Global Policy Forum

The True Cost of the World Cup in South Africa

The costs of hosting the World Cup in South Africa were said to be justified by the economic growth that the event was supposed to generate. Expenses are expected to surpass original estimates by 757 percent. The expected growth in infrastructure and small local businesses has not come close to offsetting the funds that have been diverted from long-term priorities such as healthcare and education. FIFA and international corporate sponsors such as McDonald's and Coca Cola are the biggest beneficiaries of the event with much of the local South African population unable to even attend the matches.


By Liepollo Lebohang Pheko

June 22, 2010

When South Africa was announced as the host for FIFA's premier event, justifications of the cost were made on the basis that it would grow the local economy, provide opportunities for small and local business, act as a buffer against the economic meltdown, that it would contribute to the urban regeneration programs of the major cities particularly Johannesburg, Durban and Cape Town and bring smaller cities closer to the center of economic and social activity.  It was vaunted in fact as a great expression of the so called Rainbow Nation to bridge social, economic and political interests.

Here is the reality: The trade unions have been instructed not to strike for the duration of the World Cup even though some of the concerns are from exploited construction workers who helped build the stadiums; the matches are not accessible to most local people due to relative remoteness and prohibitive cost; an unofficial 'blind eye' has been turned to human trafficking and the victimization of sex workers leading up to World Cup; and while welcoming the world with open arms, South Africa's sometimes shameful behavior  towards other Africans is rearing its head with reports of renewed hostility towards Mozambicans, Senegalese, Zimbabwean and Somali refugees, professionals and business people. Frankly the government was asking a lot from a small leather soccer ball to resolve the country's complex social dilemmas.

Soccer is historically the sport of the black working class majority and it is this majority who have greatest need of any benefits derived from this event. Unemployment stands at over 40% and youth unemployment stands at nearly 70%.

The almost R800 billion (US$107 billion) set aside for infrastructure development in roads, airports, highways and stadiums, is many times the amount spent on the World Cups by Korea and Japan (2002) or Germany (2006). Despite a comparatively positive economic environment, return on investment for those countries has been negligible. Today's climate is much less favorable for South Africa. The total cost of South Africa's hosting the World Cup still remains to be seen.

Present estimates of total cost are 757 percent above the original guesstimates. Although the new Bus Rapid Transit (BRT) systems created for the World Cup ill also benefit those living in the Townships, the World Cup expenditure has displaced investment in projects with more intrinsic and long-term priorities such as health and education. It is estimated that World Cup-related infrastructure spending is equivalent to ten years of housing investment. For every seven seats in the new stadia a fully equipped school library could have been built - only 7 percent of South Africa's schools have functioning libraries. It appears that revenue generated in South Africa is leaving our shores to the FIFA coffers and other overseas 'investors."

The primary beneficiaries of local investment in infrastructure and stadiums has, been the construction industry bosses. Between 2005 and 2006 their pre-tax profits skyrocketed to 56 percent.  The CEO's at Murray and Roberts, the construction company who built the Cape Town Stadium, saw a 40 percent increase in their remuneration to R7.4 million/year (US $995,000)

Construction workers, on the other hand, officially earn between R1, 144 and R4, 576 per month (US $154 - $615). In reality many workers are paid far less. Most workers in the industry are not unionized and are employed on so-called limited duration contracts (LDCs). Twenty-six strikes have been recorded at World Cup sites of which 20 were wildcat strikes (strikes without the authorization from the union). The strikes were complicated by the fact that the companies involved have BEE (Black Economic Empowerment) partners with prominent political profiles. These individuals could use their influence with union bosses to settle disputes without undue pressure on their lucrative profit margins. The short-term nature of the jobs has done little for the training and skills development promised. At most, 50,000 temporary jobs are likely to have been created in relation to the World Cup; not the government claims of 415,000.

FIFA will anticipate an expected €1.2 billion in media rights alone. Earnings for 2010 have already exceeded €1 billion which potentially makes it the most lucrative FIFA event on record.

The government typically pleads poverty when it comes to delivery of basic services, but they managed to locate R30 billion (US $4 billion) to build stadiums and a further R757 billion (US $100 billion) for infrastructure development as mentioned above. Without an adequate or sincere program to handle the crisis of homelessness, the local government has instead used quick "fixes" to conceal homeless children /youths and other unwanted people who could spoil the view for our visitors. The cities are looking cleaner but this is at the cost of placing the urban displaced and homeless in remote de facto concentration camps. Recent reports stating that homeless people in Cape Town were being 'cleaned up' and used as volunteers during World Cup for a few rand per day were met with appropriate derision.

Street traders have also been marginalized from the most visible and lucrative routes to soccer stadiums.  FIFA and local authorities have banned  "ambush marketing" - any vending other than FIFA's corporate sponsors (e.g. McDonald's, Coke, Budweiser) along most busy major roads, and virtually all public spaces where tourists can be expected.  Street traders have typically been harassed through brutal evictions and confiscation of goods, but the authorities have accelerated their bullying in the past year. This month in Durban thousands marched to protest against the 'FIFA mafia' and exorbitant costs of the Tournament. These included bus drivers, street traders, consumer groups, the unemployed, youths and construction workers. They provide a much-needed moral anchor in the midst of euphoric and mind numbing flag-waving.



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