Bassim Haidar bets South Africa can become global medicinal cannabis leader

By David Whitehouse
Posted on Thursday, 8 September 2022 06:00

A worker prepares joints for customers at a medical cannabis cafe in Tira, an Arab village in central Israel
A worker prepares joints for customers at a medical cannabis cafe in Tira, an Arab village in central Israel March 2, 2022. REUTERS/Ammar Awad

Billionaire entrepreneur Bassim Haidar is scaling up production of medicinal cannabis in South Africa and believes the country can become a leading supplier as the global market expands.

His SafriCanna company started production in South Africa in July, but an initial facility has proved to be too small to meet demand with all the 2023 production already sold. The “huge demand” has come from countries including Germany, Italy and Australia, Haidar says. “I underestimated the market size.”

That has prompted Haidar to start work on a new plant five times the size with a  production capacity of 30 tonnes. The company has 100 cannabis farmers now, which Haidar expects to rise to 600 when the new facility is completed in 2024. The initial facility is at Centurion, Gauteng which has an optimal altitude for cannabis at 1500 metres, and the new plant will be built next door. Centurion has 280 sunny days a year and its dry climate favours cannabis production.

Haidar, born in Nigeria to Lebanese parents, has a range of businesses operating in fintech, logistics and telecoms. His biggest business is Optasia, which supplies mobile financial and fintech services and has revenue of about $1bn. He describes himself as a “strong believer” in alternative medicines, an interest triggered when his daughter’s chemotherapy for leukaemia led to loss of appetite. That’s one of the conditions where proponents claim medicinal cannabis has a role, as well as for avoiding fits caused by epilepsy, insomnia, and reducing the pain of cancer and arthritis.

Medicinal cannabis uses modified active components to maximise therapeutic benefits and reduce side effects. The concentration can be standardised and the dose controlled, with the product taken in tablet, capsule or spray form. SafriCanna’s cannabis products contain high levels of the main active ingredient THC required by the medical industry, with the company’s R&D work having created microbe-free strains. There are currently about 40 countries across the world that allow some legal use of cannabis via prescription.

  • SafriCanna  says the global market for medicinal cannabis is expected to reach $57.6bn by 2026, with a compound annual growth rate of 17% since 2018.
  • Haidar predicts that there will be a global shortage of 250tn of medicinal cannabis versus demand by 2026.
  • He wants to see new players enter the industry. “The more good, fair players there are in the market, the more the market will develop.”

Logistics Critical

Cannabis was introduced to eastern Africa from southern Asia in the early 1500s. Though recreational use is illegal in most African countries, the United Nations has estimated that over 38,000 tonnes of cannabis are now produced annually in Africa. The World Health Organization estimates South Africa to be the world’s third-largest cannabis producer with an estimated 900,000 cannabis farmers. The country’s first medical cannabis dispensary opened in Durban in 2018.

Haidar, a member of the global council of Amnesty International, heads a multi-sector conglomerate with combined revenue of over $1.6bn. He started the Channel IT telecom firm, now called Optasia, in 2003. His businesses include Knuru Capital, which invests in technology companies, west African logistics services provider GMT and Intercom Telecoms in Nigeria. The conglomerate is about “opportunities, not synergies,” he says.

He owns three-quarters of SafriCanna, and is aiming for the company to be profitable from June 2023. He has received interest from potential new investors, though with existing minority holders he has the capacity to fund the company’s expansion. A decision on whether to bring in new funding will be taken at the end of November, he says.

According to research from Prohibition Partners, Africa’s legal cannabis market could be worth over $7bn in 2023. South Africa is an ideal place to serve global demand due to a range of factors, Haidar argues. South Africa is the continent’s only country which is a member of Pharmaceutical Inspection Cooperation Scheme (PIC/S) which develops international standards between regulators. The country’s regulatory framework on medicinal cannabis is accepted by the European Union and Australia.

  • Labour is cheap and land costs about half to those of Canada, and the climate is “ideal” for cannabis production, Haidar says.
  • The product has to be protected during transit and South Africa is currently the only African country with sufficiently good logistics, he says. He attributes that to the country’s role as a supplier of high-value exports such as gold and diamonds, and says that transport logistics have been “a lot easier than we thought.”
  • Morocco, Rwanda and Botswana have the potential to become supply hubs if their logistics systems can be improved, he says.
  • Lesotho was the first country in Africa to grant licences for the production of medical cannabis in 2017. Haidar has no plans to operate there due to a regulatory framework which he calls “very weak.”

Bottom line

South Africa has a rare combination of advantages with which to exploit a fast-growing global market.

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