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Africa's Decade

World Cup Excitement in South Africa
World Cup Excitement in South Africa

By Dr. Selwyn R. Cudjoe
July 01, 2010

I don't know who you are supporting for the World Cup but I have picked Brazil although Joel Villafana and some of the Wakka Wakka boys on Channel 6 are rooting for Argentina. When Trinidad and Tobago participated in the last World Cup my second pick was Brazil. Now that we are not there I have no qualms about supporting the samba magicians. As I marvel at the grandeur of the game and its international reach, I also rejoice at the marvelous job South Africans are doing to pull off this world event.

But do you remember the naysayers who said South Africa could not do it; that it could not finish infrastructural development on time to host this event; could not refurbish its airports in Johannesburg, Cape Town and Durban; build new stadiums in Cape Town, Soweto, Nelspruit and Rustenberg; add commuter rail links, build enough hotels and widen the highways to accommodate the people they were expecting for the games.

This was a monumental task for South Africa. It is estimated that it spent US $40 billion (about six times our annual budget) on infrastructure for stadium enhancement and transportation improvement. A Deloitte report entitled "2010 FIFA World Cup: A Turning Point for South Africa" acknowledged that "a strong technological and economic base put it [South Africa] on a par with the well developed nations of the world." South Africa, a Deloitte spokesman said, "has already realized many of the benefits hoped for by any national host of a major international sporting event."

South Africa is one of the most important economies in Africa and the games are likely to improve that position considerable. Prior to the games Foreign Direct Investments (FDI) in South Africa outpaced the performance in any other African economy. United Nations Conference on Trade and Development (Unctad) World Investment Report of 2008 indicated that close to $9 billion dollars had been invested in South African in 2008 as compared with $5.7 billion during 2007. So that South Africa was on an economic take off before the World Cup began.

However, what seems to be lost on most of us is that Africa has been on the upswing economically for the last few years. Direct foreign investment in Africa rose from $9 billion in 2000 to $62 billion in 2008. From 2000 to 2008 Africa's economies grew twice as fast as they did in the 1980s and the 1990s and as The New York Times reported "African was one of only two regions–Asia was the other–where the collective economy rose through global recession in 2009 by 1.4 percent."

Reports in the Economist are equally as favorable. In its "The World In" five African countries were among the top ten fastest growing economies in 2009 and four were expected to do so in 2010. The report noted that "what is striking initially is that three of the five have begun to exploit their energy producing resources, Angola and Congo gaining high rates due to oil product expansion, whilst Malawi is producing uranium. Madagascar and Mozambique are driven by raw materials in nickel and steel respectively. Angola has fallen from the peak experienced in 2006 where they had just under 20% growth." So that although they started from a small base their progress has been remarkable.

While our eyes have been turned away Africa has been doing some good things. Over the last ten years Africa's growth rate has averaged around 6 per cent a year; the European Union has been around 3%, Asia without Japan at about 5% and South America 3%. The Economist Economy Watch has placed four African countries (Botswana, Republic of the Congo, Angola and Liberia) among the 12 fastest growing economies in 2010. With figures like these, 2010–2020 could very well be an African decade.

The New York Times has begun to hail the progress in Africa. On June 23, 2010 it noted that a new McKinsey and Company Report "paints a much more optimistic portrait of a continent with growing national economies and an expanding consumer class that offers foreign investors the highest rates of return in the developing world." Arend van Wamelen, an author of the report noted: "The growth we've have seen in Africa recently is much more widespread than is generally recognized. There are a lot of underlying good things going on in the economies."

Unctad's recent "Economic Development in Africa Report 2010" has made it clear that the new South–South co–operation in terms of the rapidly developing trade, investment and financial relationships with large emerging economies, including China, have begun to make a difference with Africa. Where prior too, Africa had depended almost exclusively on assistance from the Organization for Economic Co–operation Development (OECD) who channeled their aid into the social sectors, the new Southern partners are more concerned with getting involved in the physical infrastructure and making technology transfers. World Bank figures indicate that in 2006 sub–Saharan Africa received more finance for infrastructural development from non–OECD economies ($8bn) than they did from its traditional donors (5bn).

As we watch our soccer for the next two weeks and listen to the vuvezelas let us understand that Africa has come of age. South Africa is now a member of the G20 and the OCED in recognition of its importance as an emergent market and a leader. It has shown the world it could manage the soft aspects of world power such as managing crime (there was no more crime in South African than there was in Germany four years ago) and keep crowds under control.

There is also a down side. Although its expenditures on the World Cup open up greater capacities forty billion dollars is a lot of money by any standard. Investments in stadiums are known to have limited long–term development benefits. However, South Africa can take heart from the fact that it completed the first section of Gautrin, the first high–speed rail line in Africa. According to Professor James Steward of Penn State University, when it is completed it will "significantly enhance the attractiveness of the industrial corridor between Johannesburg and Pretoria to potential foreign investors."

South African has done us proud. As we enjoy the games we should be cognizant of the rapid strides that are taking place on the continent today.

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