While FIFA has promised to give R9bn to global football from the profits of this year’s World Cup, the organisation will pocket over R25bn in total from this year’s showpiece, with little clarity on how much cash South Africa stands to gain from the event. Based on figures from the 2006/07 financial year, the profit from this year’s event promises to be far in excess of what was made during the 2006 World Cup in Germany.
The 2010 World Cup is expected to cause a spike in absenteeism resulting in a hefty R750m price tag for South African employers, but there are things that can be done to combat workers skiving off. According to Toska Kouskos, head of health management solutions at Alexander Forbes Health, one of the inconspicuous costs of the World Cup is the high numbers of people skipping work to watch football.
’What we have seen from other World Cups is that typically one in three workers take a day off during the event,’ Kouskos said in a statement. ’If you add that up, it comes to an estimated loss for the economy of R750m in a four week period over the World Cup.’
South Africa’s economy is expected to grow by 2.3% this year, boosted in part by the 2010 World Cup, after contracting by 1.8% last year, said Finance Minister, Pravin Gordhan. He said earlier forecasts predicted the gross domestic product would grow by 1.5% this year, notes an Insing.com report. The 2010 World Cup, which kicks off in June, has fuelled an overhaul of South Africa’s shoddy infrastructure and helped shore up the economy during last year’s recession, the first in 17 years.
SA’s 10 stadiums are ready to host the 2010 Soccer World Cup — now the fans need to come to the party, say the organisers. And no expense is being spared to make sure that Africa’s first World Cup will be a success. The national government will have contributed R11,7bn to the construction of five new stadiums, and the upgrade of five existing stadiums, says Treasury spokeswoman Thoraya Pandy.
The previous finance minister, Trevor Manuel , said in 2007 that R8,4bn had been set aside for stadiums.
There were signs of hope in the South African car sector for modestly better domestic sales in 2010, the National Association of Automobile Manufacturers (Naamsa) said on Friday. It also forecast higher levels of production on the back of continued recovery in demand in export markets. Moreover, the Fifa 2010 World Cup would boost demand in the car rental industry, promote tourism and spending and support further economic recovery, it added. ‘Also reduced cost pressures on the back of the exceptionally strong rand should facilitate stable new vehicle pricing for some time.’
The outlook for property for 2010, while still mild, was far better than 2009, auctioneers Alliance Group said Wednesday. “In 2010 people will start spending more as the stock market continues to rally and the economic outlook improves,” said chief executive Rael Levitt. Keeping the show on the road over the last 18 months of turmoil had been a true test for many developers, brokers and banks . “In 2010 the challenge will be to refocus on the long term and what the post-World Cup period will bring. “ 2010 may well be a tale of two halves,” Levitt said, adding that the impact of the World Cup in the first half of the year could not be overestimated.
South Africa’s wine industry expects increased global sales in 2010, although a strong and volatile rand currency threatens its long-term prospects, a senior official said on Wednesday. The sector expects the 2010 soccer World Cup to boost sales hurt by a global economic crisis and weakened economies in key export markets across Europe and in the US, said Su Birch, chief executive officer of Wines of South Africa (Wosa). WOSA represents all of South Africa’s major wine exporters, including Distell and KWV.
Nedbank: Credit demand to rise in 2010 – 05/01/2010
Credit demand tends to lag improvements in the real economy and will start rising convincingly only in the second half of 2010, Nedbank’s Economics analysts believe.
’However, the low base and some improvement in household demand for credit should mean that nominal growth will resume early in 2010.’ ’The approaching 2010 FIFA World Cup, lower interest rates and more stable employment conditions will help a gradual pickup in credit extended to households. In contrast, companies are unlikely to require much in the way of additional finance,’ the group said in economic comment note.
The Competition Commission’s handling of the fuel industry’s application for exemption from certain provisions of the Competition Act will make for an interesting case study. The industry, through the South African Petroleum Industry Association (Sapia), wants room to enter into agreements and engage in activities that are in contravention of the act. Business Day reports that the oil industry’s application comes shortly after fuel reserves at OR Tambo International Airport dropped to just two days’ worth in August.With the kick off of the 2010 World Cup only months away, SA can ill afford fuel supply security jitters. For the duration of the event, the margin for error for will be minimal.
Next year is likely to see increased government debate and focus on the rand’s value and appropriate level, which may well lead to downward pressure on the local currency, according to a leading economist. According to a Business Report, input from several analysts and economists reveals mixed views of the local currency’s value come the end of 2010, forecast at R7.50-R7.80, R8.00, and R9.00 versus the dollar, with factors including higher inflation, growing risk appetite, the current account deficit and the impending FIFA World Cup set to have a volatile impact on the local currency. Merina Willemse, economist at Efficient Financial Holdings said that despite the rand/dollar exchange rate’s relative strength, it is expected to weaken somewhat throughout 2010.
The 2010 World Cup may sell fewer corporate hospitality tickets than the tournament in Germany three years ago because of the global financial crisis, according to the event’s head of ticketing. However, the failure of international corporations to buy tickets for sport’s most-watched event may provide a cut-price opportunity for South African companies to entertain their guests. Several thousand seats reserved for corporate guests might be released back into the general allocation, said Horst Schmidt. ’We have to consider the development in the financial crisis worldwide,’ said the former general secretary of the German Football Association.
Economic impact of WC under the spotlight – 06/12/2009
More than 2.2m additional foreign tourists will visit South Africa between 2008 and 2015, thanks to next year’s 2010 World Cup. FIN24 reports that this is according to Gillian Saunders, a tourism expert at Grant Thornton, which recently announced the latest forecasts about the economic impact of the tournament. If one considers that 2.19m overseas tourists visited the country last year, the World Cup soccer tournament effectively gives the industry an extra year of foreign tourism. She expects the tournament to contribute R55.7bn to South Africa’s GDP, and 415 400 jobs to be created.
The 2010 World Cup is expected to inject R55 billion into the domestic economy, according to the Deputy Minister of Water and Environmental Affairs, Rejoice Mabudafhasi. The deputy minister said the Grant Thorn auditing firm, who had conducted the original economic impact assessment for South Africa hosting the World Cup, had found that not only would the event inject R55 billion into the domestic economy, but also create an estimated 415 000 new jobs.
Organisers of the 2010 World Cup do not expect the world’s economic recession to affect the number of visitors to the tournament. Organising committee chief executive Danny Jordaan told a press briefing on Tuesday that 450 000 foreign tourists are still expected to visit South Africa for the World Cup. ’I expect that the number 450 000 fans for the World Cup should not be adjusted,’ Jordaan said. ’We will remain with that figure for now.’ The tournament’s organisers have sold more than 600 000 tickets out of the 3.1 million available.
Advertising spend was expected to show some positive growth by the last two quarters of 2009 - but that was when the recession was expected to be short-lived, followed by a bounceback. Now a more grimly realistic mood has taken hold. Even lowered interest rates did not have the desired impact on consumer spending, Odette Roper, CEO of the Association for Communication and Advertising (ACA), weighs in. FIN24 reports that the 2010 World Cup was expected to be a beacon of light at this point. ’There’s been an uptick in industry activity, but at the moment it’s focused on sponsors and their campaigns.’ It’s still too early to see the impact the tournament will have at this juncture. BWA group MD Gavin Heron expects 2010 to continue the trend, with sponsors aiming to get the most out of their investment.
SA in the limelight for all the wrong reasons – 15/10/2009
Executives from the JSE, FNB and construction group Aveng have said the honeymoon SA will enjoy during the 2010 World Cup should be sustained through continued efforts to attract investment and tourism. But the JSE’s Russell Loubser warned such efforts could come to nought if the country continued to hog the global limelight for the wrong reasons, with negative media reports about crime and ill- considered statements by politicians such as African National Congress Youth League leader Julius Malema. Business Day reports that Loubser said the World Cup was bringing a much-needed boost to the economy. The immediate benefit, he said, was massive infrastructure spending associated with the tournament.
World Cup keeps car makers in the game - 03/10/2009
The global car industry has been hard hit by the recession, but several interventions abroad and the Fifa World Cup in South Africa hold the promise of keeping car makers afloat. In the first three quarters of 2009, new car sales fell by 30.3% from the corresponding period last year.
Only 294481 new vehicles were sold, compared to last year’s 422731.
This has had a big impact on jobs, with 15% of the workforce (about 5000 people) in vehicle manufacturing being cut since the beginning of 2008.
Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said the vehicle component industry lost more than 12000 jobs over the past 18 months.
Tourism Deputy Minister Thokozile Xhasa has singled out the tourism sector as a vehicle to drive global economic development, if it is managed well. Xhasa pointed out that tourism is one of the major contributors to South Africa’s Gross Domestic Product while the sector has created one million jobs both directly and indirectly.
With less than 300 days until the kick-off to the 2010 World Cup, Xasa said tourism events like this give South Africans an opportunity to promote the country.
2010 impact to be smaller than expected - 29/09/2009
The economic impact of the 2010 World Cup could be considerably smaller than people expect, notes a FIN24 report. ’They are just a bunch of soccer supporters,’ says Jeff Gable, head of Absa Capital’s research division. ’Although 64 soccer tournaments will be good for the country’s reputation, the economy is much bigger than this. What’s more, the effect of the tournament will be measured in two different quarters.’ The tournament begins on June 11, that is to say in the second quarter, and ends in the third quarter on July 11. ’I imagine the tournament will generate less than $1bn from soccer tourism,’ Gable added.
Current global conditions are an impediment but not a barrier to foreign tourists wishing to attend the 2010 World Cup, notes a FIN24 report. Interest in South Africa as a destination is on the increase as the tournament approaches. This is evident from a survey Visa conducted among 5 539 adults between 11 December 2008 and 8 January 2009 in eleven of South Africa’s most important tourist markets.
The long-term spin-offs of the 2010 World Cup will remain despite the global financial crisis and an economic recession locally, the LOC said in Johannesburg on Monday. ’I think that we are better off because during this crisis one of the things that people all over the world said was to invest in infrastructure roll-out, and the crisis found this country already in the phase of having invested and now completing infrastructure,’ LOC CE Danny Jordaan said at the Orlando Stadium during a discussion on the legacy the tournament would leave. The Mail & Guardian reports that Jordaan said top, world-class teams had recently qualified for the World Cup, including England, Brazil and The Netherlands, which meant many soccer fans would visit the country.
Socio-economic benefits of 2010 set to disappoint – 08/09/2009
The 2010 World Cup will most probably disappoint in the delivery of socio-economic benefits sold to the South African public by its promoters. That was the message from Rhodes University vice-chancellor Saleem Badat during a speech at the 2009 Highway Africa annual conference. The Herald reports that the three-day conference, held at Rhodes, drew more than 500 journalists from all over the continent. Badat cited a Human Sciences Research Council (HSRC) study which raised doubts about the development benefits to flow out of the World Cup. Quoting from the study, he said ’the event will unfortunately fall far short of (crucial socio-economic development) objectives’.
Though touted as SA’s ’new gold’ just a few years ago, tourism has not grown as expected in the run-up to the 2010 World Cup. The Financial Mail reports that tourism’s overall contribution to the economy was expected to hit 12% of GDP in 2010, from about 8,4% last year. But the number of foreign tourists visiting SA has dropped sharply - compounded by the recent rally of a stronger rand - and is expected to slide further. ’There is no doubt the industry continues to be affected by the global economic downturn. Tourists are also deterred by the strong rand,’ says Deloitte analyst Moray Wilson. During May, the number of foreign tourists visiting SA dropped 10,6% to 1,43m from April. SA residents leaving or arriving back dropped by 19,7%. However, sporting events - such as the Confederations Cup and the British Lions rugby tour over June and July - gave the industry some reprieve, boosting revenue per available room, the hotel industry’s key performance indicator, to 5,8%.
The two-day international Multi- Sectoral conference on ’decent work in the 2010 World Cup’ is under way at the Parktonian Hotel in Johannesburg. The Times reports that the conference is hosted by the Building and Woodworkers’ International, a federation of 318 construction trade unions around the world, representing 12 million workers, which includes the Congress of SA Trade Unions’ affiliate, the National Union of Mineworkers. Labour Minister Membathisi Mdladlana will deliver the keynote address. Other speakers include Cosatu general secretary Zwelinzima Vavi and FIFA international relations manager Itumeleng Dlamini.
There is no reason to cut back the number of foreigners expected to visit South Africa for the 2010 World Cup, notes a FIN24 report. According to Minister of Tourism Marthinus van Schalkwyk it can still be assumed that some 450 000 visitors will stream into the country for the event. Van Schalkwyk will shortly meet representatives of FIFA’s hospitality agency, Match, and will be in a position to make an announcement shortly afterwards.
An end to the recession might be in sight, say analysts, as major world economies pull themselves out of the economic doldrums. But South Africa is lagging behind the global recovery, with its economy having contracted by 3% in the second quarter, a less dramatic drop than the first quarter’s 6,4% dive. According to a report on the Sunday World site, Sanlam group economist Jac Laubscher says the economy will continue to stabilise during the rest of the year, but recovery will only begin in the second half of 2010. Huge government infrastructure projects and a construction boom tied to the 2010 World Cup have helped keep a floor under the economic fallout.
Hospitality, the listed hotel and leisure property loan stock company, says the leisure sector has been feeling the impact of the global financial crisis, particularly since the end of last year. According to Business Report, Gerald Nelson, the chief executive of Hospitality, said that the outlook for the sector remained challenging despite the recent interest rate cuts. ’The outlook for calendar year 2010 is more positive with the prospect of economic recovery and enhanced returns as a result of the lead-up to the 2010 World Cup and the event itself,’ he said. However, Nelson stressed it was important to note that only half of the event would take place within the company’s 2010 financial year.
Preparations for the 2010 World Cup are stimulating increased private investment, which will play an integral part in dampening the negative impact of the global recession on the South African economy. In fact, we believe South Africa will remain one of the few major emerging markets in which gross fixed capital formation will remain in positive territory in 2009. According to an Official Wire report, the World Cup event in 2010 is expected to be instrumental in leading to a relatively strong economic recovery by stimulating investment, service export growth and private consumption.
2010 WC will help SA recover from economic crisis - 06/08/2009
The 2010 World Cup was likely to contribute significantly to South Africa’s recovery following the global economic downturn, which struck during the second half of 2008, an economist said. Nedbank chief economist Nicky Weimar said that the World Cup would assist South Africa in growing its gross domestic product (GDP) to 1,6%. ’I am encouraged about the fact that a lot is expected from us,’ the local organising committee’s spokesperson, Rich Mkhondo said. Engineering News reports that he noted that the construction projects and activities associated with the 2010 World Cup would assist South Africa in its economic recovery.
Growing army of unemployed marches on - 03/08/2009
The growing army of unemployed South Africans is not going to be whittled down any time soon. Economists say the economic recession and labour’s stubborn approach in ongoing wage negotiations will certainly scare companies away from labour-intensive investments which have the potential to alleviate the country’s jobs plight. According to a report on the News24 site, there are fears that the construction industry, which has been the main source of employment, may start shedding jobs once some of the projects related to the 2010 World Cup are completed next year. About 22 000 of the one million employed in the construction industry are involved in the construction of 2010 World Cup stadiums.
