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
“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
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
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.