The debate rages on {writer: Staff reporter}

The Fifa Soccer World Cup of 2010 offers enormous economic benefits for South Africa thanks to the transformation of limited and sometimes skewed perceptions about the Rainbow Nation, as well as the enormous positive spin-offs offered by the vast investment of R787 billion into infrastructure development and public transport.

This is the view of Guy Lundy, chief executive officer of Accelerate Cape Town and managing director of Centric Consulting, a corporate strategy consultancy.

Lundy’s refreshing perspectives offer new hope. It comes amid criticism by many that the Soccer World Cup, and particularly the massive infrastructure expenditure as well as public transport upgrades, would offer South Africa little in return, while Fifa would profit.

Debating the urban legacy of the World Cup

A new publication, Development and Dreams, investigates the urban legacy of the 2010 World Cup.

The contributors say that Fifa has already sewn up broadcasting and marketing rights worth R32bn.

South Africa had to make guarantees concerning immigration, exchange controls and power supply of 2 000 megawatts.

The positive spin-offs of the World Cup, according to the contributors to the book, would probably be the fast-tracking of upgraded transport infrastructure.

According to Development and Dreams, the World Cup will deliver tourists with little effort, but it will take hard work to get them to return, particularly to rural backwaters.

Doreen Atkinson of the University of the Free State suggests that the Karoo should be promoted like the Australian Outback.

But the book also warns about the development impact on South Africa. Their best forecast is an increase by 0.94% of gross domestic product and 50 000 additional jobs for the country.

This transient event is designed to profit Fifa, not South Africa, they say.

In 2006, Fifa made R17bn out of the Soccer World Cup.

Glynn Davies of the Development Bank of Southern Africa amusingly describes this as alchemy. There is little in the World Cup for the poor of South Africa.

Wits University’s André Czeglédy warns of “millenarian expectations” about an event geared to the profit of those under a “corporate umbrella”, but not to employment. The optimism of street traders is likened to a cargo cult.

A case study in this book of Bertrams in Johannesburg, next to the Ellis Park stadium, shows that an opportunity for inner-city regeneration was swept under the carpet of Fifa’s tight deadlines.

But is this criticism vindicated?

Infrastructure expenditure essential

Lundy said the vast infrastructure investment was essential and is a prerequisite to get the economy to work. “Look at economies globally that do work. The one thing they do, is to spend consistently in infrastructure. The only shock in South Africa’s case is that such a massive amount is invested in such a short space of time.

“That was because we have not spent nearly enough consistently over time. In fact, we have gone 30-odd years without spending any significant amount on infrastructure so we had a lot of catching up to do,” he said.

“What this infrastructure expenditure does, is that it moves money around the economy. You circulate it around because you spend on labour to get things built, on steel, on concrete, on hiring equipment.

“It gives the economy a kick-start, and the longer term benefit is that it enables people to do business with each other more effectively.

“In countries like Cuba, where infrastructure development over a long period of time did not take place, they operate in a stagnating environment. The growth currently taking place in Angola is aided by the infrastructure development that is happening there,” Lundy added.

“Brazil, for example, is building infrastructure in a similar fashion to South Africa. They had similar issues to South Africa, as they also ran out of electricity, so they are also playing catch-up.

“In India, a lot of infrastructure development by the private sector is done because they cannot rely on government to build it. We won’t go the Indian route.

“It is not part of our culture to accept completely degraded infrastructure that is falling apart,” he said.


Speeding up the economy

Lundy said South Africa’s investment on improving the quality of public transport (R19.6bn by the government) is money well spent, as it enables the economy to run more smoothly.

He said he lived in South America and saw what happened to places that did not invest in public transport.

In São Paulo, with 25 million inhabitants, it was almost impossible at a stage during the early 1990s to move from point A to B and people were stuck in traffic all
day long.

The spin-off of an effective and reliable public transport is that it raises the efficiency of the economy significantly.

The criticism of people complaining that the Gautrain project and the bus rapid transit systems will not be ready for 2010 is misplaced. It was never meant to be ready for the World Cup, said Lundy.

Change in perceptions

Lundy said business confidence in Germany was at its highest for a decade during the months during which it hosted the Soccer World Cup in 2006. A sense of optimism and hope prevailed during the time when Germany qualified for the knock-out rounds.

This optimism and hope drives behaviour, and behaviour drives the economy.

When people are positive, and have belief that things will work out well – as the Germans did during the latter stages of their successful hosting of the World Cup – they behave in a way that is
self-fulfilling.

The Sydney Olympic Games put that country on the map as a tourism destination of choice.

Hosting the Soccer World Cup in 2006 also changed people’s perceptions about Germany after that event.

The greatest benefit for South Africa from the 2010 World Cup would be around perceptions.

Lundy says South Africa has proven it can host major sporting events very successfully.

Most visitors will also not be around crime hot spots and the South African government has the backing of a massive organisation and infinitely self-motivated Fifa, which will help to ensure everything runs smoothly.


Collective goodwill required

Lundy said the successful profiling of South Africa and the collective goodwill of South Africans would be paramount for the success and the economic legacy of the event.

“I would like South Africa to be profiled as a successful emerging nation in a complex environment that is successfully negotiating its unique challenges. I would like to see South Africa profiled in a more positive way that is more reminiscent of the way Brazil is profiled.

“If we want to be successful, we need to be all on message. That means we all back South Africa to be a successful host of the World Cup. What is disturbing is that for too long, many of us talked down our own country.

“We must work together to promote this country as a successful host instead of feeding negative perceptions with unfounded criticism,” he added.

Regarding criticism that a few of the World Cup stadiums may become white elephants, Lundy said some of the stadiums, such as the Green Point Stadium in Cape Town and the Moses Mabhida Stadium in Durban would drive significant activity.

Durban is positioning itself as Africa’s sporting and events capital and with the stadium it has, it can say that with confidence.

The Green Point Stadium will be iconic. The images of Cape Town are changing angles and the new tourism profile will enhance Cape Town’s image as one of the most beautiful cities in the world.

One or two stadiums may become white elephants, with concerns about Nelspruit.

Stade de France is a very experienced company in running stadiums successfully, and has done very well operating 10 stadiums across France. Lundy expects the company to be commercially successful with the Green Point Stadium.

Tourism spending –

R8.5 billion possible

Gillian Saunders, director of Grant Thornton Strategic Solutions which did a wide-ranging survey on the economic benefits of the Soccer World Cup, expects 487 000 tourists at the Soccer World Cup.

The expected tourism spending during the World Cup would be R8.5bn.

Of that amount, 25% of the soccer tourists would spend money on accommodation, 18% on transport and 15% on food.

The amount spent on transport in South Africa, as well as air fares, could be worth between R2.2 and R2.5bn to GDP.

In the food, beverage, leisure and entertainment industry, the amount spent by tourists during the Soccer World Cup could be worth between R3.3 and R3.9bn to South Africa’s GDP, according to the study done by Grant Thornton Strategic Solutions.

According to Saunders, it is possible that the vast television exposure could put South Africa in a completely different and much higher tourism bracket.


Tourism could soar after event

According to the Grant Thornton study, the estimated arrivals worldwide by tourists accounted to 9.1 million people in 2007.

That figure would swell in 2010 to 11.9 million, without World Cup projections figured in.

The projected figure for 2015 (without World Cup projections) would be 18.7 million, and with World Cup projections it would be 19.2 million.

According to Saunders, there could be a 60% increase on business and event tourism from 2005 to 2015, and a 6.5% increase on holiday tourism from 2005 to 2015 thanks to the World Cup.

In post-World Cup Germany in 2007, there was an overall 3.5% increase in arrivals and stays on 2006. There were 50 000 new jobs created, a hotel rate growth of 3.4% and an estimated boost to tax receipts of €600m over three years.

There was also a 20% increase in positive attitude toward Germany from fans of the last seven teams, compared to the attitudes tested before qualifying.

Saunders added that the Soccer World Cup could unlock new tourism markets for South Africa.


New trade and investment partners

Apart from opening the eyes of the world to South Africa as a long-haul tourism destination, it could also have a substantial trade and investment spin-off.

After the Cricket World Cup in 2003, in which India reached the final, some Indian companies began opening doors in South Africa, including Tata and Mahindra.

It is quite possible that a more comprehensive trade and investment growth could take place in South Africa and that more companies from different countries across the globe would be interested in this country as a business venue.


More than 35 billion viewers expected

An estimated 35 to 40 billion cumulative television viewership is expected for 2010.

There would be 18 850 media members visiting the country and 487 000 visitors, which offers South Africa a massive advertising and marketing opportunity.

Those 487 000 visitors are expected to spend between R12 000 and R13 000 in the country during the month of the event.

Saunders added that the Soccer World Cup in Germany contributed to a clear increase in the country’s GDP by 0.5% during that year.


Ellingson’s plan

Julie-May Ellingson, head of the eThekwini 2010 Project, said it envisaged the Moses Mabhida Stadium in Durban as a seven-a-day-week operation.

“Different parts of the stadium will be open to the public all the time. People will be charged a fee for riding the sky car.

“There will be restaurants in the northern and the southern parts of the stadium, sports-good shops, a gymnasium and a tourism office,” she told the Sunday Times.

“Further financial sustainability will come from hosting other events such as music concerts, Twenty20 cricket, athletics and show jumping,” she added.

Lindani Mbunyuza, a representative of the National Treasury, said the amount of R30bn for the Soccer World Cup stadiums must be seen in perspective.

“In effect, 2010 was the catalyst for the government to commence with large-scale infrastructure projects and several projects that they were contemplating for the future were brought forward.

“The amount of R30 billion includes money that would have been spent in the future in any case,” Mbunyuza said.

Growth of more than 1.2% possible

Dawie Roodt, chief economist of the Efficient Group, says R30bn has been invested in the World Cup stadiums.

The original estimated figure in 2006 was R14.9bn.

One must take into consideration that not all of that capital is invested simultaneously, but is spread over a long period of time.

The infrastructure development of R787bn for South Africa is also an amount invested over several years.

The total capital investment by the state annually is R700bn. Also, the politicians erred by not investing more in infrastructure development earlier.

They were focusing more on social investment than on capital investment, and waited too long to focus on infrastructure modernisation, a factor that was exposed by the lack of service delivery by Eskom in 2008.

The greatest impact for South Africa could be after the World Cup.

In a study on the economic impact of the World Cup on host countries from 1954 to 2002, it was found that the economic growth of the host country increased by 1.2% per year over the two years after the event.

The economy could receive a major boost with 487 000 people visiting the country, as well as the enormous value that good infrastructure and the positive impressions it would create, would have on tourism perceptions post-2010, said Roodt.

It is possible that the South African economic growth could be higher than the 1.2% experienced by other host countries from 1954 to 2002, simply because of the fact that South Africa is an emerging economic power.

Furthermore, growth will take place from a lower base and would be less robust after the economic recession under normal circumstances, which makes an accelerated growth of more than 1.2% all the more possible.

The one factor that is paramount for South Africa is the image portrayed by the country during the Soccer World Cup.

An upsurge in crime during the Soccer World Cup, or strikes by the police, defence force or other service delivery industries, could create a negative impression that would reflect badly on South Africa as a tourist destination of choice, says Roodt.

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