Google blinked, Facebook didn’t
Despite the poor legislation, Facebook’s blocking of Australian news reminded the world of the power of social media giants
The Australian government has done the world a huge favour. Recognising the devastating impact of Facebook and Google on the media industry, they imposed a strict new requirement for the two big tech giants to “pay back da money”.
Google blinked, Facebook didn’t. Even for Facebook, with its perverse talent for public relations disasters, this was a new low. Not only did it ban all news operations, but a list of essential services and government pages as well. It banned its own corporate page. If ever proof were needed of Facebook’s inept internal processes, this was it — and it is just as inept at managing its outward policies, as we’ve seen many times.
As they grew, Google and Facebook managed to convince media organisations that expropriating their content for free and displaying it on their sites would be a vast driver of internet traffic. This was true until Facebook realised that everything in the new feeds was news (or misinformation or clickbait websites) and not the wholesome sharing of personal anecdotes originally envisaged. This was when I stopped paying attention to Facebook. I wanted to know what was going on in my friends’ lives, not what they were reading.
In his 2019 new year’s resolution post, CEO Mark Zuckerberg said Facebook was pivoting to “privacy” and would focus on groups, among others. It would no longer make shared news as important. It changed its algorithms and all of a sudden the news organisations, jubilant at receiving heavy traffic from Facebook, started getting very little. For Facebook, the experiment was over. For the newspapers, it was devastating.
Facebook and Google account for about 80% of all online advertising globally (it varies by country), but they don’t perform any of the useful functions that the media does. Known as the Fourth Estate for good reason, the media is a critical and essential part of society. SA’s state-capture shockers, the R255m Free State asbestos scam, #GuptasLeaks and the Nkandla firepool would not have been exposed without the media. Many of apartheid’s most dastardly acts would not have been uncovered but for the courage of the journalists on great newspapers like the Weekly Mail and Vrye Weekblad.
So, it’s hard to listen to Google and Facebook complain about Australia’s insistence that they pay news organisations for displaying their content. Between them, they have destroyed the advertising market that supported the media industry. It’s been replaced with disinformation, anti-vaxxers, conspiracy theories and people who truly believe the Earth is flat.
As Australian Prime Minister Scott Morrison ironically posted on a Facebook page after the ban: “Facebook’s actions to unfriend Australia today ... were as arrogant as they were disappointing.”
His totally true kicker: “It may be changing the world, but that doesn’t mean it runs it.”
‘[Facebook] may be changing the world, but that doesn’t mean it runs it’
Despite the major logistical disruptions created by the pandemic, SA’s agricultural exports hit
$10.2bn in 2020, a 3% increase from the previous year and the second-largest level on record.
At the same time, agricultural imports fell 8% year on year, leading to a 26% year-on-year increase in the agricultural trade surplus, which widened to $4.3bn.
SA’s exports were underpinned by large domestic agricultural output thanks to favourable weather, says Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA.
The weaker rand also made SA agricultural products more globally competitive, while the government’s decision to leave the food and agricultural sectors fully operational during the various lockdowns was equally supportive.
An increase in consumer demand helped too, according to Tru-Cape Fruit Marketing, SA’s largest exporter of apples and pears. Its 2020 revenue was 17.5% higher than in 2019 and a record in Tru-Cape’s 20-year history.
“Following Covid-19, the move to eating more apples and pears as part of a healthier lifestyle has been evident and the lockdown has meant people are eating and cooking at home more than before,” says MD Roelf Pienaar. “Also, apples, in particular, have a longer shelf life than many other fruits and vegetables, so fewer trips to the store are required.”
On the other hand, the pandemic, which struck SA in March 2020 during the peak picking and packing season, exacerbated the usual weather-related challenges at the ports and created other supply chain interruptions and logistical challenges as border posts were closed for long periods.
But Pienaar says the industry responded “with speed and agility”, though many businesses had to restructure to enable them to operate remotely.
Sihlobo gives credit to the joint efforts of the government, the private sector and various research institutions for keeping SA’s food value chains open, and praises the co-operation between private sector organisations and logistics companies which ensured a constant flow of products to export markets.
Despite all the pandemic-related challenges, Tru-Cape still achieved overall volume growth and enlarged its footprint in Africa, the recipient of more than 50% of all its fruit.
“If you keep in mind that at one stage earlier in 2020 we were down on our African sales compared to the previous year, it is a good achievement to have grown our overall African footprint by year-end,” says Pienaar.
Tru-Cape also achieved solid growth in Europe, Russia and the UK. In fact, its UK volume was up almost 17% on 2019.
This year looks set to be another solid year for SA’s agricultural sector.
Favourable weather has led to an increase in summer crop area plantings, which has raised the prospect of an even larger maize harvest than in 2019/2020. Sihlobo expects this to enable more exports, given strong demand coupled with low stock levels.
In addition, SA wine grapes production is also set to be larger than in 2020 and there is “general optimism” about the 2021 harvest in the horticulture subsector as well as in other field crops, including sugar.
Last year, SA’s top 10 export products by value were citrus, grapes, wine, apples and pears, maize, nuts, sugar, wool and fruit juices.
Africa and Europe continue to be the largest markets for SA agricultural exports, absorbing 38% and 27% of the total last year by value, respectively. (The top products to these markets were beverages, fruit, grains, sugar and vegetables.)
Asia is not far behind, absorbing 25% of SA’s agricultural exports (mainly fruit, wool, grains, sugar and meat) last year even though SA lacks preferential market access to this region.
Sihlobo warns that SA’s chief competitors in the region, Australia and Chile, have secured trade agreements that have afforded them a significant competitive advantage and that they could threaten SA’s market share and future growth.
“With India and China headlining the growth potential in Asia and the Far East, this region is significant enough to warrant more attention,” he says. “SA should continue to engage these countries for greater market access [for SA’s] agricultural products.”
SilverLeaf Investments, a recently launched cannabisfocused fund, is taking its first steps on a journey that could hit full stride with a JSE listing.
SilverLeaf has rushed in a seed capital fundraiser to capitalise on cannabis-related opportunities, using the tax-efficient 12J investment structure. The initial investment floor has been set relatively low with a minimum investment of R50,000, which could attract younger, first-time investors in the first round of funding.
SilverLeaf has officially targeted a seed capital sum of R50m in a pitch that closes this Friday. But joint CEO Pierre van der Hoven, formerly a mover and shaker in the media industry, says a R20m capital raising will be sufficient to kick-start the fund’s investment endeavours.
He says institutional investors in SA remain wary of the cannabis market.
The 12J structure, which offers large tax break to investors, may help mitigate lingering perceptions of regulatory risk in the cannabis sector.
As a 12J structure, SilverLeaf will offer a 100% tax deduction in the year the investment is made. The fund has set a targeted internal rate of return of between 20% and 30% over five to seven years. Van der Hoven says the initial response has been encouraging, adding that the fundraising plans were put together in just three weeks. The longer-term plan is to raise up to R500m of capital over the next few years, with a possibility of listing the fund on the JSE’s AltX market.
These efforts may coincide with increased institutional investor interest in cannabis. It’s a move that may attract savvy US investors, who see the potential for SA to become a base for cannabis businesses.
Local investor familiarity with cannabis is growing, though.
There are already three microcap companies on the JSE dabbling in cannabis — Labat Africa, Nutritional Holdings and Go Life. The collective market value of these small counters is about R325m.
But larger companies, including Remgro and liquor subsidiary Distell, have also invested in cannabis brands — giving a whiff of mainstream appeal to the sector.
Internationally, cigarette giant British American Tobacco has explored cannabis applications, and tobacco and liquor conglomerate Altria holds a 45% stake in Cronos, a Canadian cannabis firm.
Internationally, investment sentiment for cannabis is regaining its high after a sharp drop in 2019. Alternative Harvest, a popular exchange traded fund investing in cannabis-aligned counters, is up a mind-blowing 71% since the start of the year. The share price of Canopy Growth, the world’s largest cannabis company, has surged almost 40% since January.
The global legal cannabis market is estimated to be $30bn and is forecast to reach between $75bn and $100bn by 2030.
Van der Hoven believes SA’s fledgling cannabis industry is impossible to ignore.
The “Global Cannabis Report” says Africa is in dire need of investment to take advantage of rising global cannabis demand. “Africa is lacking the infrastructure and facilities necessary for cannabis production. As such, corporate social responsibility (providing much-needed infrastructure, or supporting local workers) is of paramount importance for foreign investors and producers looking to set up in the region,” it says.
SilverLeaf’s joint CEO Cliff Giesenow reckons when this unregulated market is professionalised and legitimised, SA will become a “powerhouse green economy with one of the most conducive cannabis-growing climates in the world”.
It seems the initial acquisition thrust by SilverLeaf will capitalise largely on the expertise of Van den Hoven and Giesenow rather than on cash placements.
Giesenow is the founder and owner of Leafolo (African herbal smoking blends) and a co-founder of Canna Trade Africa, the holding company of The GreenSide and CannaFoodsAfrica. Van den Hoven has focused on the cannabis and hemp industries since 2016, and two years ago wrote a report on the commercial potential of these products for SA. He also started AfriCannaBiz and a cannabisfocused consulting company called Baobab International. Perhaps more significantly, Van der Hoven is the founder of cannabis industry advocacy organisation, the African Cannabis Industry Association.
According to the SilverLeaf prospectus, the investment team will look at qualifying companies that are “willing to embark on a journey in an incubated environment for up to six to nine months to develop confidence in each other and conduct a comprehensive hands-on due diligence process”.
SilverLeaf will look to secure a “free carry” of up to 15% of the qualifying company’s equity in return for services provided through the incubation. The purpose behind this strategy is to derisk the investments before they are presented to the investment committee by evaluating and working closely with each company before investment.