The World Cup of football, which took place in South Africa during the entire last month, has given an important boost to the African country’s economy. However, the end of this dreamy month brought, as expected, decline in sales for private businesses.
According to the Economist, the South African government estimated the GDP would grow due to the World Cup by 0.4% or 38 billion rands.
Meanwhile, FIFA was blamed by critics that it would take all the profits from broadcasting rights and leave South Africa, where 40% of the population lives on less then $2 a day with a very small share. The spending on stadium and transportation within South Africa in the four-years of preparation was 33 billion Rands ($4 billion), according to the Financial Times.
Although it was entirely predictable that restaurants, hotels and craft businesses would see a fall-off in business, there are other concerns, too. The economy, boosted by World Cup fever, seems to have hit a bump.
There are signs that manufacturing has been hit by the downturn in Europe and fears that slower growth in China could reduce demand for South African iron, coal and precious metal exports. And due the boost of money, South African’s businesses and companies are confident enough to borrow money, and local bankers believe that they are overconfident, according to a report by the Financial Times.
Although South Africa likes to measure itself by the same standards of the BRIC countries, a report published by the Organization for Economic Co-operation and Development provides another opinion. Unlike, Brazil, China, India and even Indonesia, which can provide jobs to 60% of its working age population, South Africa can provide jobs to only 40%.
"This infrastructure we have built is not for the short-term that you build today and destroy tomorrow,” says South Africa’s finance minister Pravin Gordhan. "We have increased the productivity of the people of South Africa, and all of that is part of our development and long-term planning for our country," Southafrica.info cited Gordhan.
Now, when the 2010 World Cup is behind us and behind South Africa, the government needs to work quickly in order to bring foreign and private investments, especially in the areas of rail freight and energy generation. The World Cup showed that partnerships between the public and private sector can work really well, the Financial Times reported. (BBJ)