South Africa

Details

  • Industry: Public Sector
  • Type: Business and industry issue
  • Date: 2010/09/07

Public Sector

KPMG’s Public Sector Advisors are driven by Government’s key priorities and pressing issues. The fight against poverty, ensuring job creation, infrastructure development and improved service delivery.

The Jabulani effect: Keeping Africa in centre field 

KPMG recently concluded another successful client Conversation designed to explore the process of practically building on the successes South Africa enjoyed through hosting the 2010 FIFA World Cup™. The Conversation webcast drew an audience from seven countries globally.


A distinguished panel painted a positive picture which included insights on behind-the-scenes activity that will enable the country to bring the same determination and spirit that led to the successful hosting of the tournament to addressing some of the country’s more serious challenges.


Five key achievements


Five key achievements defined the tournament, namely infrastructure development, tourism development, job-creation, continental branding, and a united nation and continent. All of these were achieved and contributed to the country brand, creating a platform ripe for South Africa to leverage future advantage.


Before, during and after


In terms of expenditure, before the event emphasis was placed mainly on infrastructure development and expansion. The largest areas of expenditure were transport, communication and the stadia. During the event, expenditure shifted to travel, accommodation, entertainment and marketing. The greatest benefits for South Africa can only be realised after the event as the positive spin-offs from the tournament result in increased foreign direct investment and higher levels of tourism. The future usefulness of the stadia remains relatively uncertain.

 

An increase in tourism


It is anticipated that over the next five years we are likely to see an increase in tourism to two million arrivals. One of the consequences of such an event is ‘induced tourism’ where people who would not ordinarily visit a destination return to it at a later stage with members of their family or friends.


The tournament has allowed the world to visit and see that we are capable and sophisticated, which led to foreign media changing their general negative reporting of the country leading up to the event.


A boost of infrastructure


South Africa experienced a R38 billion expenditure boost from the tournament wedged within a larger infrastructural expenditure project budget of R787 billion that started before the tournament and will continue long after.


Despite being a developing country, the country has shown that we can deliver world class infrastructure in the form of roads, the stadia, the Gautrain and Bus Rapid Transit system.


The tournament and infrastructural spend in general has made a significant contribution towards increasing the level of gross fixed-capital formation towards the target of 25% by 2014.


Impact on Gross Domestic Product (GDP)


To calculate the impact of the event on national GDP, the number of people who visited and their average spend while here must be considered together with the aforementioned infrastructural expenditure. Overall, it is expected that the contribution will be in the order of 0.5% of GDP but, if viewed on a quarterly basis, it could be in the 4% to 5% range.


Improving our reputation


It is difficult to quantify the value of the tournament for South Africa’s reputation. It brought South Africans together and helped address negative perceptions around the country and the continent. The world looks at Africa differently today.


The Nation Brand Index (which ranks 50 countries in terms of investment, tourism, its people, etc), placed Germany at number six before the 2006 World Cup. The country is now in the top three. Similarly, South Africa is currently ranked in the mid-thirties, and it is anticipated that it will move up the rankings, bringing a larger share of global investment with the re-rating.


While this one event helped elevate the country brand, it has to be sustained for South Africa to see long-term benefits. For sustainability, we need strong leaders to set us targets to achieve public service targets and make the country and continent a more desirable investment destination.


What’s next?


While there is no master plan to address all of South Africa’s challenges, there is a national infrastructure plan that will be put into place before the end of this year to coordinate the development of infrastructure across sectors.


The critical issue is the strength of public and private sector partnerships to realise the objectives of the plan accompanied by a common vision.

 

Contact

Contact

Frank Blackmore
Senior Economist
Quantitative and Economic Analysis
Tel: +27 11 647 5791
frank.blackmore@kpmg.co.za


 

Growth and development in the post-World Cup™ South Africa
Listen to the webcast here!