South Africa’s approach from the onset was to demonstrate to the world that it was capable of hosting such a prestigious global event and could finish the necessary infrastructure in time. Work on the project started in March 2006. The national treasury designed a management tool and budgeting framework to ensure that we placed boundaries on the overall world cup project. This was based on 24 core projects that, if implemented according to FIFA requirements, would ensure success. Also, the 2010 Government Co-ordination Unit developed project templates that included baselines, milestones, timelines and deliverables.
The national treasury developed models for funding and managing the 2010 departmental projects, which included rigorous reporting for early warning of project cost overruns, and interest support on loans taken out by host cities for the infrastructure projects. The government also set up its own co-ordinating and oversight structures, namely the Technical Co-ordinating Committee and the Inter-Ministerial Committee, chaired by the deputy finance minister and the deputy president respectively.
It must have been a financial burden.
The main cost drivers were the construction of stadia, transport, IT and water infrastructure, immigration, customs and ports of entry. Initially R8.4 billion (US$800 million) were budgeted for the construction of stadia, but this was revised to R13.5 billion due to currency adjustments and increases in input costs. Some R13.3 billion was set aside to cover the public transport infrastructure and motorways.
The economic impact–direct, indirect and induced (through incomes)–of the construction of the stadia totalled R15 billion. Some R7.4 billion of benefits accrued to households, of which approximately R2 billion went to low income households. The World Cup on the level of real GDP was approximately 0.4% in 2010, and the contribution to real GDP in 2010 was approximately R4.9 billion (R37.7 billion nominal).
Upgrades to the international airports at OR Tambo and Cape Town greatly facilitated the movement of both tourists and aircraft. Other social infrastructure, like hospitals and health facilities close to host cities, were also upgraded. Some schools were chosen to serve as training camps, and the visiting teams undertook to upgrade their facilities and assist with coaching sessions for pupils.
What lasting benefits would you say hosting the World Cup has brought to South Africa?
The national government viewed the hosting of the 2010 FIFA World Cup as a catalyst for development and investment in infrastructure, targeting the creation of employment and economic growth, rather than funding just a one-off event. South Africa not only achieved its strategic objective of hosting a very successful tournament which instilled a sense of national pride among South Africans, it also enhanced the country’s image internationally. It is estimated that approximately 450,000 spectators and tourists visited South Africa for the World Cup.
The World Cup also bequeathed the country with stadia, airports, rail, and other public transport infrastructure, as well as information technologies, broadcasting and other systems that the country can use for the foreseeable future.
Tourism and the hospitality industry also benefited tremendously from the tournament, while improved social cohesion was another invaluable, if intangible, benefit for the country.
The preparations for the World Cup provided several important lessons, including the importance of: defining outputs and their location; setting clear, immovable deadlines and timelines; deciding on the key projects or departments that should be involved, and which projects should support the delivery of these outputs.
It also created a platform for co-operation between different spheres of government, and taught us that prices for contracts given to external agencies should be on a fixed price basis to prevent the escalation of costs.
Any negative impact?
The maintenance of some of the stadia has proved a burden and some of the affected municipalities are looking for innovative ways of making them financially sustainable. The escalation of construction costs was also a serious challenge. Some of the contractors colluded in price fixing, a matter which was investigated, and fines were imposed by the Competition Commission.
How do you think Brazil will cope with hosting the next World Cup in 2014?
Brazil recently hosted a very successful FIFA Confederations Cup and I believe it is on track for the event. It is important that Brazil host a successful World Cup to reaffirm that emerging economies can compete on an equal footing with developed countries in terms of hosting global events.
If you had one word of advice for Brazil, what would it be?
Go for fixed price contracts and avoid vanity projects.
© OECD Observer No 296 Q3 2013