How 30-Year-Old South African Became a Medical Cannabis Entrepreneur After Losing his Mom to Cancer

Goitse Konopi’s life’s mission is to make quality medicinal cannabis accessible to all, though that was not his childhood dream. At 19, soon after school, he was already working with GovChat, a government-affiliated tech company in South Africa, where he later became the chief data officer. He was part of the teams in the Presidency that developed the National Development Plan and Vision 2030 for the country.

Everything looked good, career-wise, until 2013 when his health-conscious mother was down with cancer and eventually passed away. Goitse was determined to help other cancer patients stay alive and also beat other ailments. He believes the solution lay in Cannabis. Therefore, he invested all his savings, together with other peoples funds, in his startup.

In 2014, he founded South Grown, a cannabis company that scientifically cultivates, processes and manufactures cannabis-based products. In this interview with Business Elites Africa, Goitse elucidates his mission and his strategy to succeed in this highly regulated industry.

You started your company 4 years before Cannabis was legalized for private use in South Africa, why?

It was due to my mother’s terminal illness. She was diagnosed with liver cancer in 2013. At that time, her oncologist suggested that we tried cannabis oil to supplement her treatment plan. All the products

we found were non-regulated and inconsistent in terms of quality and availability. So between 2014 and 2017 when the guidelines and regulations were released, I began travelling and researching, to simply experience what the industry looks like in different parts of the world. We started in 2014 conceptually and moved from there to start the process of understanding and following the guidelines and regulations that were put into motion by the government.

To be clear, did the Cannabis-based treatment for your mom work?

Yes. The Cannabis oil was beneficial for her as an appetite stimulant. As a side effect of the chemotherapy, she lost her appetite and that is a key part of how the cancer progresses. As you are treating one side of the ailment, you are also creating a problem on the other side. And that’s where our core focus is as a company. We’re focused on the pharmaceutical aspect of cannabis, but in the first place we are also rolling out consumer products – Cannabinoids (CBD) products that are descheduled.

Our focus, however, is on the active pharmaceutical ingredients that you get from CBD. In Africa, we have CBD such as THCv which is an appetite suppressant and THC which stimulates your appetite. So part of what we are doing is to fully understand these compounds to create a really clear clinical trial pipeline. We are following the same process as the way drugs and pharmaceutical products have been historically created and made available. We have to go through drug discovery, phase 1a clinical trials, phase 1b to phase 3 and then posttrial evaluation and monitoring and all of that. So we’re following the entire pipeline to make medical cannabis accessible.

About the legalization of cannabis in South Africa, it was legalized for private use but your company is in business for the commercial use of it, can you clarify that?

So it’s legal for personal cultivation in your own private home and the personal possession and consumption in your personal environment is legal, although there is a restriction around the number of plants and all of that. But there is also a clear regulatory environment for medical cannabis, which is cannabis that is cultivated, processed and manufactured for medical purposes. This is not only in South Africa, it’s the same in multiple jurisdictions.

We’ve positioned ourselves as a multicountry operator. We have partners in Ghana, Jamaica, Zimbabwe and the United Kingdom. We’re exploring the biotic capabilities, looking at how we can expand and synthesize the existing CBD research in these countries. It’s important to work across multiple regulatory environments because this is a highly regulated sector. We’re working with other partners who have a strong background in those markets.

What part of the value chain do you belong to? Do you guys have a farm where you grow cannabis?

It’s two-fold. There are two sides to South Growth – the first is Consumer and Wellness and the other is Biopic, which is the active pharmaceutical ingredient-focused part. The biotic part is highly regulated and controlled but for the consumer side, the CBD has been descheduled for consumer access.

We have built a facility, where cannabis products are analyzed and processed, for medicinal purposes, which is under the inspection of the South African House Product regulatory authority and that facility is expected to be licensed in the foreseeable future. We have been working on getting licensed in the past 4 years. On the manufacturing side, we have manufacturing capabilities of CBDfocused products. Those products are low THC, high CBD (about 0.03% and lower). We manufacture consumer products from that.

The subject of cannabis, whether for personal or medical use, is controversial and highly regulated in the same countries that have legalized it just as South Africa. Why did you choose to do business in this seemingly volatile industry?

For me, it’s about making quality medical cannabis-based pharmaceutical products accessible. It’s about studying the historically controlled substances, understanding their compounds and creating pharmaceutical products that can help people like my mother. That’s especially what drives me. It’s also about creating pharmaceutical products that are extremely beneficial and have to be accessible.

That’s the mission and the goal of South Grown. It takes anywhere between 6 to 10 years to create a new pharmaceutical drug and requires a lot of focus, hence, we haven’t stopped working at it. At the same time also, we have entered into consumer products so that we can keep the lights on.

So money is not a driver for you?

Not at all. Money is a tool to create more value and we see value in really helping people who need this pharmacological intervention, with this intervention studied and explored. For instance, how do we synthesize something like THtv and create formulations and pharmacological products that can help people who want to go through surgery because of weight issues or whatever the case is.

How do we treat obesity in the developing world? How do we treat lymphoma using cannabinoids? How

I don’t have the luxury of giving up. We have too many people counting on us.

South Grown’s newly-acquired 2300sqm/24,756sqft cannabis manufacturing facility.

do we treat chemo resistant liver cancer? Those are the questions that we think about and are working to build a team of solution providers around that. That’s what drives us.

How are you driving all this with tech?

There is a lot of peer sharing in most of the pharmacological part of the cannabis space. For us, we are not necessarily trying to be a large cultivator of medicinal cannabis. We’re effectively building laboratories where we can synthesize and study the cannabinoids.

There are other amazing companies all across the country and the world who have the capacity to cultivate at scale. We are more focused on creating pharmaceutical products from formulas that we understand to treat certain conditions. Tech is crucial there because we have to be efficient, we have to use biotech standards, processes and procedures.

What are the challenges you’re facing right now with South Grown?

Mostly regulatory lee-time. It has taken us years to get to where we are now, which makes sense because it’s a highly regulated industry. It’s also getting people to understand that because of the nature of the products we are manufacturing and putting together (biotic products), we can’t roll out so much, any time soon. It may take up to 10 years before we can have commercially ready and viable products that can be ingested by patients. Sure there are opportunities around consumer products but the real value is essentially to make sure that quality plant-based pharmaceutical products are made available.

Are there days you feel like giving up on the business, especially when you’re overwhelmed by the challenges that come with it?

I don’t have the luxury of giving up. We have too many people counting on us and a team that is working way too hard for that to even be an option. IT’S challenging. But we wake up every morning with the mission in mind to solve this major problem, to make quality medicinal cannabis accessible.

This is a capital intensive project; do you have venture capital backings?

We were fortunate to raise capital funds from some Angel investors who are venture capitalists and private equity legends in their own rights. They gave us a couple of million South African Rands. That got us to start building the facilities, getting the compliance done and other things. These are people who genuinely believe in what we are doing.

When one is trying to conceptualize a business idea, in your opinion, what are the viability indicators one should look out for?

I guess the important thing is how big is the mission? What is it that you’re trying to accomplish? For us, our mission is to make quality medicinal cannabis accessible. And the trigger question; how do we scale a biotic firm while being compliant and build a distribution where we are able to test that our idea works. This is a drive towards the mission. Everything else will come along the way to enhance that.

Do you work with scientists in Africa or outside the continent?

Yes, there are a couple of scientists we are working with – from pharmacists to pharmacologists. They are in Africa and Jamaica. We’re also exploring other partnerships in the UK with one or two scientists and with an institute in Australia. But our core focus is African scientists.

can be available commercially, what are your consumer products – the Cannabinoids coffee drinks and water?

Those will roll out quite soon. We don’t have the luxury of going 8 years without revenue, hence the consumer products. And it’s a very big and exciting vertical. The consumer products are non-psychoactive. They are on the wellness side, to substitute for energy drinks and all kinds of soda. We’ve partnered with some large retail outlets in South Africa. We’ll be making announcements in the next coming weeks.

I know you said your cannabisbased pharmaceutical products would take up to 8 years before they

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Fehintolu Olaogun and Olorunfemi Jegede

Discuss Fintech Regulation in Nigeria and Expansion Plans for CredPal

Fehintola Olaogun serves as CredPal’s Chief Executive Officer while Olorunfemi Jegede serves as the Chief Operating Officer.

There are many Nigerian startups with multiple co-founders. But it is not all the time that a journalist is lucky enough to interview these cofounders at the same time. That’s exactly why I was super excited when Fehintolu Olaogun and Olorunfemi Jegede (Co-founders of Nigerian fintech company CredPal), agreed to grant me an audience. My colleague and I drove down to CredPal’s Yaba office where we discussed extensively with them on wide-ranging topics, including their take on the recent regulatory oversight on the sector as well as the company’s expansion plans. Enjoy the conversation.

BEA: When did you both realise that you needed this partnership in order to bring the CredPal dream to reality?

Fehintola: Before we co-founded CredPal, we‘ve known each other for a while and even worked together in a company that I previously founded. One thing is that entrepreneurship is partly instinctive such that you see a problem and you want to solve it. The same problem that we founded CredPal to solve has long been faced by very many people. But no one thought to solve it. But then we discussed the problem and realized it’s something we could solve together. Now, this problem has to do with people having to pay in full for anything they want to buy. Like normally in Nigeria, if you want to buy a laptop, phone or furniture, you will be required to pay in full. Whereas in developed countries, there are options for you to get instalment payments for pretty much anything you want to buy. Even for food

and coffee. You can use your credit card to buy them. The advantage is that you can live a comfortable life by paying for whatever you need in a more convenient and flexible way. We recalled that this kind of flexible payment was practically non-existent in Nigeria when we came into business. And it was a big problem, not only for our customers but for us as well. Back then, Femi had an eCommerce site that had a lot of products and a lot of his customers were asking for an installment option of payment. But of course he wasn’t offering an installment option because there was none available. So, this was why we came together to develop a solution to that problem.

Olorunfemi: I’d like to add that one of the things that inform co-founding is when two people meet and they are both passionate about solving a particular problem. Just to buttress that, the inspiration for CredPal came up in a discussion we both had, where we both instinctively saw the need to come up with a solution to this problem. So, it was that natural. He was excited about the problem we wanted to solve and I was excited about it as well.

BEA: What are some of the biggest challenges you’ve had to contend with as tech entrepreneurs?

Fehintola: Yeah, there are a couple of challenges. Let me begin by saying that as much as tech business might look like it’s different from other types of businesses, it’s challenges are not quite peculiar. For instance, tech entrepreneurs still face the challenge of securing initial capital. As you know, in most cases tech entrepreneurs are just trying to sell a commodity or a service that could have been sold without technology. So, in that sense, even the daily operational hassles of running the business are still there. So also are other problems like hiring the right people to work for you, figuring out the right business model, etc. Agreed, technology actually helps you to scale your business a lot faster because, instead of doing things manually, you can automate. Tech also enables you to solve certain problems which you normally are not able to solve manually. But even at that, tech presents its own challenges because before you can automate, you will need to buy some expensive equipment and hire people with expertise. It’s either that you as the founder have these technological skills or you have to get someone with them. And as it is right now, hiring tech talents is getting a bit more expensive. Even paying for the initial cost of some technological services might be a bit expensive.

But the good thing about technology is that because of its high growth potential, you are more motivated to inject money. Having domain and tech expertise can always help you to easily overcome these challenges.

BEA: It’s been about 7 months since last December when your company raised $1.5 million from Y Combinator and others. What are some of the good things that have taken place as a result of the fundraising?

Olorunfemi: One of the most exciting things we’ve been able to do with the money is the innovation of new products. These new products will basically make it possible for us to tap into new markets. And of course, we’ve also been able to overhaul our entire product lines to make them a lot more customer-friendly and competitive. I’ll now let my Partner speak more on this…

Fehintola: We’ve also been able to grow the team quite significantly. And what that means is that we can handle more customers now. Building new products (like he mentioned) now happens a lot faster. There is just that increased capacity to do a whole lot more. We are making plans to partner with other businesses within our space to further drive a whole lot more value to the ecosystem. So, I’ll say watch out for what’s coming.

BEA: Any prospects of future capital raise?

Olorunfemi: Absolutely! I mean, it’s typical for startups generally. You want to go from your pre-seed to seed round. And from there you want to do your Series A. I think CredPal is getting to that stage when we are ready for a Series A. In the next couple of months, we should be commencing our Series A round.

BEA: Based on your experience, how profitable is fintech business in Nigeria right now?

Olorunfemi: I would say it is actually very profitable, especially if you have an amazing fintech product. But it gets really profitable at scale. And the reason is that a lot of times, in order to be very competitive in technology business, margins are very tight. So, basically, you are playing the numbers game to really, really make the business profitable. And that’s even why you are leveraging technology in the first place because technology allows you to serve really huge markets. I mean, you can literally build in Yaba Lagos and you are serving the whole of Nigeria and Africa. There are currently a number of Nigerian fintech companies that are serving businesses across the world. And when you get to play at that level, trust me, that’s when it becomes really profitable. The profitability really is in the brilliance of your technology.

Fehintola: What I will also like to add is that one thing that makes fintech very profitable is the fact that finance is an essential commodity in everyday life. There is no one really living that doesn’t need to spend money every now and then. And that in itself has made the business one that has arguably the largest customer base. I’d like to add that because most tech products are digital, tech businesses have less need for a lot of other

moving parts which other businesses might require. As such, it’s easy for you to build and scale at a massive rate. Agreed, the initial cost may be high, because it takes a lot to set up all the regulatory and compliance infrastructure. But once you can get all of that right, then scaling it is pretty much easy. That’s why you see that a lot of the most successful startups in Nigeria right now are fintech startups. Good examples include Paystack, Flutterwave, Paga, etc. And just like Olorunfemi has said, growing the business and scaling it is where the juice is; not just the initial profitability.

BEA: What would you say are the six most essential things someone needs to start a successful fintech company in Africa?

Olorunfemi: I think we should start by looking at what success actually means for you. Is it about building a product that customers find valuable, building a product that customers love, or is it all about your bottom line; about making a lot of money? I’d say for me, when we started this business, one of the things that really motivated us to start was to ultimately ensure a future where every Nigerian can conveniently walk into a store and buy on credit. This would literally aid their quality of life and ease the financial burden. As you know, our quality of life can be very low in Nigeria, much as living here can be very stressful. And that’s because a lot of things are not done the way they should be done. So, for me, I would say I have built a successful fintech business when this dream eventually becomes a reality in the next couple of years.

But if I am just going to go with the standard definition of “success” as we are used to in Nigeria and say a business making a lot of money, then the first thing I would say is necessary is building a good product that will solve a real problem. Have you been able to identify a serious pain point of the people? Do you have innovative ideas around how this problem can be solved? If so, after you’ve identified the problem and come up with a solution for it, then you are good to go.

Secondly, your customers are who will determine if your business is going to be successful or not. Of course, this is a very old saying. But it’s funny that somehow, people still don’t take it seriously. Customer is always king! And ultimately, it is not even enough for you to build for your customers; they must also be able to connect with and love your product. It is very important that customers love your product. Now you may ask; what’s the yardstick to measure customers loving your product? Well, they should be talking about it. They should be referring new customers. Also, your product/service must make their lives better.

Thirdly, I will say that having a decent domain expertise is necessary towards building a successful fintech company in Africa. Let me explain; I won’t just wake up tomorrow and say I want to invest in aviation, because I do not know anything about the aviation industry. I think it’s just a standard rule of business that if you want to venture into any business, it should be one that you are quite knowledgeable about. That way, you are coming along with a lot of skill sets which will help you to navigate the very challenging world of business.

Fehintola: What I would like to add to that is that one thing that will determine your success is how you are solving the problem you are solving. Sometimes, you find out that whatever problem you are trying to solve, someone else is already solving it. Before payment fintechs sprung up everywhere, people were using other means of payment which were mostly inefficient. Before ride hailing became a thing, we had some companies that would have you call in so they could help you book a cab. In reality, whatever problems are there, people have tried to solve them before you. The most important thing, therefore, is the method you are using to solve it. Your solution method must be innovative, scalable and sustainable.

I will also like to touch on the domain expertise which Olorunfemi already mentioned because it is quite important. I recommend that you have two separate domain expertise, first is the technology itself, and what that means is that you must have a good knowledge of coding and full-stack development. Secondly, the problem you are trying to solve requires domain expertise as well. For instance, in the finance space, if I don’t know anything about finance and how money moves, it’s going to be very difficult for me to just wake up as a programmer and say ‘hey, I’m now a fintech entrepreneur’. If I do that, I might end up creating a product that might not work because there are loopholes and maybe even some compliance issues that will affect me in the long run. So, ensure to develop domain expertise in both technology and in the particular area you want to play in.

Lastly, I will say this; most tech companies pivot when they need to. One thing that kills a company fast is not knowing when to change. You can start off doing something before you feel that’s the way to go. But in reality, the market will always show you the way to go. Now, if the market reacts to you and you don’t adapt your product, you will likely keep trying to serve customers the same thing and they will not take it. Eventually, the product dies. So, that ability to respond to the market very fast is very important. And like I mentioned earlier, most businesses pivot when they need to. If you read the history of some of the most successful companies in the world today, you will realise that many of them resorted to pivot at some point. Even Facebook was supposed to be something meant for a small university community. But now, it is something that everyone across the world is using without restriction.

important. And that comes with having very good instincts. And that’s part of what makes you a good entrepreneur.

BEA: What is your take on the recent regulatory oversights that have taken place in the Nigerian fintech space this year?

Fehintola: Let me begin by saying I don’t think the CBN had any negative intentions with regards to the regulations that were passed this year. Certain issues called for those policy changes. And if we are being honest, it is part of the CBN’s job to come up with these policies. That said, the problem I have with such moves is that these policies came all too suddenly. They all came in almost at once, thereby giving stakeholders very little time to react. And that isn’t so good. Secondly, these policies could have been further fine tuned. There should have been better collaboration with fintech companies; some sort of forum where everyone could voice their opinions. As much as the CBN has the right to regulate the fintech space, the success of what the fintechs are doing is the success of the business they are regulating. If you over-regulate a business and kill all the operators, then there will be nothing to regulate afterwards.

Let me reiterate that there definitely should have been some feedback from the tech ecosystem before those policies were made and implemented. And even if they didn’t want to receive feedback. There should have been more time for businesses to adjust. The absence of these two factors definitely impacted us significantly. But ultimately, you have to always find ways of adapting and surviving.

Olorunfemi: Fehin has said it all; government regulations should definitely be more collaborative. All the stakeholders playing in the ecosystem should always be given room to participate in policy making because eventually, they are the ones who get affected by these regulations. It is almost impossible to get a complete perspective from just one angle. So, adopting a more collaborative approach will always allow to add a whole lot more comprehensive picture which also will naturally enable better regulation.

BEA: Let’s get back to CredPal for a moment. What is the most expensive thing I can buy with a CredPal credit card and what security measures have you put in place to protect against loan defaults?

Olorunfemi: I would say one of the most expensive things you can buy with your CredPal account is a car. I mean, you can access credit facilities up to millions of naira. So, whatever you choose to do with that is left for you.

Regarding your next question, of course we are a forward-thinking business. But we don’t take collateral, although we do have security measures in place. And these measures are embedded in our technology. We’ve been able to leverage a whole lot of data to be able to come up with really decent underwriting models. And so far so good, it’s been really efficient. Our facilities are doing very well, meaning that our customers are actually performing well. One of the things that have been very helpful is the credit bureau. It’s been a very important asset, thanks to the government for compelling pillars in the industry to report customers’ performance and all of that. It has been really very valuable.

Fehintola: To add to that, I will say that as much as you may try to ensure that every customer gets credit, you cannot give everyone. Some customers will apply and you will deny them for various reasons, ranging from perceived bad character, not having the capacity to repay. Take for instance, if someone that earns N50, 000 wants to buy a car of N50 million, you will have to deny them because that obviously will not work. So yes, we have a thorough underwriting process because we need to be sure you are eligible for the loan. And in line with what Olorunfemi already said, we work with various data centres to assess the customer before we avail that loan. And the good thing is that once you give out good loans, you will most likely get the money back. It’s only when you give out loans on grounds that are not exactly good, that you will have problems collecting it back.

BEA: Lastly, some people have argued that the tech bubble will soon burst. Do you think so?

Fehintola: I don’t think so. And I will tell you why,” he said. “The important question is — are we offering value? The answer is yes. Tech is offering significant value. Let’s use the example of cab hailing companies like Uber and Bolt; they came in and gave us a better solution that is offering better value. Trust me, that is not going anywhere anytime soon. In most cases, technology offers superior values to traditional means of doing things. What you should be worried about, therefore, is the effect of tech on traditional businesses. The effect might be negative as has been demonstrated in the case of the taxi industry. But technology itself will always drive the future of any economy. So, in my opinion, the tech bubble will not burst. As a matter of fact, there is no “tech bubble”. We may consider the likelihood of ‘market correction’ in the future. And this can only happen if in the future everything goes entirely out of hand and prices of these tech products become too expensive. Only then will the market forcefully correct itself. But in itself, the essential service that technology provides will never change. We will continue to provide value to our customers and our customers will continue to enjoy our value.