World Cup: Realism needed

Cape Town - The Soccer World Cup will have a smaller impact on the retail industry and tourism than generally expected.

Analysis by the Cadiz asset managers shows that South Africans need to be more realistic about the upshot of the tournament.

Cadiz researchers Shamil Ismail and Jasmine Lin point out that the tournament is expected to give the domestic economy a significant boost. But tourist numbers and retail sales will not necessarily show an increase, they say.

They compared South Africa to South Korea, which presented the 2002 World Cup soccer tournament. Cadiz considers South Korea a more suitable country for comparison with South Africa than Germany, which hosted the 2006 tournament, and with which South Africa is usually compared.

Three dangers were identified that could result in the World Cup event proving less of a stimulus than anticipated:

• There could be fewer tourists from Africa because they want to avoid the anticipated rush of tourists from elsewhere in the world;
• a strong rand could make travelling and accommodation more expensive for foreigners; and
• a strong rand would also restrict foreigners' purchases.

According to Ismail and Lin, tourist numbers decreased during the South Korean World Cup because there were fewer visitors from the rest of Asia.

This trend could be repeated for the 2010 tournament in South Africa. Most of South Africa's tourists come from Africa.

If the target of 10m visitors in 2010 is reached, and if it is assumed that each visitor will spend an average of $500 in shops during his or her visit, this amounts to only R803 000 more than 2009's sales to foreigners.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.