The South Africa of 2009 can be described as experiencing the best of times, or the worst of times, depending on whether one is talking about the recent peaceful elections or the confirmation of a technical recession, the incredible success of the recent Indian Premier League tournament or the persistent threat of crime and violence. But when it comes to 2010, there can no longer be equivocation, no ‘Plan B’ – it simply has to be spectacular.

But what is also definite is that the clock is ticking. With 12 months to kick-off, South Africa is well on track. The stadiums, transportation systems and airports are taking shape, are ready or will be ready in good time. The eyes of the world are on South Africa and it dare not disappoint.

The R8,4-billion investment in developing and upgrading ten 2010 FIFA World Cup stadiums is proving to be the catalyst for other infrastructure investments, such as the R19-billion spent on airports, as well as the R5,5-billion poured into rail and road network improvements.

The R8,4-billion set aside for stadiums has been allocated over a four-year period, with R600-million allocated for the 2006/7 financial year, and about R1,2-billion for 2007/8, R3,6-billion for 2008/9, and R2, 4-billion for the 2009/10 financial year.

During his inauguration, South Africa’s newly elected President, Jacob Zuma, committed the country to promoting inter- national friendship and cooperation through the 2010 FIFA World Cup.

“South Africa will deliver a world-class event that will forever change the perceptions of the international community, and also ensure a lasting legacy for the people of Africa,” said Zuma.

However, the economic meltdown is the current buzz and there are many who believe that it threaterns to cripple, or at least crimp, 2010. What if the expected tourists and fans stay away because they cannot afford the tickets or the accommodation?

Tourism and Economic Meltdown
Tourism has become the lifeblood of the South African economy and has contributed some R350-billion in foreign direct spending since 2003. Last year, the sector contributed 8,4% to the country’s gross domestic product.

Growth in the global tourism industry came in at 1,3% last year, but South Africa fared better, at 5,5%.

South African Tourism (SAT) board chairperson Jabu Mabuza told this year’s Tourism Indaba, held in Durban, in May, that the South African tourism industry remained buoyant and positive, and was already celebrating the FIFA 2010 World Cup.

“We confidently expect 300 000 visitors in South Africa for the tournament and remain cautiously optimistic of attaining 10-million visitors in 2010,” said Mabuza.

However, he cautioned the industry that times were tough and that the industry was feeling the effects of the economic meltdown.

“Many of our primary markets are officially in recession. It is time to be sober and sensible.”

SAT had been working hard to market the destination and to make the most of the opportunities presented by the Confederations Cup this month and the 2010 FIFA World Cup.

Pan African Advisory Services MD Dr Iraj Abedian said that the financial meltdown was testing the industry globally, but that the South African economy and industry were feeling the effects less keenly than giant economies that had recorded double-digit growth in recent times.

He reiterated that even if this were the worst of times, the economy of the country was doing relatively well.

“When their economies fall, our economy enjoys relative improvement.”

Abedian stressed that the 2010 FIFA World Cup would attract billions to South Africa’s economy. However, its real, long-term value lay in the exposure it would give the country and in the evidence it would offer the world of its capability, efficiency and attractiveness as a world-class investment and leisure destination.

Lowered Expectations
Owing to the prevailing economic squeeze, Airports Company South Africa (Acsa) has revised its 2010 World Cup-related infrastructure expenditure down to R17,8-billion, from R19-billion.

Acsa communications manager Solomon Makgale says that, as a result of the current global economic slowdown, the company undertook a review of the infrastructure expenditure programme and postponed, where feasible, uncommitted projects in light of the decline in the traffic profile.

“However, Acsa will complete essential 2010- related projects for the efficient facilitation of the soccer World Cup, which is a strategic initiative for the company and the country,” assures Makgale.
The projects and the related costs remain unchanged, except that the midfield development at OR Tambo International Airport and some of the projects have been postponed.
Acsa expects passenger traffic volumes to drop by about 6% compared with figures for the previous financial year.

On security, Makgale says: “We have measures in place to manage any security issues now, during 2010 and beyond. We are currently finalising our preparations for what we believe is a dry run for the World Cup. Acsa is working with all its partners and stakeholders to ensure that the capacity of airports can meet the required demand for both the Confederations Cup and the British Lions and Irish rugby tours.”

He notes that planning for the expected passenger and aircraft volumes has huge implications in terms of slots and airspace management. The collective synchronisation of all these components is critical in determining available capacity and, where necessary, taking action to meet the expected additional capacity requirements before, during and after the events. The same is being done simultaneously for the 2010 World Cup.

Imperial Holdings executive director: strategy and investor relations Tak Hiemstra says that the 2010 budget will certainly reflect the company’s lower expectations as a result of the credit crunch.

“We already see fewer foreign visitors, and we expect the economic crisis to have a negative effect on tourism throughout 2009 and 2010. The current estimate of revenue benefit to the company from the World Cup is between R10-million and R20-million,” says Hiemstra.

He adds that there is a strong demand for car rentals and coach touring and “the challenge is the extent to which we would increase capacity, which would have to be disposed of after the event”.

“We are confident that Imperial will maximise 2010 opportunities.”

Ten-Million Arrivals In 2010
South Africa expects to achieve its tourism target of 10-million arrivals in 2010,” Tourism Minister Marthinus van Schalkwyk said last month.

“The South African industry continued to perform well in spite of pressures exerted by the global financial crisis that had seen growth in the global industry shrink to 1,3% last year, when South Africa recorded a 5,5% growth,” added Van Schalkwyk.

A total of 9,5-million foreigners visited the country last year, compared with nine-million in 2007.

Van Schalkwyk believes that the hosting of numerous events, such as the Indian Premier League, the International Cricket Council Champions trophy, the British Lions tour, the Confederations Cup and the 2010 FIFA World Cup will help the industry weather the global economic storm and prove its global competitiveness.

“Our successful hosting of these events will also entrench South Africa as both a capable and desirable leisure destination.”

“South Africa is excited about the 2010 FIFA World Cup. This is the biggest sporting spectacular in the world and it’s coming to our country in our lifetime. It’s an opportunity that none of us alive in this country today will ever be given again. We must grab this opportunity with each of the 45-million pairs of hands we have in South Africa,” said SAT acting CEO Didi Moyle.

She added that 2010 gives “each of us an opportunity to welcome the world, to tell our story, to share our incredible and beautiful country with millions of tourists and to show them that we are, indeed, a nation of friendly, warm, hospitable and celebratory people”.

Don’t Seek to Profiteer

The CEO of the 2010 FIFA World Cup Local Organising Committee (LOC), Dr Danny Jordaan, tells Engineering News exclusively that there is no definite figure for visitors.

“Our figure was 450 000 visitors and, if we look at the sale of tickets for the World Cup, we have sold in 205 countries and had 1,6- million requests for the 743 000 tickets that we have. The indication is that fans are still buying the tickets and we will wait until all the teams qualify in November, because some fans will wait until their teams qualify. We are also monitoring the economic crisis and engaging with SAT to see if there is an impact on tourist inflow into the country,” says Jordaan.

He adds that the LOC expects more than 10-million tourists in 2010 and encourages all tourists that will attend the World Cup to return to the country after the event.

However, Jordaan cautions that some of the industry players see this as a one-off oppor- tunity to get the highest revenue possible, regardless of whether or not people feel aggrieved.

“I do not think we will see growth in tourism if we continue that way. We must see it as an opportunity to convince tourists that the country offers a value-for-money desti- nation and they should return. If that is not their conclusion, they will go elsewhere. We hope that we will be able to convince them. I have seen that, in many of the World Cups and other major competitions, before the event and during the event, the prices are increased by 400% to 500%.”

Jordaan warns that the conclusion that tourists reach as a result is that they should not return and “we do not want the fans to come to that conclusion”.

“We want fair pricing and quality service, and we want the country to maintain its reputation as a value-for-money destination. We are making an appeal because, in business, there is a short-term and a long-term approach. I think, given the economic crisis, where few people will travel, if we keep the ratio of value for money as if our ratio is based on profits, fans will feel ripped off and we will have difficulty convincing them to come back.”

BRT System on Track
Another issue that needs to be dealt with is the bus rapid-transit (BRT) public transport system. Last month, the country came to a standstill, under siege and held to ransom by the taxi industry demanding that the BRT system be scrapped.

Former Transport Minister Jeff Radebe, who has been moved to the Justice and Constitutional Development portfolio, assured South Africans that the infrastructure for the BRT system was on track and “going ahead unabated”.

He added that the Reya Vaya phase one, in Soweto, Cape Town and Port Elizabeth, was on schedule.

“The route from Soweto to Johannesburg will be completed in time for the FIFA Confederations Cup this month. The taxi industry has been involved in the implement-ation of the BRT system from inception and government believes that the industry is the nucleus of the BRT system,” said Radebe.

He noted that the main issue to be tackled for the BRT system to become operational was the convening of another meeting with the taxi industry to finalise the operational company –as soon as the new African National Congress administration has an opportunity.

He said that what needed to be established was the extent to which the taxi industry would be involved in the new company to be created to roll out the BRT system.

“The taxi industry has a view of being involved all through the value chain and we also share that view as government. We have made a commitment that none of the taxi operators involved on the routes that the BRT will be operating will lose their jobs and profit, as they will be incorporated into the new system and I am confident that the issue will be finalised this month,” said Radebe.

He stressed that the timeframe would not especially affect the transport department’s readiness for the Confederations Cup, since Reya Vaya was an important corridor for transporting people in South Africa.

“We have done our own research as govern- ment and we know which taxi operators are on the routes for which the BRT system is intended, and that is why we made the guaran-tee that there will be no job and profit loss.”

Radebe emphasised that when the BRT system was fully operational, Reya Vaya phase one would have an annual revenue of R1,5-billion and, if one assumed a 15% profit margin, it would be R150-million a year shared among all the operators on this route.

“We are confident that we are going to achieve that.”

African Affair
Jordaan believes that the World Cup could unite South Africa more than any other event has done.

“It gives an unprecedented opportunity for nation building, to brand our country and to leave a lasting legacy.”

It is also an important catalyst for economic growth to showcase to the world our African hospitality.

“We have positioned this World Cup as an African World Cup and we are engaging the region on issues of accommodation and tourism. We are looking beyond our borders, to Swaziland, Botswana, Mozambique, Namibia and, recently, Mauritius, to make the tournament a truly African affair,” concludes Jordaan.

PUBLICATION: Engineering News
AUTHOR: Dennis Ndaba
DATED: 5th June 2009