South Africa Draws Praise as World Cup Concludes
Pravin Gordhan, South Africa's finance minister, speaks during an interview in London. Photographer: Chris Ratcliffe/Bloomberg
July 12 (Bloomberg) -- Bloomberg's Rachel Brookes reports from Johannesburg on the companies that have benefited financially from the soccer World Cup in South Africa. (Source: Bloomberg)
South Africa has pulled off what many said couldn’t be done: a soccer World Cup that filled stadiums and gave thousands of fans a party they won’t forget.
The month-long tournament, the world’s most-watched sporting event, ended yesterday with a victory for Spain at Soccer City stadium in Johannesburg. Foreign visitors to the competition may have numbered half a million, the Finance Ministry said, exceeding an earlier estimate by 200,000.
The absence of any serious crime, the tournament’s smooth operation and the publicity given to South Africa will help the country shed its reputation for murder and racial tension, said Pratibha Thaker, Africa director at the London-based Economist Intelligence Unit. Now, Finance Minister Pravin Gordhan says he hopes the country can use that drive to tackle unemployment, AIDS and poor educational standards.
“Before the World Cup, the news was all about crime and AIDS,” Thaker said in a July 5 phone interview. “What we’re seeing now is a very favorable image. This will help to boost tourism and boost the recovery. It’s crucial that the government keeps the momentum going.”
South Africa’s high school graduation rate has dropped for the past six years, more people suffer from AIDS than in any other country, 2.1 million people are on waiting lists for public housing and the 25.2 percent jobless rate is the highest of 62 countries tracked by Bloomberg.
Poverty and Unemployment
If government, business and labor unions “can play as a team, we can scale up our collective efforts towards the improvement of all South Africans,” Gordhan told economists in Johannesburg on July 8. “What we’ve learned from the six years of preparation for the World Cup is that if we can focus our minds, we can put an end to poverty and unemployment in this country.”
More immediately, the tournament may encourage more people to visit South Africa, where tourism represents 7.9 percent of the economy and employs 920,000 people. The industry earned 79.4 billion rand ($10.5 billion) last year, compared with 48.7 billion rand from gold mining.
“The real benefits lie ahead of us, provided we work hard to nurture new relationships and draw numbers of new tourists and investments to our shores,” Nobel laureate Archbishop Desmond Tutu said in an e-mailed statement today.
Johannesburg-based Tourvest Investment Corp., Africa’s biggest package-tour operator, and Peermont Global Ltd., owner of the Emperor’s Palace resort, say they plan to step up investment in anticipation of a tourist boom.
Even if only a small proportion of the final’s estimated 750 million viewers visit South Africa, “that would be a very meaningful increase in the number of tourists,” Peermont Chief Executive Officer Anthony Puttergill said by phone from Johannesburg on July 2.
‘Play as a Team’
Though some of the 43 billion rand spent preparing for the World Cup went for building or renovating 10 stadiums, South Africa also invested for competitiveness. It upgraded a 50- kilometer (31-mile) highway between Pretoria and Johannesburg to 10 lanes, set up a new bus system with dedicated lanes and built a rapid train service from Johannesburg’s airport to Sandton, where the stock exchange is based.
The new roads will slash commuting times, and the airports and train service will make life easier for tourists and business travelers.
The World Cup has helped South Africa learn “expertise to deal with creating jobs, improving education and providing health services,” President Jacob Zuma told reporters in Johannesburg today. The payoff of the tournament will be increased tourism and investment, he said.
“We mustn’t underestimate the change in perceptions about South Africa and our continent,” Maria Ramos, CEO of Barclays Plc’s Absa Group Ltd., the country’s third-largest lender, said on June 27. “People have visited and had a good time. The dividends of that we’ll be reaping for a long time.”
Crime and Punishment
South African officials took extraordinary measures to prevent crime against tourists in a country where the murder rate is six times higher than in the U.S. and almost 12 times the level in Britain. The government set up 56 special courtrooms to try offenses related to the World Cup, such as theft and violence. They have seen only 194 cases, almost all for petty crime.
“The police were efficient and the special courts were effective,” the competition’s organizing committee chief, Danny Jordaan, said on July 9, according to the South African Press Association. “The question is how do we maintain this?”
Peter Attard Montalto, an economist at Nomura Plc in London, said he was skeptical the tournament’s success will result in increased investment or transform the efficiency of the state.
“People soon forget the World Cup when you start talking about the outlook for wages, electricity prices and the issues around supply-side constraints, such as education and health,” Montalto said. “It always comes back to the bottom line.”
Less Than Ghana
Investment in South Africa was 19.3 percent of gross domestic product last year, compared with 26 percent in Nigeria, 30 percent in Ghana and 29 percent in Senegal, according to the International Monetary Fund.
“South Africa has been moving too slowly,” Mark Mobius, who oversees $34 billion in emerging-market investments at Templeton Asset Management Ltd., said by phone from Hong Kong. “They are not moving at the pace that is required to prevent major political upheavals.”
South Africa’s economy, which contracted 1.8 percent in 2009, needs to grow by 6 percent a year to reach the official goal of reducing unemployment to 14 percent by 2014, according to the government. Unemployment and housing shortages fueled a wave of protests in townships around the country earlier this year.
“South Africa will certainly benefit from the World Cup in terms of tourism,” Iraj Abedian, chief executive officer of Pan-African Capital Holdings Ltd., a Johannesburg-based adviser to potential investors, told reporters on July 2. “The question is whether we can use the same level of coordination and political will to get it right on housing, education and health care.”
To contact the reporters on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net; Mike Cohen in Cape Town at mcohen21@bloomberg.net
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