World Cup no panacea for SAFrica’s economic woes

South Africa may reap a windfall for defying the skeptics and

successfully hosting the World Cup but the profits short term are

heading elsewhere while unions gripe and the nation’s already

staggering unemployment rate climbs higher.

FIFA, the tournament’s organizer, is happy – with near-record

ticket sales and huge global TV audiences. Some of its major

international sponsors also are reporting record sales.

Yet official jobless figures released during the tournament

revealed that the extensive World Cup-related preparations –

including several billion dollars worth of new stadiums and

transport infrastructure – didn’t prevent a further downturn.

According to Statistics SA, 79,000 non-farm jobs were lost in

the first quarter of this year, and 242,000 in the 12 months ending

in March. The jobless rate is above 25 percent – and more than 30

percent if those who’ve given up job-hunting are included.

Patrick Craven of the Congress of South African Trade Unions,

the nation’s largest labor federation, described the job figures as

“extremely alarming” and said there is an urgent need to create

more manufacturing jobs.

Economist Mike Schussler, co-owner of a Johannesburg consulting

firm, South Africa now has more people on welfare than it does in

its active work force. And Luke Hirst, managing director of debt

management company DebtBusters, said there was a big surge in June

in the number of unemployed people applying for debt


The World Cup preparations did create tens of thousands of new

construction jobs, but most of those were temporary. Economic

experts said one key question is whether the government will

continue to pursue ambitious and badly needed infrastructure

projects in the coming years without the pressure of World Cup


“The World Cup took us forward 20 paces. Maybe we’ll go back 10

or 12 paces afterward, but we’ve still got a net gain,” said

Lee-Anne Bac, a director of the financial consulting firm Grant

Thornton. “We’ve got the momentum and we need to keep it


Short term, there are some clear winners from this World Cup,

including FIFA – which estimates it will earn $3.3 billion from

marketing, TV rights and other initiatives.

Adidas, one of the official sponsors, has reported record sales

of football balls and jerseys this year, and declared the World Cup

a resounding business success.

Visa, another sponsor, says spending by foreign visitors in

South Africa using Visa cards, jumped 68 percent in June compared

to the same period a year earlier.

“This is a great strategic property for us,” said Visa’s chief

marketing officer, Antonio Lucio.

The economic intricacies of this World Cup already are being

studied in Brazil, which will host the tournament in 2014.

Underestimates of total costs, the security budget, political

infighting on where public funds should be directed – these were

challenges in South Africa and are likely to resurface in


Brazilian taxpayers are concerned they will foot a much larger

portion of the bill for 2014 than is now anticipated. They need

only recall the 2007 Pan American Games held in Rio de Janeiro –

which ended up costing three times more than expected, most of that

covered by public spending.

For South Africa, the short-term picture is mixed. Certainly,

there was a World Cup bonanza for many hotels and restaurants in

the host cities – aided in some cases by jacked-up prices.

Long term, however, there’s a broad consensus the nation will

benefit after confounding widespread skepticism and successfully

staging Africa’s first World Cup.

The huge investment in public transportation and other new

infrastructure will pay off over the next couple of decades, and

positive word-of-mouth from World Cup visitors is likely to boost

future tourism.

“The international media spotlight has been on our country,”

President Jacob Zuma said this week. “The world has seen this

country in a different light. They have seen the warm, friendly

people. They have seen the precision when it comes to planning and

logistical arrangements.”

Marius Roodt, a researcher at the South African Institute of

Race Relations, recently wrote an economic analysis of this World

Cup, concluding that from a purely financial standpoint it was a

dubious enterprise.

However, he said that by meeting construction deadlines and

providing a warm welcome to throngs of foreign visitors, the

tournament provided a unique opportunity for the once-ostracized

nation to “rebrand itself.”

“South Africa and its taxpayers will be paying for this World

Cup for decades,” he wrote. “But the value of the change in

perceptions of this country and the continent will have been


Associated Press correspondent Bradley Brooks in Rio de Janeiro,

Brazil, contributed to this report.