Author: Thebe Matlhaku
On Tuesday 4th June 2019, Statistics South Africa released an update on the performance of the country’s GDP in the first three months (quarter) of this year. The results were atrocious as the country’s GDP fell by 3.2%. The biggest contributors by sector to the overall decline, were Manufacturing with an 8.86% decline, mining with an 8.8% decline and Agriculture with a steep 13.2% decline.
Revered Economist, Dr Thabi Leoka’s analysis on the effects of the decline in GDP were that the labour intensive sectors were the hardest hit and this is likely to adversely affect the level of employment in the country. South Africa’s unemployment rate hovers around 27.1% with the youth making up the majority of the unemployed.
With the imminent arrival of automation and job cuts as industries begin to digitize, there seems to be no positive opportunity for growth and employment prospects.
However, there is indeed a sleeping giant that South African policy has not taken into consideration. In 2018, the Constitutional Court ruled that the use of marijuana does not constitute a criminal offence. This ruling was not only positive for its social impact but also the potential economic effect it could have if implemented in a prudent manner.
According to CNBC the marijuana industry in the United States of America created 64, 389 jobs in 2018 which lead to a 44% growth in employment figures. It further asserts that job creation is likely to increase as more states in the U.S. take steps towards legalizing the herb.
Consultancy Eu asserts that European countries such as France, the UK and Spain are currently reviewing their historic stance on cannabis with the intention to ease the laws to allow for expansion. Furthermore, Germany, Italy and Netherlands are in the process of heavy investment in their medical programmes. According to a report by consultancy and research firm Prohibition Partners, the European cannabis market is likely to be valued at 128 billion Euro’s in 2028.
In a local context, the CapeTownetc reported that the Mother City will be the first province in South Africa to be awarded a cannabis cultivation license. The intention of this project is to promote research on the positive and negative effects of the herb and assist in creating sustainable plants that will cultivate the herb.
Marijuana cultivation is not without any resistance as detractors argue that the initial investment in the cultivation will require a lot of funds that the government currently does not have. Also, conservatives are likely to bring about the moral aspect and social impact that it might have if uncontrolled.
Whilst we appreciate the abovementioned thoughts, South Africa’s economy is in dire need of growth and job creation. Medical marijuana is one of the success stories of cultivating the herb and the state and business should strive towards using unconventional methods to achieve growth and create jobs.