South Africa has a potential domestic industrial hemp market valued at R40bn by 2040, according to a landmark study released by the Localisation Support Fund (LSF) in partnership with the Presidency, the Industrial Development Corporation (IDC), and the Department of Trade, Industry and Competition (dtic).
Source: Supplied | LSF Hemp study event panellists
The report outlines a clear pathway for industrial hemp to support reindustrialisation, export growth, decarbonisation, and inclusive rural economic development.
"Industrial hemp represents one of the most compelling and versatile economic opportunities available to South Africa right now. Every part of the plant is marketable - from grain for high-nutrition foods to stalks for carbon-negative construction materials - and with domestic demand alone projected to reach R40bn by 2040, the scale of the prize is significant," said Irshaad Kathrada, LSF CEO.
"But none of that potential converts into reality without a deliberate, coherent industrial strategy. Hemp is not a niche agricultural curiosity - it is a strategic platform for reindustrialisation, rural inclusion, and South Africa's green economic transition, and it deserves to be treated as such."
South Africa poised to capture global hemp demand
Globally, the hemp market is projected to grow from US$10bn in 2025 to US$37bn by 2032. South Africa’s diverse agro-ecological zones and counter-seasonal production cycles enable year-round supply, while established manufacturing clusters in automotive, textiles, pulp and paper, and food processing provide ready-made demand pathways for hemp-derived inputs.
“This high quality and important study provides a clear evidence-based roadmap for coordinated action across government, industry, and investment institutions to secure important economic objectives, most importantly to enable commercially viable investment and employment creation,” said Garth Strachan, technical consultant to the PMO Presidency and the IDC.
Since 2022, South Africa has issued 1,725 cultivation permits covering 29,000 hectares, mostly in Gauteng, KwaZulu-Natal, and the Eastern Cape. However, the study highlights that the lack of industrial-scale processing infrastructure—particularly primary processing—and regulatory fragmentation remain key bottlenecks to scaling the sector.
Five priority industrial pathways
The study identifies five sectors for early development:
1. Food and beverages – grain-based products such as hemp milk, flour, and oils.
2. Personal care – hempseed oil-derived creams, serums, and wellness products.
3. Pulp and paper – using underutilised straw biomass for biodegradable packaging and cellulose materials.
4. Textiles – non-woven and technical applications from dual-purpose grain crops.
5. Building and construction – materials like hempcrete and insulation from hemp hurds, accounting for about 65% of stalk volume.
These pathways were chosen for strong and growing demand, proven or adaptable technology, and realistic prospects for localisation within South Africa’s existing industrial footprint.
Coordinated action needed for sector growth
"Realising the economic promise of South African hemp will require a deliberate minimum programme of action, not simply lifting regulatory barriers,” the report notes.
This includes early-stage financing to support processing infrastructure, supporting first-mover companies to build technical expertise, and designing aggregation models for farmers, processors, and manufacturers to operate at a viable scale. Dedicated project preparation capacity in both public and private institutions is also essential to translate potential into bankable investment opportunities.
"We are excited at the prospects of this study providing some direction for scaled industrial activity and to begin crowding in necessary capital to finance the sector. This will not happen organically, however. It requires deliberate, targeted, and sequenced interventions enabled by the state and implemented by its partners," said M. Ayanda Bam, executive director of Zageta Solutions.
Clarifying regulation and policy
"This study is a game changer for South Africa’s hemp sector, offering clear insight into a complex and evolving regulatory landscape. It helps demystify the legal and policy environment while highlighting the real economic potential of hemp. Importantly, it reinforces that hemp and cannabis are the same plant, with regulation largely determined by THC levels," said John Jeffery, project manager of the Hemp and Cannabis Masterplan.
The study provides a foundation for informed policy development, industry growth, and investment in agriculture, manufacturing, and research, positioning South Africa as a potential global hub for industrial hemp.
