Horizons Newsletter – week 12 // 2019
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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Producing locally for food security
Globally, food insecurity is on the rise. The international community has committed to achieve food security by 2030, as one in nine people worldwide still do not have enough access to nutrition. UN aid organizations like the World Food Program and the Food and Agriculture Organization are saving lives with their food aid projects. Yet, food aid is a donor-driven response that creates recipients’ dependency and undermines local agricultural producers and traders upon whom sustainable food security depends. In order to bridge the gap from aid to sustainable development, potential lies in engaging the private sector. Part of the success of the Marshallplan, that was regarded as the first large-scale and successful aid program, was the involvement of private parties. Similarly, Germany has plans for a ‘Marshall Plan’ in Africa. But smaller nations like the Netherlands can also champion this kind of development cooperation. In Kigali, DSM has built a food processing plant in a joint venture with the Rwandan government, sourcing from 24,000 local smallholder farmers. Tomorrow’s food security is a locally produced one.
Thanks to ultra-cheap data packages and smartphones provided by Indian telecom Reliance Jio, India is offering the cheapest mobile data rates in the world. In addition, private and public investments in India’s digital infrastructure are boosting connectivity by establishing near universal 4G coverage after years of slow internet speeds and very low internet coverage. This is enabling India to become a “mobile-first” country and Indian consumers to leapfrog into new digital consumer practices. For example, mobile video streaming has increased 10-fold in the past three years, turning India into YouTube’s biggest user group in 2018. Likewise, the number of low-cost Jan Dhan bank accounts (a scheme initiated for the financial inclusion of the unbanked) and transactions on the Unified Payments Interface (i.e. a cross-Indian online payment platform) have exploded in the last two years, making India’s e-commerce market the fastest growing in the last five years. As India is still a relatively poor and rural country, its booming digital economy creates many more opportunities to invoke digital disruption and will become the backbone of its development policy.
Tackling tech giants
More than ever, last week’s front-pages show that tech giants such as Facebook and Google are under a magnifying glass, with governments from all over the world addressing harmful effects of the growing power of big tech. Some governments focus on tax avoidance; others mention unfair market competition or practices harming consumers, such as fake news, invasion of privacy, unauthorized data use, or screen addiction. Intended government interventions vary from fines (for instance under GDPR law) to new taxation schemes, as proposed by the U.K. and France. Another possibility is asking for financial compensation for damaging consequences to society, similar to what happened in the nineties when U.S. states struck a financial deal with the tobacco industry for reimbursing healthcare costs. Effective government regulation of big tech is a complex puzzle, which will require a combination of constraints. Breaking up big tech is an option, but probably as a last resort, since governments have other instruments available. A ‘digi-tax’ to let digital businesses contribute to the societies where they are doing business, seems to be an achievable first step.