A recent article in the New York Times (Aug 1, 2009) titled “Just When
Africa’s Luck was Changing” discussed how the current economic crisis has reversed the trend of private investment in Africa that had been occurring over the last 2-4 years. Foreign private investment had begun pouring into countries like Rwanda and Tunisia from Western companies as well as relative newcomers from the Emirates in the Middle East and China. Investment funds were supporting the development of things like infrastructure to luxury resorts. This was a positive trend; African countries were not going to grow on western foreign assistance alone; the private sector needed to step in. As the article states, M. Nathaniel Barnes, Liberia’s ambassador to the United States and the country’s former finance minister was quoted as saying “Instead of talking to USAID () I’d rather be talking to a company like Nike.”
While the article does not specifically mention investments and developments in South Africa around the World Cup it does beg the question of whether companies will respect and fulfill the investments and promises made in the country. It will be crucial for the numerous infrastructure projects in areas such as transportation and tourism to be completed to ensure a successful tournament.
The timing of the World Cup being hosted in South Africa couldn’t have been better in light of the current economic crisis. Billions of dollars have been pumped into the country creating numerous jobs and subsequent consumer spending; these are dollars that might have not have been invested in the first place or at best may have been scaled back if the upcoming event were not in place. South Africa has in effect been slightly protected from the global economic crisis due to the investments surrounding the World Cup. Now it’s more important than ever for the private sector to ensure that that their investments contribute to both a successful event but also long term economic growth. The World Cup will come and go and hopefully part of its legacy will be that everything surrounding the event (investments, increased tourism, infrastructure improvements, etc) gave South Africa the opportunity to ride out the economic crisis and position itself for future success.
Full article can be found here: http://www.nytimes.com/2009/08/02/business/02africa.html?_r=1&partner=rss&emc=rss
Photo of Durban Stadium Construction can be found on Flickr here: http://www.flickr.com/photos/kleinz/2829036386/