Money is pouring in for the 2010 World Cup as the country anticipates an economic kick from hosting the world’s largest sporting event. With government providing billions of rands to upgrade infrastructure and depressed inner-city areas, there are indications that the private sector is following suit, particularly in Gauteng.
Experts say it is difficult to quantify the amount of private sector money, as there appear to be few researchers keeping track of investments. It is also difficult to tell if investments are specifically related to 2010, or would have happened anyway, given trends for inner-city regeneration and higher economic growth.
It appears that the World Cup has provided a springboard for other projects.
Barba Gaoganediwe, spokesperson for the Gauteng Economic Development Agency, known as Geda, says the Gauteng provincial government is spending R50-billion on 2010 preparations, of which the bulk will be spent on infrastructure, particularly public transport.
He did not specify if the Gautrain, estimated to cost R20-billion, will be part of that expenditure, but a new bus system is also being put in place and new highways are being built. The South African Rail Commuter Corporation will upgrade its railway stations and has begun running a luxury train service from Soweto’s Naledi station.
Gaoganediwe says there is increasing foreign interest in the possibilities offered by the World Cup. He says Geda has hosted at least 70 missions to South Africa in the past six months, from countries as diverse as Jamaica and Guinea-Bissau. As a result, Geda is trying to facilitate business links between local and foreign businesses.
Neil Fraser, who runs a consultancy focused on Johannesburg’s inner city, says an estimated R15-billion will be spent on the inner city alone in the years leading up to the event. He emphasises that this is a ballpark figure, as he has used only figures from projects he knows about directly.
Johannesburg’s landmark Ponte City building — a symbol of inner-city degradation in recent years — has been sold to property developers who intend to refurbish the tower at a cost of R94-million. Although the sale price is confidential, The Star estimated that the buyers, David Selvan and Nour Addine Ayyoub, paid close to R100-million for the building.
The refurbishment will be complemented by the Johannesburg Development Agency (JDA), which is spending millions to upgrade the Ellis Park area. “To date, approximately R60-million has been spent on the precinct and a further R150-million will be spent between now and July next year,” says Agmat Badat of JDA. The agency is spending R200-million to upgrade the stadium by July next year and R150-million has yet to be approved for upgrades in the precinct, he says.
On a national level, the Airports Company is spending R6,5-billion on major construction projects to ensure the country’s airports can cope with the influx.
Much of the private sector involvement comes in the residential accommodation sphere. Several new hotels have been announced, including the R1,2-billion Le Meridien Kruger Park Golf Resort and Spa in Hazyview, outside Nelspruit. Rumour has it that the Le Meridien hotel aims to host at least one World Cup team.
Cape Town plans to spend R6,5-billion on public transport in the next three years. Its convention centre will be expanded to the tune of R800-million, a project given added impetus by the possibility of it hosting the World Cup’s International Broadcasting Centre.
On the private sector side, R1-billion will be spent on upgrading the Waterfront and six new hotels are planned, Business Report said.
Small players are getting in on the action too — or trying to. Lindsay Jackson of the Guest House Association of South Africa says the organisation receives enquiries “almost daily” from people wanting to start guesthouses. “There has been a definite increase since the World Cup [was announced],” she says, particularly from Johannesburg and Pretoria. Since there are many guesthouses in the Western Cape, the effect of 2010 has been masked.
Barbara Hamm, from the Bed and Breakfast Association of South Africa, says while there is considerable interest, the costs and paperwork involved in starting an accommodation business means that anyone starting up now will be unlikely to find a viable business in time for 2010. “If you’re doing it just for 2010, you’ve missed the bus,” she says.
Prospective bed and breakfast or guesthouse owners have to comply with municipal regulations, as well as regulations governing health and safety. To be listed on Fifa’s Match company, where tickets and accommodation can be booked, establishments have to be graded.
But Hamm is unable to estimate the volume of investment. “It’s all a thumbsuck at the moment. There are no figures.”
Government has helped the sector by offering grants to tourism entrepreneurs. The Small and Medium Enterprise Development Programme, under review by government, pays entrepreneurs 30% of the cost of certain qualifying assets, such as buildings and vehicles. A consultant to the accommodation industry estimates that between 15% and 20% of the annual R750-million budgeted for the programme has gone to the short-term accommodation sector. He says foreigners are increasingly involved, making up about 20% of his client base.
Another programme, the Tourism Enterprise Programme, run by government and the Business Trust, provides training to small and medium tourism enterprises to ensure they benefit from 2010 and has helped 250 enterprises since its inception.