With South Africans' dreams of soccer glory dashed by the elimination of their Bafana Bafana from the tournament today, fans may now be hoping that at least the World Cup will deliver on the economic boost its organizers have repeatedly promised them. They are likely to be disappointed again.
"We want, on behalf of our continent, to stage an event that will send ripples of confidence from the Cape to Cairo—an event that will create social and economic opportunities throughout Africa," former South African President Thabo Mbeki said in the run up to the tournament. While Mbeki touted the international attention the World Cup would bring to South Africa, the government of his successor Jacob Zuma has made much of the attendant infrastructure improvements. Following a victory by Bafana Bafana in a friendly against Columbia in the newly renovated Soccer City stadium on May 27th, the national spokesman of the ruling ANC party issued a celebratory press release suggesting that the upgrades would "make the country ready to meet the many demands of a growing economy."
The headline figures in a report from accountancy firm Grant Thornton released on the eve of the tournament seem to support the politicians' claims. Despite the dampening effect the recession and weak global recovery have had on attendance, their study predicted that World Cup could add as much as half a percentage point to South Africa's annual gross domestic product. That would be a huge boost for a country where GDP is only expected to grow by some 2.5 to three percent in 2010.
But there is good reason to question those figures. When the World Cup was first awarded to South Africa in 2006, the same firm predicted that readying the country's stadiums and infrastructure would cost only $300 million. The final price tag for hosting is now listed at more than ten times Grant Thornton's initial estimate: $3.5 billion. Furthermore, the games have done stunningly little to address South Africa's serious unemployment problem. In spite of the flurry of economic activity associated with preparing for the tournament, the country actually lost 79,000 jobs in the first quarter, bringing the official unemployment rate to an eye-watering 25.2 percent. As Simon Kuper and Stefan Szymanski noted in last years' excellent book, Soccernomics, "the raising and dashing of hopes of an 'economic bonanza' [has] become as integral a part of a modern soccer tournament as the raising and dashing of hopes that England will win it."
Recent dispatches from South Africa (coupled with the dismal play of Wayne Rooney) have conformed to the pattern the authors identified. A stadium built over local opposition on land appropriated from a school is struggling to reach capacity. Fans who can't afford to watch inside the stadium are unable to see the games in the townships because the power has been shut off. Wage disputes have led to violent protests with stadium security guards and threaten to cripple the national electric utility in the midst of the tournament. Local businesses attempting to cash in on the World Cup fever have been shut out or even sued by Fifa. (Unlike the host country, the Swiss-based soccer organization has already profited mightily from the events, leading some angry South Africans to don "Fick Fufa" t-shirts.)
Even if the Bafana Bafana had advanced, South Africans would still have every right to be upset about the economic impact of World Cup. The money spent building stadiums of highly questionable long-term value could have been better applied directly addressing the immense economic hardships faced by the third of South Africans who live on less than $2 a day. Potentially even more damaging than the heavy opportunity cost of such expenditures is the low-reward/high-risk wager involved in making one's nation the world's playing field. In spite of all the glowing praise that international sporting event host countries generally receive in global media coverage, none of the nations examined by Kuper and Szymanski experienced any appreciable rise in tourism or economic growth following their moment in the spotlight. Some hosts have been burned by dramatic events that were mostly beyond their control (see: the Summer Olympics in Munich and Atlanta). A serious incident off the field could set South African tourism back for years. The authors warn that, "the World Cup might persuade people that South Africa is not poor, corrupt, diseased, crime-ridden country; alternatively, it might persuade them that South Africa is precisely that."
One local columnist aptly describes the proceedings thus far as "teetering between triumph and disaster, not quite living up to the expectations of the evangelists, but not fulfilling the dire prophecies of the doom-mongers either." South Africa would be lucky to maintain that uneasy balance. Like the Bafana Bafana's surprise tie against Mexico in their opening game, perhaps the best economic result the host country can hope for from this World Cup is a break-even draw.