Economic History

Economic and Social Impact of the World Cup on South Africa

Alexander HURST (2012), Amherst College, B.A in Political Science.

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       In the summer of 2010, sixteen years after the fall of apartheid, South Africa hosted the World Cup to the fanfare of buzzing vuvuzelas. It was a remarkable transition for the nation that had been banned from the global tournament by FIFA in 1961. South Africa was hoping that the opportunity to host the biggest spectacle in the world would be an opportunity to continue its societal transformation and economic development.

     Nations and cities are often motivated to host mega-sporting events in hopes of showcasing the country or city as a destination, creating new trading partners, boosting tourism, creating jobs and business opportunities, urban renewal, including housing and sports infrastructure (Preuss 2000). South Africa added to these goals national unity, patriotism, nationalism, and the coalescing of both white and black South Africa around the common goal of presenting the games and rooting for Bafana Bafana, South Africa’s national soccer team.

       Even more than an opportunity for South Africa, the 2010 World Cup was seen as an African achievement. Looking beyond just the borders of his nation, South African President Thabo Mbeki thought that the Cup would “send ripples of confidence from the Cape to Cairo,” enabling historians to look back on “a moment when Africa stood tall and resolutely turned the tide on centuries of poverty and conflict” (Cowell, 2009).

        But in hindsight, were these lofty goals accomplished? Or was Africa’s first ever World Cup just an enormously expensive mistake? This paper examines the impact of the world cup both on South African society and economy. Economic goals are easy to quantify and examine; social outcomes much less so. However, ultimately I argue that hosting the World Cup was a good thing for South Africa, even though there are numerous critiques to be made regarding its economic consequences and implementation.

          I/ Economic Impact

       The economic impact of hosting large-scale sporting events is always a controversial issue—whether the money should be spent, whether the returns will be great enough, the opportunity cost of World Cup related spending, and the social distribution of benefits. Though the total benefits to South Africa of hosting the World Cup exceed just the narrow focus of economic costs and returns, on this front alone the Cup was not a failure, though it has its critics. The most justified of these criticisms revolve around the failure of the economic gains to be evenly distributed among the population.

        South Africa directly spent over four billion dollars to host the cup (Cohen 2010), and billions more in corresponding infrastructure improvements in host cities (Desal and Vahed 2010, 156). In all, the government spent over R13 billion on infrastructure and transportation improvements. This spending directly created 130,000 construction jobs (Marcus, 2010), and the World Cup as a whole indirectly resulted in a gain of 415,000 jobs (Sylvester and Harju 2010, 8). Ultimately, the World Cup added 0.5%–or R93 billion—to South Africa’s GDP in 2010 (Ibid).[1]

        Critics argue that the infrastructure spending was too narrowly focused on the needs of the World Cup, and would have been better directed elsewhere. Economist Stephen Geld calculated that instead, the state could have built 90,000 new homes each year during that same period (Desai and Vahed 2010, 157). Indeed, the state was plagued with cost overruns that grossly exceeded the numbers put forward in its World Cup bid. Instead of the expected R818 million, stadium construction and renovation cost R16.4 billion—plus the continued maintenance cost for cities. And the 130,000 construction jobs were largely temporary.

       However, while stadium expenses may be a legitimate critique, infrastructure spending as a whole was largely justified, and did not in fact represent an opportunity cost. Many of the improvements the government spent money on for the World Cup—upgrading roads, airports, and rapid bus systems for cities—were sorely needed, and had actually been budgeted for in the state’s long-term infrastructure plan. In fact, compared to the planned R846 billion in infrastructure spending for 2010 – 2013 (Sylvester and Harju 2010, 5), the R13 billion attributable to the World Cup is relatively small.

     The far more legitimate critique lies in the way many infrastructure projects were carried out, and who reaped the benefits. At times, development and stadium building sometimes purposely was not done in poor areas, passing over stadiums that would have been more economically viable to renovate. Desai and Vahed (2010) point to FIFA as the culprit behind this, and a quote from a FIFA representative, “A billion television viewers don’t want to see shacks and poverty on this scale.”

       Because of that concern for global viewers, South Africa also engaged in widespread evictions in an attempt to close shantytowns. This goal of eliminating shantytowns in and of itself is not a bad one, but evictions were done with little care as to where families would be relocated, and families were moved rather than provided better housing in the same location. Cape Town became infamous for the thousands of people who were moved out of their homes or squatter’s settlements and moved to Bikkiesdorp, a “sprawling, remote camp consisting of about 1,700 identical metal huts on a wide plain of gravel surrounded by heavy concrete fencing,” (Werth 2010). Around the country this scenario of forced eviction was replicated for slum communities either situated on land close to stadiums or other infrastructure that was slated for construction, or that would draw the eyes of foreign tourists.[2]

        Furthermore, even needed infrastructure projects did not always benefit the poor and marginalized. The Gautrain, Africa’s first high speed rail, is a prime example of this. Although not specifically a World Cup initiated project, the Gautrain’s development corresponded to the tournament, and cost R24 billion. However, the R100 ticket price to take the train is far out of reach for many in South Africa, including the extraordinary number of people living on only slightly more than $1 a day. The train runs mainly through affluent areas, and so really only serves the well off.

        Additionally, the potential benefits to local entrepreneurs and the local economy were shortchanged as well. FIFA, which pocketed over $3 billion from the World Cup (it’s most financially successful ever) has been highly criticized for commercialization at the expense of these local entrepreneurs. Desai and Vahed even went so far as to call the World Cup a “classic example of public funds being used for private profit,” (2010, 157). Many South African entrepreneurs and small business owners were shut out of the potential markets created by games and their attendance by FIFA’s commitment to its corporate sponsorship. FIFA established zones around the stadiums in which commerce was exclusively permitted to its large sponsors, like McDonald’s. Local vendors, commonly seen selling food on the streets at soccer matches in Africa, were told that if they wanted to sell at the World Cup, they had to pay 60,000 Rand for an official food stand, a sum of money entirely out of reach (Bal 2010, 5).

        Not all researchers share this critical view about the economic impact of the World Cup. Some researchers argue that most of the evictions that took place in South Africa were relatively unconnected—they took place before, and continued to take place after the tournament (Werth, 2010). And others argue that a broader timescale is necessary for evaluating the economic benefits of hosting the World Cup. In their 2011 research paper, Antón, Alonso, and Rodríguez found that economic growth in host nations is highest during the two years after having hosted the World Cup, and suggest that the overall picture for South Africa will be an even more positive one.

       Nevertheless, looking at the World Cup through purely an economic lens masks a large portion of the impact the global soccer can have on a society—especially when that society is temporarily home to the biggest event in the world. Even if the economic gains of hosting the cup have been dubious, perhaps the social cohesion it inspired was well worth the cost.

         II/ Social Impact

       Economics aside, South Africa placed great hope in the possibility that the World Cup would shepherd transformations in society as well. Soccer as a tradition in South Africa has questionable beginnings. In the 19th and early 20th centuries, sports, including soccer, were taught by Missionaries to local populations as part of the ‘civilizing mission’ to Blacks. Once apartheid was formalized, however, the civilizing mission that had encouraged black participation in Western sports like soccer was replaced by a policy of ‘retribalization’ which encouraged black participation in amalaita, and ‘traditional’ dancing, and restricted or withheld access to sports facilities,” (Hammond 2011, 48).

       Nevertheless, sports, and soccer in particular, remained incredibly important to Black South Africa as well as White South Africa—and soccer played an important and central role in the transition from apartheid state to democracy. In 1985, the desegregated National Soccer League was formed (Alegi 2009, 127). Even before the new constitution had been fully completed, in 1991, formerly antagonistic soccer associations crossed the color line in a “unity process” and formed the South African Football Association (Ibid).

     “Mandela and the government of national unity turned to sport to build a new and inclusive sense of ‘South African-ness’ in a sports obsessed country with eleven national languages and deep racial and economic divisions,” (Ibid, 128). To this effect, a soccer match was staged as part of Nelson Mandela’s official inauguration ceremonies. And a short time later, South Africa got a preview f what the World Cup might bring. When the South African team won the African Nations Cup, defeating Tunisia, both Black and White fans came together in the streets to celebrate in “peaceful sportive nationalism,” (Ibid).

       Thus, the World Cup can in some ways be seen as bridging of these two histories—sport introduced, and then taken away, from Blacks as a tool of oppression, but now reclaimed by Bafana Bafana. Furthermore, beyond this symbolism, the South African government desired to use the World Cup to inculcate a “banalized” nationalism (Ndlovu-Gatshen 2011, 282). That is, they desired nationalism not as a movement, which is often expressed through xenophobia and exclusion, but as a part of everyday life in the way it exists within many older nation states.

       The use of sports as a way to create unity is no new concept. Sports create community and a sense of identity, and as such can act to facilitate healing. Rooting for the same team, celebrating the same victories, bemoaning the same losses, brings people together, much like war produces a ‘rally around the flag’ effect within a nation. Mandela recognized this when he donned a Springboks jersey in support of the national rugby team shortly after the fall of apartheid in 1995, as both a gesture to White South Africa and an attempt to create common cause and pride through international sporting competition (Cowell, 2009).

   In order to produce banal nationalism, the government attempted to use the international competition as something around which both White and Black South Africa could unify, root for, and be proud of. Sports regalia with the colors of the national flag was promoted, and Fridays were designated “football Fridays,” when workers were allowed to wear such sports regalia to work. In many ways, the World Cup was highly successful in achieving these social goals.

       “There is no doubt that the World Cup really ignited spasms of patriotism and positive nationalism. It became ubiquitous for a month and pan-Africanism was constantly flagged alongside South Africanism. Even the fact that Bafana Bafana failed to win the competition did not diminish the patriotic spirit, because the major win for the country was in successfully bidding for and hosting of the World Cup and Ghana’s national team soon became the African hope after the exit of Bafana Bafana.”(Ndlovu-Gatshen 2011, 290)

       Unfortunately, full access to the unifying aspect of games wasn’t available to all of South African society. In a nation where the per capita GDP is around $10 thousand, and a quarter of the population lives below the poverty line, many South Africans could not afford to pay the 570 Rand that the cheapest tickets cost. Unlike many previous tournaments, vast numbers of the tickets slotted for locals went un-purchased. Coupled with decreased attendance overall due to the economic crisis, many seats in stadiums went unfilled during the matches.

        Critics not only bemoaned that ticket prices did not match the local economy, they also argued that the social unity brought by the Cup was largely temporary. They pointed out that different segments of South African society sung different portions of the national anthem (which bridged the old apartheid national anthem—though with changed lyrics—with the Black struggle song ‘Nkosi Sikelel’ iAfrika,’ sung in Xghosa and Zulu. At the end of the month long event, critics claimed, everyone would go back to their separate lives, and the rallying around the South African colors would once again give way to the way that White South Africans identified themselves with their various European national heritages, as well as the civic identity of their place of residence (Ibid).

       Conclusion

      The 2010 World Cup should be judged differently than comparable mega sporting events hosted by other nations. The 2004 Greek Olympics, the 2014 World Cup in Brazil—these deserve more scrutiny based purely on the economic returns, and the quality and necessity of the infrastructure built to accommodate them. The economics of South Africa 2010 mattered—a great deal—but it was always about more than that. The World Cup was about producing something that cannot be monetized and quantified. It was about creating pride, commonality, shared stakes in something greater, and showing the world—and itself—that South African society had achieved an incredible transformation.

      The World Cup largely succeeded in producing these feelings and increasing social cohesion. Nevertheless, it was marred because even in its success in bringing people together, large and often forgotten segments of South Africa were once again left out. No single event could have been a panacea for all of South Africa’s development problems, yet it remains a lasting shame that the promise and opportunity the Cup presented was dampened by forced evictions, and restrictions on access—both for excited fans and enterprising locals.

References

Allie, Mohammad. “South Africans Fight Eviction for World Cup Car Park.” BBC News. June 2, 2010. http://www.bbc.co.uk/news/10205455

Anton, Antonio J. Monroe, Juan Jose Méndez Alonso, and Gema Sáez Rodriguez. “Mega-Events Impact on Economic Growth: Analysis of the South African World Cup.” African Journal of Business Management. Vol. 5, August 18, 2011, 6940 – 6948.

Bal, Sharan. “Fifa Fails to Score at World Cup.” CSR Asia Weeklyhttp://csr-asia.com/upload/cover/307059103144.pdf

Cohen, Mike. “South Africa Losing World Cup Bonanza as Costs Keep Fans Away.” Bloomberg, March 22, 2010. http://www.bloomberg.com/apps/news?pid+newsarchives&sid=aRFbYA.VfNxA

Cowell, Allen. “World Cup Whose Meaning Goes Beyond Soccer.” New York Times. December 28, 2009.http://www.nytimes.com/2009/12/29/world/africa/29iht-letter.html?_r=2

Desai, Ashwin, and Goolam Vahed. “World Cup 2010: Africa’s Turn or the Turn on Africa?” Soccer & Society, Vol. 11, Nos. 1 – 2. January – March, 2010, 154 – 167.

Hammond, Nicol. “The Disharmonious Honking of the Vuvuzelas: Homegization and Different in the Production and Promotion of the 2010 Soccer World Cup in South Africa.” Soccer & Society, Vol. 12, No. 1. January 2011, 46-55.

 Marcus, Jeffrey. “South Africa Wonders What Lies Beyond the Cup.” New York Times. July 12, 2010. http://www.nytimes.com/2010/07/13/sports/soccer/13legacy.html

 Ndlovu-Gatshen, Sabelo J. “The World Cup, Vuvuzelas, Flag-Waving Patriots, and the Burden of Building South Africa.” Third World Quarterly, Vol. 32, No. 2. 2011, 279 – 293.

Preuss, Holger. Economics of the Olympic Games: Hosting the Games 1972 – 2000. Sidney: Walla Walla Press, 2000.

 Sylvester, Justin and Daniel Harju. “What’s Left After the World Cup?” Idasa. 2010. http://www.idasa.org/media/uploads/outputs/files/epolitics1.pdf

 Werth, Christopher. “Kicked Out for the Cup?” The Daily Beast, June 3, 2010. http://www.thedailybeast.com/newsweek/2010/06/04/kicked-out-for-the-cup.html

[1] Fully judging the economic consequences of the World Cup is difficult, because the whole story of gains may not be finished yet. In their 2011 research paper, Antón, Alonso, and Rodríguez found that economic growth in host nations is highest during the two years after having hosted the World Cup, and suggest that the overall picture for South Africa will be an even more positive one. So a broad timescale may be necessary for a comprehensive evaluation.

[2] It should be noted that some researchers dissent from this point of view, and argue that most of the evictions that took place in South Africa were relatively unconnected—they took place before, and continued to take place after the tournament (Werth, 2010).

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