South Africa spent a bundle on stadiums, but World Cup will pay off
A funny thing happened on the way to South Africa's World Cup. Africa found its confidence and greater sense of unity. New foreign investment, more tourist dollars, and greater economic prosperity seem just around the corner.
Johannesburg, South Africa — Yesterday I found myself in the Nelson Mandela Square reading the inscription at the feet of a supersized statue of the pan-African colossus, Nelson Mandela (see My Twitpic here), and the inscription reads 'A Celebration of Hope.' I thought of another "man from Hope" but that man was from another continent. And while loitering around the great man's feet, I caught sight of a diminutive Sepp Blatter [chief of world soccer's governing body, FIFA] exiting his redoubt at the Michelangelo Hotel, with a posse of 8 Gullivers, and, as is my wont, I sliced through the posse like a hot knife through butter and greeted the Napoleon of soccer in my best Swiss German.
Now the South Africans have spent a pretty penny on FIFA's instruction. They have built wonderful new stadia, upgraded the roads, built a new fast train among countless other spending.
A lot of my economist friends are referencing Greece and its now supreme closeness to bankruptcy and citing the Olympics as an example of how such an enterprise as the World Cup or the Olympics can cripple a country and force the country to countenance having to sell off its most treasured islands. The Greeks are apparently considering selling that prized lotus island of Mykanos. My South African geography is not that accomplished, but Robben Island might not be as easy a sale as Mykanos!
FIFA is and always will be a capitalist enterprise. Blatter and his FIFA posse are infamous for a Diktat approach. They are not exponents of “patient capital” or “social investing,” which is all the rage here in Africa. It might salve consciences but actually is a lot of hot air, in my book. FIFA is a capitalist enterprise and it is naive of anyone to have thought otherwise. Blatter apparently disabused the Zuma government rather brusquely of that notion.
The question therefore actually recalls the Gipper, President Ronald Reagan and his famous "trickledown economics."
Is the World Cup going to be a giant white elephant? You do not have to be a rocket scientist to work out that stadia are probably in fact one of the worst investments any sovereign country can undertake. What will they be used for once the World Cup is over?
However, that is a collateral price that South Africa had to pay. It was the ante South Africa had to pony up to host the beautiful game. The roads and the fast train are entirely different. They will be there for years to come when all the fans have gone back home.
The sense I have is that the World Cup has tipped the country in ways that are difficult to measure empirically. It has forged a greater unity among this Rainbow Nation. I was here 5 Years ago and recall how ghettoized the country was.
Today, the mood is tangible and the vibe so strong I occasionally feel I can touch it. Most of all, I think this World Cup has put President Obama's famous words "Yes, we can" on the lips of every South African and even nearly 1 billion Africans' lips. I believe this is important. Confidence measures have spiked.
The South African equity market pushed into positive territory briefly last week but is now back in the negative column for the year. I sense a concern among those folks whose opinion I count that there might be a letdown once this is over. A letting out of the air from the balloon. That is the nature of the markets. They do not go up in a straight line. However, in a world where everyone has to capture each other’s attention [after all that seems to have been the sole raison d'etre of Dubai], I think the World Cup has been an economic breakthrough tfor South Africa and the continent.
--- Aly-Khan Satchu blogs at Rich Management.