South Africa may develop a domestic industrial hemp industry valued at roughly $2.5 billion by 2040, according to a recent report that highlights the crop’s potential to drive environmentally sustainable industrialisation and boost rural economic activity.
Prepared by the Localisation Support Fund in collaboration with the Industrial Development Corporation and the Department of Trade, Industry and Competition under the Presidency of South Africa, the report explains how industrial hemp could stimulate manufacturing, strengthen exports, and support environmentally friendly industries nationwide.
Researchers project that the country’s hemp industry could expand to around R40 billion, equivalent to about $2.5 billion, by 2040 based on current exchange levels of approximately R16 to one US dollar.
Supporters within the industry note that hemp’s broad range of applications makes it highly suitable for large-scale industrial use.
Irshaad Kathrada, chief executive of the Localisation Support Fund, described industrial hemp as one of the most promising and adaptable economic opportunities currently available in South Africa.
He explained that nearly every component of the plant has commercial value, from the grain used in nutrient-rich foods to the stalks that can produce environmentally sustainable construction materials.
Kathrada also emphasised that achieving the sector’s full potential will depend on coordinated policy direction and substantial investment.
According to him, hemp should not be viewed as a minor agricultural crop but rather as a strategic industry capable of supporting reindustrialisation, expanding rural participation in the economy, and advancing South Africa’s transition to greener industries.
Positioning South Africa in a growing global market
Rising international demand for hemp-based products forms the backdrop to the study’s findings. Analysts expect the global hemp market to expand from about $10 billion in 2025 to approximately $37 billion by 2032, opening opportunities for new producing nations.
South Africa’s geographic conditions could offer a competitive edge, as its varied climate zones make it possible to cultivate hemp across different regions.
In addition, counter-seasonal growing cycles could allow producers in the country to supply markets throughout the year.
Existing industrial hubs in sectors such as automotive manufacturing, textiles, pulp and paper, and food processing could also incorporate hemp-derived materials into their production systems.
Garth Strachan, a technical adviser working with the Presidency and the Industrial Development Corporation, described the report as a practical, evidence-based guide for developing the sector.
He noted that the study outlines a clear framework for coordinated efforts between government institutions, industry players, and investors while encouraging commercially viable projects that can generate employment.
Early growth, but major hurdles remain
Authorities in South Africa have already taken initial steps toward establishing a hemp industry. Since 2022, regulators have granted 1,725 cultivation licences covering roughly 29,000 hectares of farmland, primarily in Gauteng, KwaZulu-Natal, and the Eastern Cape.
Despite this progress, the report identifies several barriers that could slow the sector’s development.
A major challenge is the limited availability of large-scale processing infrastructure. Hemp must undergo processing to produce fibres, grain derivatives, or industrial inputs before it can be used in manufacturing supply chains. Without such facilities, growers struggle to access commercial markets.
Researchers also highlight fragmented regulatory frameworks, which have created uncertainty for investors and businesses seeking to expand operations.
Five sectors poised for early growth
The study identifies five industries where hemp could gain traction in the near term.
Food and beverage products are expected to drive early adoption, particularly items such as hemp milk, flour, and cooking oils that cater to increasing demand for plant-based nutrition.
The personal care industry could also see rapid growth through skincare and wellness products formulated with hempseed oil.
Beyond consumer markets, the report outlines opportunities in pulp and paper manufacturing, textile production, and construction materials.
Hemp fibres can be processed into biodegradable packaging, specialised fabrics, and building components including hempcrete and insulation materials.
Within the construction sector alone, hemp hurds—which account for around 65 percent of the plant’s stalk mass—could become an important raw material for environmentally friendly building solutions.
Policy coordination seen as critical
According to the report, unlocking the sector’s potential will require strong collaboration between government and private industry.
Key measures include financing for processing plants, assistance for early-stage businesses building technical expertise, and cooperative production models that enable farmers, processors, and manufacturers to operate efficiently at scale.
M. Ayanda Bam, executive director of Zageta Solutions, stated that the sector will not develop automatically without deliberate planning.
He explained that structured interventions from the state, combined with coordinated action by industry stakeholders, are necessary to build a sustainable hemp value chain.
Advocates believe the findings could also contribute to ongoing policy discussions around hemp and cannabis regulation.
John Jeffery, project manager for South Africa’s Hemp and Cannabis Masterplan, said the research provides clarity about the regulatory environment while emphasising the crop’s economic potential.
For policymakers and investors alike, the study presents industrial hemp not merely as an agricultural commodity but as a possible cornerstone of South Africa’s future industrial expansion and green economic transformation.