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Last Updated: Friday, 14 May, 2004, 06:06 GMT 07:06 UK
Africa set to profit as World Cup hosts
By Bill Wilson
BBC News Online business reporter

Nelson Mandela address the South Africa World Cup bid team
Nelson Mandela is the most famous supporter of the South African bid

The South African economy stands on the verge of an economic boost, if, as is hotly predicted, it wins the nomination to stage the 2010 football World Cup.

After it was pipped in its bid to host the 2006 competition, world governing body Fifa agreed that the 2010 tournament must be held in Africa under a new rotation system.

South Africa is up against Morocco and Egypt for the host's role, (Tunisia and Libya are outside bets), with millions set to flow into the economy of which ever country gets the nod.

Income projected for South Africa as host nation is estimated at about $550m (313m), without contributions from Fifa and the other millions from football tourism.

Economic growth

Naturally, tourism in whichever country wins the nomination will be boosted, and in neighbouring nations too.

There would be construction, telecoms, and merchandising opportunities, and a general impetus to economic growth.

In addition there is the value of broadcasting and marketing rights, and money spent on accommodation, food, entertainment and transport by the 280,000 fans expected to pour into the host country.

The winning nation would also see its international image and profile boosted, which would be of particular advantage to South Africa.

The winning country may be tempted to divert cash away from projects set up to tackle illiteracy or unemployment... and into stadium building
Abah Ofon, Africa economist, Standard Chartered Bank

"It will be a positive in so many ways for the successful country," says Tim Ash, an emerging markets specialist at Bear Stearns.

"Tourism would be a major winner, although South Africa, and Morocco and Egypt, already do well in that respect.

"It will give a boost to the image of the successful country, which in itself can help bring in more trade.

"There has been a big effort to cut crime in South Africa, and this may concentrate minds in the country to continue that drive and also to address other issues, such as HIV/Aids.

"There are many positives, the construction industry will be boosted by stadium building, and improving infrastructure generally, such as roads, rail and telecommunications.

"It will also help change perceptions of Africa, and African business, in the way the 2002 tournament updated perceptions of Asia."

Regional economy

An economic impact study, drawn up for South African soccer bodies, said hosting the finals would create about 160,000 jobs.

At the moment there is 35% unemployment in the country.

South Africa has already successfully hosted the cricket World Cup in 2003, the 1995 Rugby World Cup and the 1996 African Nations Cup.

Egyptian fan Kamal Eshmawy in Pharaonic uniform at Giza Pyramids, Egypt, at a rally to support their bid
Thousands gathered at Giza to support Egypt's World Cup bid

After losing out to Germany for the 2006 WC by one vote, soccer-mad South Africans are praying this will be their big moment.

But Morocco and Egypt are lurking to take advantage of any possible fears among the 24-strong Fifa executive committee surrounding South Africa's high crime rate.

South Africa is also further from Europe than other bidders.

But Mr Ash said: "Security could be more of an issue in Egypt and Morocco.

"And South Africa's distance could boost the whole regional economy, as fans may decide to visit other countries after having travelled all that way."

South Africa's neighbours, such as Swaziland, Lesotho and Botswana, could also be used as team bases - raising the profiles of those nations.

'Service industry'

Last year the budget estimated to host the tournament in South Africa was put at more than $500m. The South African 2010 World Cup bid committee has requested $30m for stadium development alone.

The economic benefits would be spread across South Africa, as the 64 matches would be played at 13 stadiums from Polokwane to Cape Town.

Abah Ofon, specialist on the African economy at Standard Chartered Bank agrees there are great benefits to the winning nation's economy, image, and prestige, but sounds a note of caution.

Ismail Bakkar, adjusts a flag in support of Morocco's bid to host the 2010 soccer World Cup
Morocco is still forceably putting its case to host the 2010 competition

"There will be a fiscal stimulus, and it will affect GDP in the short-term.

"It would also help countries like South African, heavily based on mining, and Morocco, which depends a lot on agriculture, to develop their service economies.

"Hotel bookings, travel, and personal consumption by visitors will all stimulate that side of things.

"The fear is the winning country may be tempted to divert cash away from projects set up to tackle illiteracy or unemployment, or to provide social housing, and into stadium building.

"Both Morocco and South Africa have set up worthwhile projects, and there is a danger they may move money from these to grandiose stadiums that are not needed after the tournament."

'Organisational skills'

Awarding the showpiece event to South Africa would send a message Fifa believes the wealth generated by the world's biggest sport should be spread and shared amongst the poorest countries.

However, Morocco and Egypt are still strong contenders.

Whichever country wins, it seems their economy will be given a much-needed stimulus, but football officials feel the whole continent is already a winner.

As African football federation President Issa Hayatou says: "Our struggle to host the World Cup 2010 was made possible by the remarkable progress of African football, organizational skills and in sports management on the continent. After many years, our efforts have been rewarded."

The BBC's Shola Olowu
Hosting the event does not necessarily lead to foreign investment and economic growth"

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