Hosting the 2010 Soccer World Cup will add at least R21,4-billion to South Africa’s gross domestic product (GDP) and create 159Â 000 jobs, according to accounting firm Grant Thornton.
In addition to the direct benefits from hosting the World Cup, there are very many other indirect benefits such as increased optimism and therefore willingness to invest in the future.
Later this month or early June, for instance, the National Treasury will embark on a roadshow to Europe to gauge investor demand for South African government debt.
Now that South Africa has won the bid, many investors will want to share in the success of South Africa and any offer is likely to be over-subscribed with keen pricing.
This will allow the National Treasury to reduce its call on the domestic bond market, so lowering bond yields and therefore making it cheaper to fund the required infrastructure.
In a similar manner, the credit agencies may decide that winning the World Cup bid will so boost the South African economy that it warrants an upgrade, which once again lowers borrowing costs.
In 1995, when South Africa hosted the Rugby World Cup, real gross fixed capital formation (GFCF) rose by 10,7% on the previous year. That was the highest GFCF growth rate since 1988 and this time around, the GFCF growth rate should reach double digits once again from 8,4% last year.
The other two main beneficiaries are tourism and security firms as South Africa works hard in the run-up to the World Cup to eliminate crime by allocating more resources to this vital function.
Airlines will seek to make sure that they increase their capacity to service the South African market, which in turn makes it imperative that the La Mercy airport in Durban be built and completed before 2010, as many Asian airlines may find that landing in Durban is more attractive than landing in Johannesburg. – I-Net Bridge