World Cup: no short-term cure for South Africa’s economic woes but long-term boost likely

World Cup no panacea for SAFrica’s economic woes

JOHANNESBURG — South Africa may reap a long-term windfall for defying the skeptics and successfully hosting the World Cup. Short term, however, the profits are heading elsewhere while unions gripe and the nation’s already staggering unemployment rate climbs even higher.

Tournament organizer FIFA is happy with near-record ticket sales and huge global TV audiences. Some of its major international sponsors also are reporting record sales.

Yet official jobless figures released during the tournament revealed that the extensive World Cup-related preparations — including several billion dollars worth of new stadiums and transport infrastructure — didn’t prevent a further economic downturn in South Africa.

According to Statistics SA, 79,000 non-farm jobs were lost in the first quarter of this year, and 242,000 in the 12 months ending in March. The jobless rate is above 25 percent — and more than 30 percent if those who’ve given up job-hunting are included.

Patrick Craven of the Congress of South African Trade Unions, the nation’s largest labor federation, described the job figures as “extremely alarming” and said there is an urgent need to create more manufacturing jobs.

Economist Mike Schussler, co-owner of a Johannesburg consulting firm, said South Africa (population 48 million) now has more people on welfare than it does in its active work force. And Luke Hirst, managing director the debt management company DebtBusters, said there was a big surge in June in the number of unemployed people applying for debt counseling.

The World Cup preparations did create tens of thousands of new construction jobs, but most of those were temporary. Economic experts said one key question is whether the government will continue to pursue ambitious and badly needed infrastructure projects in the coming years without the pressure of World Cup deadlines.

“The World Cup took us forward 20 paces. Maybe we’ll go back 10 or 12 paces afterward, but we’ve still got a net gain,” said Lee-Anne Bac, a director of the financial consulting firm Grant Thornton. “We’ve got the momentum and we need to keep it going.”

Short term, there are some clear winners from this World Cup, including FIFA — which estimates it will earn $3.3 billion from marketing, TV rights and other initiatives.

Adidas, one of the official sponsors, has reported record sales of soccer balls and jerseys this year, and declared the World Cup a resounding business success.

Visa, another sponsor, says spending by foreign visitors in South Africa using Visa cards jumped 68 percent in June compared to the same period a year earlier.

“This is a great strategic property for us,” said Visa’s chief marketing officer, Antonio Lucio.

The economic intricacies of this World Cup already are being studied in Brazil, which will host the tournament in 2014.

Underestimates of total costs, the security budget, political infighting on where public funds should be directed — these were challenges in South Africa and are likely to resurface in Brazil.

Brazilian taxpayers are concerned they will foot a much larger portion of the bill for 2014 than is now anticipated. They need only recall the 2007 Pan American Games held in Rio de Janeiro — which ended up costing three times more than expected, most of that covered by public spending.

For South Africa, the short-term picture is mixed. Certainly, there was a World Cup bonanza for many hotels and restaurants in the host cities — aided in some cases by jacked-up prices.

Long term, however, there’s a broad consensus the nation will benefit from confounding widespread doubts and proving a competent host for Africa’s first World Cup.

The huge investment in public transportation and other new infrastructure will pay off over the next couple of decades, and positive word-of-mouth from World Cup visitors is likely to boost future tourism.

“The international media spotlight has been on our country,” President Jacob Zuma said this week. “The world has seen this country in a different light. They have seen the warm friendly people. They have seen the precision when it comes to planning and logistical arrangements.”

Marius Roodt, a researcher at the South African Institute of Race Relations, recently wrote an economic analysis of this World Cup, concluding that from a purely financial standpoint it was a dubious enterprise.

However, he said that by meeting construction deadlines and providing a warm welcome to throngs of tourists, the tournament provided a unique opportunity for the once-ostracized nation to “rebrand itself.”

“South Africa and its taxpayers will be paying for this World Cup for decades,” he wrote. “But the value of the change in perceptions of this country and the continent will have been priceless.”

Associated Press correspondent Bradley Brooks in Rio de Janeiro, Brazil, contributed to this report.