Countries often compete for the right to host the FIFA World Cup Finals. Apart from Antarctica, it has now been hosted in all continents except for Australia/ Oceania. It has been widely suggested that the economic benefit from hosting a World Cup is often overstated. Fédération Internationale de Football Association (FIFA), the sport’s global governing body spent £800m in addition to the estimated £3.5bn (or 1.72% GDP) that was spent by the South African government on building and redeveloping stadiums, transport infrastructures and security of the event. Is it really worth it for South Africa to host arguably one of the biggest events in the modern world?
Tourism and retail were said to benefit most. Despite the empty seats spotted at several games, the number of transactions in South Africa using Visa-branded credit cards for the first 20 days of June was up by 60% compared to the same period last year (exceeded US$128m). In early July, the Finance Minister of South Africa announced that the tournament was projected to add 0.4% to South Africa’s real GDP.
It was estimated that with the creation of 130,000 jobs, with most of them being in the construction, roads and transport, and hospitality industry, leading up to the World Cup, the long run benefits for South Africa are definitely significant. A report by UBS Investment Research estimated that the 4 year preparation for the 2010 World Cup has added between 0.5% to 2.2% of GDP to South Africa’s economy, and 2.7% to the employment figure since 2006.
In addition, South Africa will also benefit from the infrastructure development to its transport, energy, telecommunication and social infrastructures. These infrastructures that were developed to support the World Cup may well be the catalyst for South Africa’s future economic development.
Hosting the World Cup had added values to South Africa’s hospitality and retail industries, employment and infrastructure development. Can these benefits justify the hefty expenditure? Or will South Africa gain more if these resources were to be used elsewhere? It is too early to draw a conclusion to this now. It is up to the government as to how they are going to maximise their benefits now that the game is over.
