Is Facebook losing steam in Brazil?

Author

Gustavo Ribeiro
April 10, 2019 • Reading Time: 6 minutes

Good morning. Is Facebook losing steam in Brazil? Who is Brazil’s new Education Minister? Pension reform takes a step forward in lower house. Petrobras new USD 8.6bn deal. 

Is Facebook losing steam in Brazil?

The main reason Brazilians go online is to access social media. But, according to pollster Datafolha, Facebook is becoming less and less the social network of choice. In only 17 months, the internet behemoth has lost users—56% of surveyed people said they had an active Facebook account; against 61% in November 2017.

Alessandro Janoni, a Datafolha director, points out the recent Facebook scandals related to the transparency of its user data as a reason for this downward trend. A waning trust in information shared on social media is also to blame. The poll shows that 21% of Brazilians don’t trust anything they read on social platforms.

Things, however, don’t look so grim for Mark Zuckerberg. WhatsApp Messenger—which is owned by Facebook—remains  atop the preference list in Brazil, with 69% of Brazilians using the app on a daily basis. Then comes Facebook, Instagram (another Facebook company), and Twitter.

Who is Brazil’s new Education Minister?

After 3 months of ineffectiveness and controversy, Ricardo Vélez-Rodríguez has finally been fired as Education Minister. He has been replaced by Abraham Weintraub, an economist who was serving as the president’s deputy Chief of Staff. Mr. Weintraub worked in the transition government under the wing of Economy Minister Paulo Guedes, being involved in strategic talks around the pension reform.

The new minister is a disciple of Olavo de Carvalho, the ultra-right ideological guru of “Bolsonarism.” He wants to fight “cultural Marxism” with “Judeo-Christian values” and “Greco-Roman logic.” Even within the administration, Mr. Weintraub is known as a “hunter of leftists.” Last year, he faced heat from students of the Federal University of São Paulo for supporting Jair Bolsonaro.

But if he decides to be overly political, he could face the same fate as his predecessor. The challenges in the Ministry of Economy are enormous. Until the 2015 recession, Brazil had increased its education budget more than any OECD country—but has yet to see results. Half of 9-year-old school students remain illiterate, 40% don’t finish high school before they are 19, and 70% of high school graduates don’t have sufficient math skills. These are more pressing issues than fighting “cultural Marxism,” whatever that may entail.

Pension reform takes a step forward in lower house

Today at 2:30 pm, Congressman Marcelo Freitas will present his report on the pension reform bill to the House’s Constitution and Justice Committee (CCJ). At this stage, he is not tasked with analyzing the merit of the bill—only whether it goes against the principles of the Constitution. And, barring any surprise, Mr. Freitas will recommend the bill to be approved without caveats. Discussions on the bill’s controversial topics will be held at a later date.

Even though opposition parties are decided on voting against the report, they are expected to ask for more time to analyze the document as a way to stall the bill’s progression. But a vote on the report is expected for April 17. By the government’s count, 40 of the 66 votes are favorable to moving the bill forward.

Markets shouldn’t get too distracted today, as it is the next step in the bill’s path that is really important. The House will create a special committee to dissect the proposal, which is when the bill could get watered down, stalled, or nixed completely. A major reduction in the government’s proposed BRL 1 trillion of savings over 10 years would create havoc among investors.

Petrobras new USD 8.6bn deal

Brazil’s state-owned oil and gas company Petrobras has confirmed a deal selling 90% of a 4,500-km-long pipeline network for USD 8.6bn. The winning bidder was a consortium formed by France’s Engie and Canada’s Caisse de dépôt et placement du Québec (CDPQ).

The deal excited markets, who took it as a sign of the company’s continued commitment to its divestments plan (with BRL 26.9bn slated to be sold off by 2023). The amount paid was also considered to be high enough to generate value to shareholders.

Investment banks have tagged Petrobras as a “buy,” with Credit Suisse going as far as saying this is the “last call to join the company’s flight.” XP has a target share price of BRL 33—which would represent a 13% bump.

What else you need to know today

  • Bolsonaro 2022. During the 2018 campaign, Jair Bolsonaro defended a political reform that would end re-elections in Brazil, which he called a “disgraceful” thing and a corruption enabler. However, in an interview toJovem Pan yesterday, Mr. Bolsonaro said there has already been “a lot of pressure” on him to run for a second term in 2022. In the interview, the president said he wouldn’t be the one proposing a political reform. 

  • FAO.The UN Food and Agriculture Organization (FA) will choose its new Director General on June 23. Big agro wants Brazil to back China’s candidate Qu Dongyu—a nod to Brazil’s top commodity importer. But the Ministry of Foreign Affairs wants the U.S.-backed Georgian nominee Davit Kirvalidze. Agriculture Minister Tereza Cristina believes Brazil should get behind China during FAO’s General Council meeting, on Thursday.

  • Infrastructure.During the Lula administration, the Growth Acceleration Program (PAC) was sold as Brazil’s ticket out of infrastructural underdevelopment. More than a decade later, 1,400 projects remain unfinished—and are stalled. The government hopes that, by resuming these projects, the construction sector will pick up, generating jobs and helping the economy to grow.

  • Violence.Ten military officers were arrested yesterday in Rio after firing over 80 shots at a car containing a family (including a 5-year-old child). One man was killed and another was injured. The officers said they were shot at first, but no gun was found in the car—the family was heading to a baby shower. Investigators say the driver was mistaken for a criminal. Governor Wilson Witzel said he “wasn’t in a position to judge” what happened.

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