Johannesburg - The decision this week allowing South Africa to hold the prestigious Indian Premier League cricket (IPL) tournament provided further evidence the country would avoid the much-feared negative growth in 2009, economists said.
"It will assist in preventing the country recording negative growth this year which some pessimistic economists are forecasting," said Azar Jammine, a senior economist at Econometrix, in an interview.
The IPL is a Twenty20 tournament, involving eight franchises. These consist of Indian cricket players of all ages and levels of experience. The tournament will be played between April 18 and June 1, while fixtures are yet to be announced.
The tournament is part of a triple whammy for South African tourism which will see sports fans from the worlds of soccer, rugby and cricket flood through the country's borders for a first-hand view of the Confederations Cup, the Lions Rugby tour and the IPL - all within the space of three breath-taking months.
Talking about the effects of hosting the IPL, Jammine said: "Obviously, yesterday's interest rate cut is part of the process. Inflation is falling, interest rates are coming down - surely that must provide breathing space for consumers," he said.
Said Jammine: "These events suggested to me that we would see a turnaround in the declining trend of foreign tourism which took hold towards the end of last year (2008)."
"There is no downside for somebody like City Lodge or the casino companies, it's a cherry on top," said Brian Pyle, a portfolio manager for Old Mutual Investment Group South Africa (Omigsa).
Spectator turnout, however, depended on foreign visitors, said Pyle. An event like the IPL catered for a limited group of people compared to the Fifa World Cup which would appeal to a broader spectrum of fans, he said. "The amount of people coming to watch the IPL is not big money," he said.
Hospitality stocks
Quantifying the number of people set to make their way to the event at the moment is very speculative, given the short notice with which the IPL has come to the South African market.
Commenting on the impact the event would have on the hospitality and entertainment sectors, Pyle said: "It's going to add so little to City Lodges and Sun International's bottom line.
"Certainly as investors, it's not something we are going to worry about, although I think the World Cup is going to be big," said Pyle.
It was unlikely that investors would rush out to buy shares in travel and leisure companies listed on the JSE, according to Pyle. "In a bull market, you would see that. But not in the current market environment."
Twenty20 cricket, unlike the older 50-over code, has revived the game for many spectators who found the latter too boring.
The six-week IPL tournament was due to be hosted in India, but the recent spate of civil unrest prompted the IPL's directorate to seek an alternative host country.
For India, the tournament would have come at a bad time. Reports suggested the country's security forces would have been found wanting in respect of fan security, as well as cricket teams and staff.
The IPL coincides with a national Indian election, which raised fears that security forces would have been spread thin between the two events.
Terrorism memories
The memory of terrorist attacks against the Sri Lankan cricket team in neighbouring Pakistan is still fresh. Twelve gunmen opened fire on the Sri Lankan team's bus, injuring some players.
"It's probably too late to bring a lot of foreigners to South Africa, but at a margin it does help just a little bit, and [it will] uplift the country as a whole," said Jammine."We've had to get our security in place pretty quickly."
Security forces were recently on trial after outbreaks of taxi violence. Taxi operators railed against the introduction of the Bus Rapid Transit, a bus-lane only system they believe could supplant their services.
In an ironic reflection of India's event logjam, South Africa will be holding its own national general elections on April 22.
Pyle said: "It's quite ironic that they [international cricketing authorities] now decide after years of isolation that South Africa is actually a safe place to play cricket."
- Fin24.com