Counting the World Cup benefits

6 July 2010

The social and economic benefits created by hosting the 2010 Fifa World Cup will continue to benefit South Africa long after the final whistle has blown, says Finance Minister Pravin Gordhan.

“I think as South Africans, we need to remember that we are a teenager in the world of nations, and for us this has been a proud moment since 1994, and from the economic point of view all the investment was money well spent,” Gordhan said at a press conference in Johannesburg on Friday.

He said the tournament’s benefits included not only its economic legacy; the event would also help the country increase its delivery capacity while demonstrating to the world its ability to host major events.

Extra R38-billion in GDP

Gordhan said current projections were that the tournament will add 0.4 percent to South Africa’s real gross domestic product (GDP). “What this actually means is that about R38-billion will be added to the GDP as a result of the World Cup.”

He said while some benefits from hosting the event were not clear-cut for now, South Africa had prospects of fast growth as a result of the infrastructure that had been built for the World Cup.

South Africa’s government spent more than R33-billion over a period of four years on infrastructure and preparation for the World Cup, Gordhan said. Close to R12-billion was spent on stadium infrastructure, R11-billion on transport infrastructure, and R1.5-billion on event broadcast and telecommunications.

“This infrastructure we have built is not short-term infrastructure that you build today and destroy tomorrow. We have increased the productivity of the people of South Africa, and all of that is part of our development and long-term planning for our country. ”

An estimated 130 000 jobs, most of them leading up to the World Cup, were created in the construction, roads and transport and hospitality industry.

A reputation transformed

“I know there are questions that are being asked, but I’m sure you will all realise long after the World Cup the social and economic benefits that this tournament has been able to provide for our country.

“Today, we have earned the reputation of a country that can actually deliver, and that is good for future growth,” Gordhan said, adding that the event had helped to bring an end to the Afro-pessimism that had dominated foreign media for years.

While some businesses, especially those in the hospitality industry, would struggle to sustain the high profits generated by the World Cup, at least one economist believes the future benefits for South African business will be enormous.

“Yes, it’s true that business will hate to see the World Cup go – especially the hospitality industry, where production is expected to drop again,” economist Iraj Abedian said at the briefing. “But I believe with a little creativity and coordination we can actually turn this into future opportunities.

“For instance, the success of this event will ensure that most of the people who have visited our country will surely come back, so the infrastructure we have spent on hotels is not a waste at all,” Abedian said.

“History has taught us that hosting events of this magnitude can boost the country’s credibility,” he added.

Trust, confidence

Initial research shows that restaurants, hotels, informal traders and shopping malls have been experiencing better than usual business over the World Cup period as fans flock to the country for the tournament, while overall business activity has picked up since the arrival of the first team and fans in the country a few weeks ago.

Abedian said that when South Africa was first awarded the right to host the event, with all the accompanying deadlines, business was “worried” about the country’s ability to meet all of the deadlines.

“We were worried about what [it would mean for the country] if we didn’t meet all of them … but now we are all smiling. All the Afro-pessimism we are accustomed to is now being replaced by a high level of trust and confidence, which is good for attracting foreign investors and visitors to our country.’ he said.

Fifa, meanwhile, has made revenue of US$3.2-billion from hosting the tournament in South Africa, Fifa spokesperson Nicola Maingot said at the press conference, pointing out that World Cup revenue accounted for more than 90 percent of the governing body’s budget for a period of four years.

“So what this means is that the money has to sustain Fifa’s development programmes for the next four years,” Maingot said.

Source: BuaNews