Since then, Zimbabwe, South Africa, Malawi, eSwatini, Zambia, Uganda, Rwanda and Ghana have embarked on some kind of reform. The continent is ideal for growing cannabis outdoors – starting with the continent’s location on earth and the amount of sun the continent receives.

As policymakers examine alternatives to destructive crops (such as tobacco production), the future of African cannabis production looks bright. In the short term, the lack of regulatory conformity elsewhere (e.g. in Europe) is just one of many obstacles to the development of industry here (at least for export to the EU).

However, as cannabis is normalized – even across Africa – it is clear that the plant can have a significant impact on economic development – from medicinal uses to hemp materials developed for construction and other uses.