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Some African Countries Turn to Medical Marijuana to Earn Forex

September 7, 2019

As sources of foreign exchange and official development assistance (ODA’s) dry up, many African countries are becoming innovative in exploring other avenues of keeping afloat. And they are turning to medical marijuana as the global market for the crop is now estimated at $150bn and could reach $272bn in 2028 and one of such countries the Kingdom of Lesotho where cannabis is grown legally by the Lesotho-based company Medigrow and is regulated by the government of Lesotho.

A marijuana farm

Lesotho is one of Africa’s poorest countries ranking 159 out of 189 in the latest UN human development index. High unemployment has been rife while opportunities are scant and almost a quarter of the population is infected with HIV. This presents a very hopeless scenario thus the need to search for opportunities outside the traditional avenues of economic activities.

Government sources say that as at two years ago, the country took the step of exploring the business end of marijuana so as to tap into the booming medical marijuana industry, becoming the first country in Africa to allow the cultivation of cannabis for medicinal purposes. However, there was a stumbling block to Lesotho’s plan. This is because to meet legal standards, most traces of tetrahydrocannabinol (THC) — the main psychoactive constituent responsible for marijuana’s intoxicating effects — is removed from the seeds. The remaining medical version is primarily made of the non-psychoactive substance, cannabidiol (CBD), and can only be 0.03% THC, thus starting a journey towards turning Marijuana into a money minting machine for the Kingdom of Lesotho.

To meet expected international standards for export, the company, Medigrow invested $19.3m in cannabis-growing facilities around the capital, Maseru. A heliport is also being built to ensure the cannabis — commonly referred to as “green gold” — is shipped safely and swiftly. The investment is spurred by the industry’s positive outlook. Sources at the company say that at the moment they have almost 2,000kg of biomass and are going to produce more than 1,000 litres of CBD oil and from market outlook cannabis oil is sold at between $6,000 and $21,000 per litre. The legalisation of cannabis presented a huge opportunity for the country which enjoys 300 days of sunshine per year. Year-long sunshine and fertile soils make Lesotho ideal for cannabis plants. Known as “matekoane” in Sesotho, the country’s national language, it has been grown for centuries in rural areas.

There are about have about 10 businesses operating on the industry already and the government has raised the cost of the license to a level many small holder farmers complain is out of reach. The government charges €30,000 for a one-year renewable license to grow cannabis. But the cost is too steep for most locals, and the market is dominated by foreign companies, mainly from Canada and the US. Inspite of the revenues from Marijuana, the dark side is becoming equally worrisome to authorities. The UN office on drugs and crime estimates that 70% of marijuana consumed in South Africa is grown in Lesotho, making cannabis the country’s third source of revenue.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Kenya Has Just Sealed Its First Oil Export Deal Worth Sh1.2 Billion

August 3, 2019

Time for early investors and startups in Kenya to leech onto the country’s blossoming petroleum industry! It is now safe to say that Kenya is now an oil-producing nation in the world, the only nation in the whole of East Africa, after South Sudan to actually export oil.

The country has just sealed its first oil export deal worth Sh1.2 Billion ($11.6m). With 60,000 to 100,000 barrels per day, Kenya is set to displace either Ghana, Brunei or Chad in the ranking of oil-producing and exporting countries by production capacity.

“We are now an oil exporter. Our first deal was concluded this afternoon with 200,000 barrels at a price of 12 million US dollars. So, I think we have started the journey and it is up to us to ensure that those resources are put to the best use to make our country both prosperous and to ensure we eliminate poverty,” Kenyan President Uhuru Kenyatta said

Here Is The Deal

This deal which is the first-ever in the whole of Kenya’s history saw Kenya selling off 200,000 barrels of oil at a price of Sh1.2 billion ($12m).
Kenya discovered commercial oil reserves in its Lokichar basin in 2012 and Tullow Oil estimates the basin to contain an estimated 560 million barrels in so-called 2C proven and probable oil reserves.
Tullow has said this would translate to 60,000 to 100,000 barrels per day of gross production.
Tullow Oil is a multinational oil and gas exploration company founded in Tullow, Ireland with its headquarters in London, United Kingdom. It has interests in over 150 licenses across 25 countries with 67 producing fields and in 2012 produced on average 79,200 barrels of oil equivalent per day.

**Source: Statista 2019; Oil Production in Africa from 2001 to 2018 (in 1,000 barrels per day)**

The government and Tullow Oil had expected to start exporting crude under the Early Oil Pilot Scheme (EOPS) by June this year but that appeared unlikely with the company only having trucked about half of the amount that will be needed for the first shipment.
In May, Kenya’s Ministry of Petroleum said about 88,000 barrels of oil had so far been trucked to Mombasa and was targeting to accumulate 200,000 barrels that would form the first export cargo.
The oil that has been ferried to Mombasa was produced in 2015 during an extended well testing exercise. By end of March, Tullow had shipped all the oil stored in Lokichar and has been setting up an Early Production Facility, which will produce 2,000 barrels a day.

Currently, major oil producers in Africa include Nigeria (0.0449), Libya (0.0101), Egypt (0.0418) and Algeria (0.0913), producing a total of 0.1881 trillion cubic feet of gas cumulatively which is 5.4 percent of the world’s total production.

In 2018, Africa’s total oil production amounted to around 8.19 million barrels of oil per day.

Africa’s production rate is, however, decreasing at a rate of 1.1 percent per annum. Africa’s consumption rate is at 138.2 billion cubic meters at a growth rate of 1.4 percent. It would take Africa 68 years to completely deplete its reserves.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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Afreximbank, JBIC sign $300m Export Credit Line deal

July 5, 2019

The African Export-Import Bank (Afreximbank) and the Japan Bank for International Cooperation (JBIC) have signed a general agreement for a $300-million export credit line, which can be availed in US dollars and euros, to support projects in Africa.

The credit line will enable Afreximbank to provide funds for the import of machinery and equipment from Japanese companies and their overseas affiliates to support projects in the Bank’s 51 member-countries in Africa.

Demand for machinery and equipment, which are needed for economic development, is expected to continue to expand in Africa and the credit line will support the efforts of Japanese companies and their overseas affiliates to expand exports to the Africa region. It will also help to further strengthen the economic relationship between Japan and Africa.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.