A new generation of young British drug barons are becoming overnight millionaires by importing high-quality cannabis direct from South Africa.

The gangs are taking advantage of the rock-bottom price of the South African product - known locally as dagga - to enjoy profit margins as high as 4,000 per cent and police are warning that those behind the trade could become richer and more powerful than those trafficking cocaine and heroin.

Cannabis from South Africa and neighbouring countries is some of the most potent in the world and now accounts for the vast majority of seizures in the UK.

In Britain, high quality 'skunk' cannabis sells for around £3,500 a kilo. In South Africa the same product can be bought for £20 a kilo, less if bought in bulk. In some areas, dagga is said to be on sale for only 40p a kilo.

The rapid growth of the market is creating overnight multi-millionaires who invest their new-found wealth in other areas of criminality.

Last week MPs voted to approve proposals to downgrade cannabis from Class B to Class C. The move, which is intended to allow police to focus attention on cocaine and heroin, is expected to increase demand for the drug, now smoked regularly by more than three million Britons. Although penalties for trafficking cannabis will be increased, they will be considerably lower than those for Class A drugs.

Those running the trade rely on a network of couriers to bring suitcase-sized loads of the drug to the UK, often via France, Germany and in particular Ireland.

Over the past year at least 100 South African couriers have been detained at Dublin International Airport, leading one judge, Patrick McCartan, to declare the situation 'out of control'. During the summer, eight out of 10 drug smugglers arrested in Dublin were South African.

The gangs have now switched tactics and are flying into other airports. Customs officials at Birmingham have dealt with a string of cases of South African couriers in recent months. Authorities in South Africa have also seized shipments bound for the West Midlands.

Most of the mules are white Afrikaaners who have fallen on hard times. They are given a plane ticket and paid around £500 to carry a suitcase holding up to 25 kilos of marijuana. The drugs are wrapped in plastic and covered in coffee and carbon paper to avoid detection. The couriers, usually women, are given telephone numbers to call on arrival in Dublin and then get tickets to complete their journeys to the UK.

One police source told The Observer: 'A lot of what is going on involves testing out routes. Because the amount of money invested is low, the traffickers can afford to lose a shipment or two. The average amount the couriers carry is 25 kilos. That costs £500, but is worth £75,000 in the UK.'

Interpol now rates South Africa as the fourth-largest cannabis producer in the world. Around a quarter of worldwide seizures involve South African cannabis. The trend is confirmed by a a report by the Institute for Security Studies in Cape Town, which says that most of the marijuana seized in the UK, and a third of that seized globally, is now of South African origin.

A spokeswoman for the National Criminal Intelligence Service told The Observer: 'This is an area of particular interest to us, as criminals who make money from trafficking cannabis may use the profits to fund other criminal activity. In addition, a consignment of cannabis may well include Class A drugs.'

The potential for vast profit from South African cannabis was highlighted last week when five members of a gang led by unemployed 24-year-old Robert Beal were jailed for varying terms totalling 30 years.

Beal was arrested at a north London flat along with two South African accomplices, businessmen Aaron Reichlin, 53, and 40-year-old Katiso Molefe, when police carried out a search in connection with a robbery. They found 25,000 ecstasy pills, 5.2 kilos of cannabis and a cache of firearms, including a sub-machine gun and two semi-automatic pistols.

They also found details of a shipment of two electrical transformers from South Africa which were awaiting collection in Ipswich. When police searched the transformer units at the dockyard they found 825 kilos of high quality herbal cannabis. They resealed the empty containers and put them under surveillance as they were taken to an industrial estate in Wembley, north-west London, where police arrested the three other gang members.

Beal had paid £65,000 for the cannabis concealed in the transformer units. In the UK, its value was £4.5 million.