World Cup kick for SA economy
17 May 2004
While South Africa's economy will receive a massive direct boost from hosting the 2010 World Cup, the likely spin-offs of an improved image abroad will have an event greater impact, economists say.
According to consulting firm Grant Thornton, which drew up the financial impact report for South Africa's World Cup bid committee, the 2010 World Cup will pump R21.3-billion into SA's economy, generating an estimated R12.7-billion in direct spending and creating an estimated 159 000 new jobs.
SA's booming tourism industry will benefit from the estimated 235 000 visitors expected for the tournament, while construction and engineering companies will look to a slice of the estimated R2.3-billion to be spent on infrastructure building and upgrades in the lead-up to the event.
The SA Revenue Service will also be smiling at the prospect of an extra R7.2-billion that Grant Thornton expects to land in the state's coffers.
But according to news
agency Reuters, analysts believe the biggest long-term benefits for the country will come from "intangibles like an enhanced international profile and an improved sense of pride and unity among local people because the world's most popular sport crosses the racial divide".
Despite the progress made in the 10 years since the country held its first democratic elections, SA's economy continues to struggle against negative perceptions, with foreign direct investment amounting to "a trickle" compared to other emerging market countries.
Hosting the world's biggest sporting event barring the Olympic Games should "help remove the reservations many foreign investors have about a country known more for its high crime rate than its developed infrastructure", Reuters reports.
"There will be a big direct injection for the economy", Standard Bank economist Goolam Ballim told Reuters.
"But the indirect impact may be more meaningful for a sustainable economic lift in
subsequent years ... it will help change the perceptions that a large number of foreign investors hold of Africa and South Africa."
Bheki Sibiya, the CEO of South Africa's largest organised business chamber, Business Unity SA, told Business Day that the private sector was expected to provide most of the R2.3-billion needed for infrastructure upgrades for 2010 "in expectation of substantial returns, with any outstanding infrastructure needs being covered by government".
Business, Sibiya told Business Day, would be meeting with South Africa's bid committee to work out a strategy to unlock the opportunities presented by the World Cup.
"We must use this not just to identify opportunities for black economic empowerment, but also to focus on how this World Cup can actually help us address real poverty alleviation", he told Business Day.
The tourism industry, he said, would need to work out strategies to turn one-time World Cup visitors into "repeat customers", while
other elements of business should be looking for ways to create permanent jobs.
For Tourism KwaZulu-Natal chief executive Miller Matola, however, the benefits of the 2010 World Cup go beyond the obvious economic ones - and will begin to be felt long before 2010.
"There are a number of benefits in terms of economic impact and job creation, development of physical infrastructure and new facilities", Matalo said in a statement.
"However, I believe the key benefits to the country are much more subtle and very symbolic.
"The affirmation that South Africa is fit to host a World Cup marks an important shift in perception and is a vital confidence booster for our country - in the world's eyes we have moved from being an apartheid-ravaged nation to a peaceful, democratic land."
SouthAfrica.info reporter
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