What the SWC will bring

Wednesday, 26 May 2010 07:59

The impact of the 2010 Fifa Soccer World Cup on SMEs in South Africa

The chamber movement represented by the South African Chamber of Commerce and Industry (SACCI) addresses all economic, social and political issues affecting the business community in one way or another, and is apolitical.

It is “the voice of business” and ensures that this voice is heard where it matters; where it is necessary to protect and promote the interests of business, at local, regional and
national levels.

It is the Secretariat for the International Chamber of Commerce South Africa, which provides it with a global reach. It is in this context that SACCI has a leading role to play with regard to the upcoming 2010 Fifa Soccer World Cup (SWC).

One would be justified in saying that the SWC has helped offset the effects of the global economic downturn on South Africa. At the moment, projections differ, but it is generally estimated that the SWC will inject about R55 billion into the South African economy and create approximately 415 400 jobs.

Grant Thornton estimates that the gross economic impact will be considerably higher than R93bn.

Foreigners’ spending alone is expected to amount to R14bn, and it is estimated that R4.9bn will be added to gross domestic product.

The real benefits, however, will emanate from profiling on a global scale, which will generate long-term spin-offs.

The projections have helped boost confidence and expectations domestically. This was reflected in the latest SACCI Business Confidence Index (BCI), which increased by 0.2 index points between March and February 2010, to measure 83.2 in March 2010. The March 2010 BCI was 4.3 points higher than in March 2009; the first year-on-year increase since September 2007.

Furthermore, SACCI’s Trade Activity Index, which reflects current trade conditions, improved to 56 in March 2010, following 54 in February and 44 in January 2010.

One of the greatest concerns surrounding the SWC is the expected increase in the level of domestic absenteeism during that period. A study conducted by Alexander Forbes Health shows that the spike in absenteeism could cost the South African economy R750 million in a four-week period over the SWC.

The anticipated loss in productivity could be somewhat alleviated by employers making certain amendments to employees’ work schedules, such as permitting employees to watch a soccer match at work, thereby ensuring that an entire day’s productivity is not completely lost.

The SWC is expected to bring with it a fair amount of foreign interest and investment.

This, in addition to the massive domestic infrastructure spending regarding the tournament, has already given the South African economy a much needed boost.

However, SACCI remains concerned that this may be overshadowed by South Africa’s presence in the international media for all the wrong reasons.

Recent ill-conceived utterances from political leaders and alleged race-related incidents of crime have already impacted negatively on investor perception of South Africa. It is hoped that these issues are contained so as to not deter foreign investors completely.

South Africa’s ability to deal with publicised incidents of crime will also undergo increasing scrutiny as visitors finalise their travel plans in respect of the SWC.

On a positive note, National Police Commissioner General Bheki Cele has disclosed a national plan to ensure that the SWC is a safe event. The plan involves six to eight security experts from Germany, the United States and the United Kingdom, as well as 44 000 South African police officers.

In addition, personal security will be provided for the 31 teams participating in the SWC, including North Korea that has its base in Zimbabwe, and for the 43 heads of state expected to attend the SWC.

All nine international airports will be under the watchful eye of the South African Police Service, and extra security will be provided for games that are regarded as “high risk”.

Members of the South African National Defence Force will be positioned at all border posts throughout the country.

Since its onset, the SWC has drawn concerns regarding South Africa’s public transport system. However, a R19-billion transport upgrade has been implemented, which sees a new and more efficient bus system, refurbished airports and a high-speed urban train.

The widely anticipated Gautrain will begin operation a few days before kickoff, between Sandton in Johannesburg and OR Tambo International Airport.

In addition, President Jacob Zuma recently unveiled the newly constructed central terminal building at OR Tambo that will accommodate in excess of 60 flights per day, as well as 28 million passengers per annum.

These improvements in infrastructure not only bode well for the SWC itself, but also in terms of long-term benefits for South Africa. The infrastructure development will definitely provide a stronger platform for future economic growth than if South Africa were not the SWC host. The event has provided focus and prioritisation of domestic infrastructure development programmes.

Although all programmes will not yield direct economic impact, there is general consensus that there is a substantial contribution to infrastructure which would form a base for economic growth.

There has been doubt regarding socio-economic benefits of the SWC to the South African public. Small and medium enterprises (SMEs) located in the immediate surrounds (one-kilometre radius) of the soccer stadiums stand to lose significantly, as those areas are cordoned off.

In an emerging economy such as South Africa, SMEs are generally based in major economic centres, which tend to be the main beneficiaries of the host country. The SMEs outside major centres, particularly rural SMEs, will realise fewer benefits.

Hence, there is the risk that the existing disparities and inequalities in South Africa could in fact be worsened by the SWC itself.

Future host countries must ensure that there is a plan to manage the distribution of opportunities across the country, as this would minimise the probability of the event worsening the disparities.

Local SMEs have vacillated between accessing business opportunities as part of the Fifa monopoly and pursuing these opportunities on their own, and they are broadly of the view that the initial benefits of South Africa as the host country will not accrue to them.

Nonetheless, SACCI remains optimistic that this event will help promote the interests of business in South Africa, as the host country will be under the spotlight for the duration of the SWC. It is anticipated that the economy will receive a significant boost from foreign interest and investment, and that this will help pave the way for sustainable economic growth in South Africa, against the backdrop of the global financial crisis.

Future developing host nations of sporting events must remember to secure opportunities for local business, particularly SMEs, in early negotiations with Fifa. Printing, production of mascots, entertainment and accommodation are among the opportunities that an event of this magnitude presents for emerging enterprises.

Plans must be developed to manage the post-World Cup dissonance. In the case of South Africa, it is expected that the country will experience a short economic lull after the event. However, it is hoped that South Africa will emerge from this lull in the short term as the economic recovery takes stronger hold compared to any active planning locally.

Plans must be developed for the host nation to utilise the stronger infrastructure base immediately and effectively to accelerate the national return on investment, and to minimise the period for which the economy holds a national ‘loss’ on infrastructure investment.

It is imperative that SMEs are included in infrastructure development programmes. There should be an effective arrangement for use of stadiums post-World Cup so as to minimise a “white elephant” scenario.

The necessary work should be done immediately after the event possibly to secure other international sporting events, as there is a strong infrastructure base with which to negotiate.

Business (particularly tourism) must have active plans to utilise the international exposure to its benefit and immediately follow the SWC with the implementation of such plans to ensure the focus remains with the host country.

Organised business must play a strong role in leading and guiding all business, particularly SMEs, toward realising future opportunities immediately after the opportunity to be host is awarded.

Furthermore, organised business should never assume that planning and strategies to address the challenges listed above are the responsibility of another stakeholder, such as the government.

It is the duty of organised business to take the lead in all respects, and this must be done as early as possible.

Never forget: Fifa owns the franchise, but you remain the host.

Melissa Arjoonan – SACCI policy analyst

The new Companies Act

SACCI hosted Cipro, the Companies and Intellectual Property Registration Office, at a Companies Act workshop in March at the SACCI offices in Johannesburg. Members were afforded an opportunity to engage directly with senior Cipro staff on key issues pertaining to the Act and how it will affect their business practices.

The introduction of the presentation stated that the new Companies Act development process began in earnest over five years ago, using guidance developed in the Department of Trade and Industry (the dti) policy document titled, “South African Company Law for the 21st Century: Guidelines for Corporate Law Reform (May 2004)”.

The ultimate goal of the reform was to ensure that the regulatory framework for enterprises (of all types and sizes) promoted “growth, employment, innovation, stability, good governance, confidence and international competitiveness”.

The Act itself provides for two categories of companies, namely: non-profit companies, which are the successors to companies limited by guarantee, and section 21 companies; and for-profit companies – private companies, personal liability companies, public companies and state-owned enterprises.

Some of the highlights or changes in the Act included:

• Structural arrangements, namely new regulatory institutions;

• Decriminalisation;

• Transparency and accountability;

• Fundamental transactions and takeovers;

• Corporate governance; and

• Concept of Business Rescue.

The existing close corporations should be free to retain their current status until such time as their members may determine that it is in their interest to convert to a company.

Therefore, the Act provides for the indefinite continued existence of the Close Corporations Act, but provides for the closing of that Act as an avenue for incorporation of new entities, or for the conversion of companies into close corporations as of the effective date of this Act.

The dti was made aware of proposals within the Department of Justice and Constitutional Development to develop uniform insolvency legislation which, if brought to use, would overlap and may conflict with the regime set out in the current Companies Act, 1973 for dealing with and winding up insolvent companies.

Advocate Rory Voller and Dr Mkhuseli Vimba, the two presenters, interacted directly with the audience and answered questions related to governance and directorship as well as financial reporting.

Cipro will be rolling out the workshops in different parts of the country via the various Chambers affiliated with SACCI.

For more information, including copies of the Companies Act and the presentation, visit www.sacci.org.za.

Denise Chendip – SACCI operations manager

Roodepoort Chamber

Giving business a helping hand

Tourism

The Roodepoort Chamber of Commerce and Industry (ROCCI) has been actively and effectively involved in promoting tourism and other business opportunities in the area for a considerable number of years.

The ROCCI 2010 Tourism conference was one such successful event that allowed business people to engage with tourism role-players in South Africa.

Facts and figures were balanced out with presentations on practical advice from experts on promoting a tourism business.

The growth in the global tourism industry is volatile, as the industry is highly susceptible to external factors.

While globally, the consumer demand has fallen considerably due to recent events, South Africa has shown better growth in tourist arrivals than the world average.

First National Bank, the core sponsor of this event, was represented by Mr Pieter de Bruyn whose presentation showed that of all the global events, the economic crisis had the most pronounced effect on the tourism industry.

According to the United Nations World Tourism Organization’s World Tourism Barometer report, across the globe most regions registered a decline in tourist arrivals during the first eight months of 2009, including Europe (-8%), the Middle East (-8%), the Americas (-7%), and the Asia Pacific (-5%). Africa was the only region to record a 4% increase in arrivals.

De Bruyn also showed the audience a breakdown of the 2010 SWC ticket sales which showed that in total, two million tickets were sold (two-thirds of the total inventory). A total of 1 232 000 tickets were sold through public sales, the rest through tour operators, participating federations via the hospitality programme or to commercial affiliates.

A call centre has been set up which will operate on a 24/7 basis and will cater to English, Portuguese, German, Spanish, French and Dutch speaking persons.

FNB has set up exclusive international services for FNB clients, and more information on these can be requested via e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or telephone: 011 6320390.

Annelie Barkema, national project leader of the Tourism Safety Initiative (TSI), said that an increase of one million more arrivals would mean the following increases: R8.1-billion tourist spend, R18.144-billion contribution to GDP and 52 765 more jobs.

The TSI’s purpose is to co-ordinate and integrate efforts aimed at addressing tourism safety and awareness challenges in the tourism industry of South Africa.

The scope of its organisations is to take on national and local responsibilities from a sectoral approach and ensuring that tourist safety and security information is available.

The TSI is also responsible for promoting the “early warning system”, which is intelligence driven by a spectrum of stakeholders including business, the public, embassies, the police, community safety forums and others.

This collaboration of intelligence gathering is slowly but surely gaining momentum and effectiveness.

You can help by reporting incidents directly via telephone on 0861 874 911 or via e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Rob Stokes presented valuable information on eMarketing and how this medium could promote business.

Delegates were told repeatedly that there has to be a value add to the users’ experience – before, during and after their visit to the website. The website’s purpose is to attract, convert and retain customers – or they should not exist at all!

An interesting statistic given to delegates was the fact that the average tourism website has only 11 seconds to capture a user before he/she becomes bored and goes elsewhere.

Rob added that the website should have consistent “Calls to Action”. Do not make them think – tell people to take the exact action you want them to perform in order to get the best response. If an Internet searcher does not find you, he/she WILL find your competitor!

In 2009, over 40% of online bookings began with a search. So ensure that your website service provider is supporting you with all the right information (website traffic statistics) and has incorporated methods to ensure that you are easily found via the various online search engines.

Gillian Saunders, a principal at Grant Thornton Strategic Solutions, gave the delegates various interesting and critical facts and figures relating to accommodation, visitor rates, tourist spend, match schedules, stadium data and international team base camps.

Detailed data is included in her presentation that can be downloaded, together with the other presentations, from the ROCCI website at www.rocci.org.

SMME development

The ROCCI’s SMME (small, medium and micro enterprise) Training Programme empowers aspirant emerging entrepreneurs with the necessary skills, knowledge and exposure to start or grow their business.

This is done through continuous business skills training and development courses and workshops, mentorship programmes, networking and conferencing.

British American Tobacco (BAT) South Africa has been the main corporate supporter of the ROCCI’s SMME Development Programme since 2008. Its major investment in SMME development contributes to creating jobs and growing South Africa’s economy, and it is also actively involved with other local Chambers.

The training subjects include everything from developing a persuasive business plan, through to accessing finance and marketing for small businesses.

The ROCCI hosted its second annual SMME conference on 30 March 2010 at Montecasino, with the theme of “SMME Sustainability”.

The conference attracted top-notch speakers who addressed and inspired SMMEs, including: Michael Jackson, one of the best business-to-business presenters on the global professional speaking circuit, who spoke on “Challenge of Change”; Clem Sunter, scenario planner, futurologist and popular author of The Mind of a Fox, The Games Foxes Play and Socrates & the Fox, to name but a few; South African Chamber of Commerce & Industry chief executive officer Neren Rau; BAT South Africa area head of communications and corporate social responsibility Itumeleng Langeni; and Business Partners regional general manager Chris Koen, to name a few.

Women in business

The ROCCI launched Lady ROCCI in 2005, an initiative through which the Chamber encourages businesswomen to become involved in networking to assist local community projects facilitating the creation of an environment in which the business community and its people can flourish. Lady ROCCI is committed to working for the expansion of opportunities for women and the improvement of the community as a whole.

Through the years, Lady ROCCI has introduced and promoted the following charities:

• Cansa Association of South Africa – www.cansa.org.za;

• Friends of Rescued Animals – www.fora.org.za;

• SPCA;

• Soul Food;

• Thandanani Centre – www.thandananicentre.co.za;

• The Cradle of Hope – www.thecradleofhope.org;

• Westview Alcohol & Drug Rehabilitation

Centre (formerly SANCA);

• The Gateway Society;

• Child Welfare; and

• Be A Friend Foundation

The purpose of this dynamic business women’s forum is to address issues of concern to businesswomen. It presents a unifying point of contact and communication, creating an effective link between all stakeholders.

Lady ROCCI encourages women to pursue their dreams, and we support their endeavours.

If you would like to receive an invitation to the next Lady ROCCI event, e-mail your contact details to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 086 111 3304 for further information.

Access to finance

There will always be a need for business to be reminded and educated about the accessibility of finance for business and entrepreneurial development. SACCI recently hosted a workshop focusing on three programmes/funders that offer this type of service to business. Each one, while sharing basic criteria, also offers opportunities based on different models both from private and government mandates and expectancies.

Business Partners, Gauteng Economic Propeller and the Masisizane Fund operated by Old Mutual were some of the funders that presented to business during the SACCI workshop.

The senior representatives educated the delegates in terms of special requirements and expectations that each fund had. Most funds did not offer 100% financial support and required some form of collateral from the client, which helped reassure the funders from a risk assessment perspective and included aspects related to collateral, equity and royalties.

The programmes funded by local and national government and others such as the Msisizane Fund have a more developmental role and will endeavour to contribute to economic transformation by enabling sustainable development of SMMEs, facilitating job creation and increased financial and business skills – which translates into social benefits
to communities.

These funds would also give special preference to women, youth and the disabled, but does not preclude any other businesses seeking assistance. There are also funds specific to industries such as technology, manufacturing and agriculture to name a few.

Copies of the presentations as well as a broad list of funding agencies and programmes can be accessed via the Sacci website.

In an article that appeared on the Skills Portal website, it was stated that – included in a report done by the National Credit Regulator (NCR), titled “Information Sharing and SMME Financing in South Africa” – it was found that effective information-sharing is crucial in efforts to ensure access to finance for South Africa’s SMMEs.

The research report further noted that acceptance rates for granting loans significantly improve when the financiers have access to suitable information about payment behaviours of small businesses.

Financiers that have little knowledge about the payment behaviour of SMMEs therefore would be reluctant to provide finance. The risk faced by financiers of collateral being pledged more than once to different financiers could be mitigated by having a register of collaterals.

It was further revealed in the report that in countries where these items were introduced in credit application reviews, higher acceptance rates resulted.

The report also found that by World Bank standards, South Africa has a remarkable level of SMME activity compared with similar economies.

A survey conducted in 1997 showed 22 small businesses per 1 000 people. In a decade, that figure has more than doubled to 58.

According to the report, information solutions can help bridge the divide between the formal and informal economies by putting much needed data in the hands of credit providers.

In South Africa, a way to overcome this information barrier is by sharing key data via the proposed National Credit Register.

For SMMEs, access to credit and financing is crucial to their sustainability and growth.

The report further found that SMMEs play an important role in the health of a country’s economic growth, employment levels and asset formation.

Access to finance is available, but as experience dictates, not always easily!

Denise Chendip

Comments (0)

Next >

Endorsed by

In stores now

opps_41_web_Page_01