The soccer World Cup in South Africa was – by almost all accounts – a fabulous success. The feel-good factor was perhaps best expressed by Ferial Haffajee, editor of the Sunday newspaper City Press, who told New Yorker correspondent Charlayne Hunter-Gault that it was as if “somewhere in our tattered souls we had all found our inner Madiba” – a reference to the affectionate name given to South Africa’s beloved former President Nelson Mandela and the warm glow associated with him.
After South Africa’s fractious election of 2009 and on the cusp of the first economic recession since the African National Congress government took over in 1994, the country needed something to lift the national mood, and this did the trick.
If there were a relative of the word schadenfreude that meant ‘a sense of triumph that someone else’s worst fears did not come true’, South Africans would still be full of it. The waves of negativity and fear from abroad – about crime, safety, infrastructure failures and organisational hitches – were all swept away in a blare of vuvuzela-inspired cacophony.
Now that the dust has settled, it appears that crime rates were low and the hundreds of special World Cup courts stood empty most of the time. The stadiums were packed and the attendance at the games was the third highest in history.
The International Federation of Association Football, commonly known by its French acronym FIFA, apparently achieved its ambitious financial targets with ease despite the global recession. Even the ‘right team’ won: the Spaniards were pre-tournament favourites and they consummated their rating. But was it also a financial success for South Africa?
This is a surprisingly hard question to answer, notwithstanding a whole basket full of non-financial benefits and some obvious financial ones. The broader economic benefit has to include the ongoing use of the infrastructure and the tourism benefits in the future – as well as to account for the opportunity loss involved if the same money had been spent on something more useful.
Ahead of the tournament, accountancy group Grant Thornton estimated the ‘gross economic impact’ in numerical terms to be about $12.4 billion. Foreign tourism accounted for 16 percent of this. It also included government infrastructure spending of some $4.2 billion, with a further $1.2 billion or more spent by cities and provinces.
As things turned out, the expectation of 483,000 World Cup visitors was rather inflated and the actual number of arrivals ended up being about 250,000. In part, this was because South Africa is an expensive long-haul destination. It also appeared that more ‘normal’ tourism was displaced than expected, with tour groups avoiding the country during the period. This was rather similar to Greece’s experience during its Olympics Games.
What is more, although pre-tournament research had suggested a high number of visitors from the African continent would come, and much of the tournament’s marketing described it as the ‘African World Cup’, the actual number was very disappointing. Ticket sales to Africans outside South Africa accounted for only 2 percent of the total, or about 11,300 people – only a quarter of the number originally expected.
Travel to South Africa from African destinations turned out to be simply unaffordable for ordinary people. Most of the African visitors came from Botswana, South Africa’s richest and closest neighbour to the stadiums around Johannesburg.
Yet, the tourism authorities are not discouraged. The key advantage of the tournament was that it generated tourism from ‘non-traditional’ countries. South Africa barely gets 5,000 tourists a year from Mexico but suddenly it had treble that in a single month.
This same contradictory picture is true of the infrastructure spend. South Africans are most proud of their exceptional new stadiums, five of which were built from scratch, while three others underwent major upgrades. About $2.7 billion was spent on arenas that are truly magnificent engineering achievements, though it remains to be seen whether they were actually worth it. The grand Durban venue is actually almost across the road from a rugby stadium of similar size. In the 2009-2010 season, about 200 games were played as part of South Africa’s Premier Football League, but only four of these drew more than 40,000 fans – the size of the smallest of the World Cup venues.
The upgrading of roads and new public transport efforts seem much more likely to bring benefits in the long term. A good example is the metropolitan rail line, the Gautrain. The project was actually planned before the hosting of the World Cup was secured, but its first phase, linking Johannesburg’s O R Tambo Airport with the financial centre of Sandton, was rushed to completion in time for the tournament.
The train carried more than 400,000 passengers between these two points, about quadruple the anticipated number, in the World Cup month of June alone, and even after tournament ended, it continued to carry something close to double the initial estimates.
The true value of the World Cup for South Africa was not so much the immediately quantifiable benefits, but the more intangible ones. KPMG senior economist, Frank Blackmore, told a post-tournament briefing that the World Cup had “rebranded the country” and had created a favourable climate for direct foreign investment and tourism growth. Perhaps as important was the experience it gave South Africa’s fiscally cautious government of the positive effects of signing off on ambitious infrastructure projects.
Discovering your inner Madiba, it turns out, has an economic dimension too.
