South Africa could develop a domestic industrial hemp market worth R40 billion by 2040, creating new opportunities for farmers, manufacturers and small businesses if infrastructure and regulatory challenges are addressed.
This is according to a new study by the Localisation Support Fund (LSF), conducted in partnership with the Industrial Development Corporation (IDC), the Department of Trade, Industry and Competition (the dtic) and the Presidency of South Africa.
Market potential and policy impact
The research outlines how industrial hemp could contribute to reindustrialisation, rural economic development, export growth and the country’s transition to greener industries.
“Hemp represents one of the most compelling and versatile economic opportunities available to South Africa right now,” said LSF CEO Irshaad Kathrada during a recent National Hemp Dialogue.
According to Kathrada, every part of the plant is marketable.
“From grain used in high-nutrition foods to stalks used in carbon-negative construction materials. But that potential will only be realised with a deliberate and coherent industrial strategy,” Kathrada said.
Opportunities for SMEs
The study identifies several sectors where small businesses could enter the market relatively quickly.
Food and beverage products such as hemp milk, flour and edible oils could integrate into existing food-processing infrastructure. Personal care products, including hempseed oil-based creams and wellness items, also present accessible entry points for entrepreneurs.
Ayanda Bam, executive director at Zageta Solutions, said the sector’s growth will depend on building local supply chains that include smaller producers.
“This study provides direction for scaled industrial activity and could help crowd in the capital needed to finance the sector,” Bam said. “But it will not happen organically. It requires deliberate, targeted and sequenced interventions.”
Longer-term opportunities include textiles, biodegradable packaging and green construction materials such as hempcrete. These industries could provide steady demand for farmers’ crops while supporting the growth of small manufacturers.
Project manager of the Hemp and Cannabis Master Plan, John Jeffery, said the research also helps clarify the policy and regulatory environment surrounding the industry.
“By clarifying distinctions between industrial hemp and cannabis, it provides a foundation for informed policy development and industry growth,” he said.
Infrastructure and regulatory hurdles
Since 2022, South Africa has issued more than 1,700 cultivation permits covering roughly 29,000 hectares, mainly in Gauteng, KwaZulu-Natal and the Eastern Cape.
However, the lack of industrial-scale processing remains a major constraint, leaving farmers without reliable buyers.
Garth Strachan, technical consultant to the Presidency and IDC, added that the study provides an evidence-based roadmap to address this challenge.
“This is a high-quality study that provides a clear roadmap for coordinated action across government, industry and investment institutions, and most importantly, it shows how to enable commercially viable investment and employment creation,” adds Strachan.
