Tanzania needs a watchful eye to model economic bearing of AFCON 2027

Unquestionably, Tanzania will, jointly with Kenya and Uganda, host one of the AFCON competition games in four years.

The games come with own expenses for preparing the required infrastructures and logistics to accommodate the delegates and soccer fans—a popular game not only in the country but also globally.

Thus, the primary attribution factor in my view is the economic initiative and how AFCON is such a golden opportunity for the country and indeed the co-hosts Kenya and Uganda.

How the East African member states clinched the deal? Politics must be considered in securing such a hosting level, the most crucial part is the economic one because it allows the host country the opportunity to construct or upgrade facilities, infrastructures, and so forth.

On other hand, there could be more to say about what it means to host big events and games, but what worries me most are the high costs associated with hosting a major sporting event like AFCON and the potential economic advantages and risks it bears.

A major sports event like the AFCON 2027 results needs significant capital investments for Tanzania in new and enhanced facilities.

Tanzania can receive assistance from private investments, for example, to build new hostels and other tourist-related capacities, but a large part will come from public investments if we have a strong plan in place and are thinking ahead about how best we can make this successful.

What will be a decent strategy for the state to benefit economically?

Tanzania should open and closely study what occurred to our friends when they hosted major events like this, what benefits their economies received, or did they found themselves at a crossroads, to better prepare for AFCON 2027.

The concerned ministry and even the government will benefit from some of these examples to minimise future finger-pointing, especially after the competition is over and the winners declared.

I could be proven wrong, but in the short term, hosting a mega-event like AFCON 2027 costs a lot of money from an investment perspective. Long-term maintenance of the new sports infrastructure is still quite expensive, and this should serve as a warning to our government; otherwise, we risk abandoning the new facilities due to the expense amidst public needs that rely on government coffers for their execution.

I won’t go into detail, but I will give a few examples to illustrate the necessity for caution as we plan for the AFCON 2027; otherwise, there may be a future financial issue.

The Olympic Winter Games in Sochi serve as a prime example as it cost Russia 51 billion US dollars. This was said to be the priciest hosting game ever on record. Prior to Sochi, the most expensive Olympics were the 40 billion US dollars for summer games held in Beijing in 2008. Critics of all walk of life discussed corruption in the planning process as the whole budget was three times higher than imagined.

They invested 17 billion US dollars in infrastructural projects and the building of the stadium, but Sochi was abandoned two months later. Since they were intended to accommodate major events, some of the structures in that region are no longer economically functional.

This example of two previous Olympic huge investments that turn white elephant projects should be an early warning signs for Tanzania as the host country to ponder thoroughly and must think through clearly.

Due to physical and IT-based security, additional police time and IT experts, rental equipment, and other costs, there are also very considerable running expenses.  Certainly, it might not be taken seriously but the fear of terrorism must be enriched.

Those who can recall can think back to the politically catastrophic 1972 Munich Summer Olympics, which were overshadowed by a terrorist attack that claimed the lives of 11 Israeli players. Since this disaster, the cost of security is much more crucial and needs to be carefully and thoroughly considered.

Brazil spent a total of 10 billion euros preparing for the FIFA World Cup, which it hosted. This includes the 300 million US dollars security costs. It was assumed to be larger due to Brazil’s population. However, there were marches against the government because of the significant sums spent, with some individuals claiming that the money could have been better utilised to advance education or aid the Brazilian populace etc.

Likewise, for the 1998 World Cup, France spent a total of 1.5 billion euros. The fact that all the stadiums were already there and merely needed renovation and improvement accounts for the discrepancy. They simply constructed the Stade de France, unlike Brazil which had more buildings to deal with.

I could go on and on, but as previously said, planning a major sports game the like AFCON 2027 event involves significant costs. So, as a nation and as a private sector, where do we anticipate making money from? Tourist spending and tourism are the main sources of income. They also anticipate more manufacturing, which will result in higher GDP growth. Additionally, they anticipate a multiplier impact because of all costs.

I’m open to being proven wrong, but I believe most economists will concur with me that massive games like AFCON 2027 and others can have very little or no immediate impact on the host country’s GDP growth rate if their thoughtful processes, designing, and planning are poorly communicated.

Due to increased output and consumption during and immediately after the event, it is extremely simple to see an increase in the GDP growth rate, but over the medium and long terms, growth will return to normal as consumption does.

Tanzania should take a few things away from the existing experience on the ground to avoid making mistakes that it will later regret. Germany, for example, spent 7.0 billion euros on infrastructure and facilities i.e., stadium construction and reconditioning to host the World Cup in 2006. Analysis of the economic impact created shows that it ultimately increased GDP by 0.3per cent.

The World Cup’s impact on Germany economic growth has been insignificant, according to Gert Wagner, head of the German Institute for Economic Research, in his 2007 report who said, it was a tonne of fun: Nothing additional or less. In actuality, the sale of the marketing right brought FIFA, the organisers more benefits.

It is not an awful thing if you had the chance to learn from those who came before you on fundamental and beneficial things for the country; this does not apply to sports only, regardless of how to advance the economy of the nation. Learning from others matters too.

By hosting a major sporting event, some nations become aware of these issues. Canada for instance suffered greatly because of hosting the 1976 Summer Olympic Games in Montreal. It took Canada more than 30 years to repay its initial debt of around 1.0 billion US dollars. Most analysts consider that the 2004 Olympic Games in Athens negatively impacted the Greek economy. At the current exchange rate, it ended up costing about 11 billion euros, which were twice the original budget estimates. Even though it was not the primary source, we understand how severe the Greek’s economic problems were.

There is also the case of Argentina in 1978. The nation’s economy according to World Bank country’s records was doing terribly during that time. Argentina hosted and won the FIFA World Cup, yet despite these accomplishments, the country experienced negative growth and high inflation. For the host, despite all economic activities that drive such tournaments, French economist Nathalie Hénaff once commented that the impact typically does not surpass 1.0 per cent of GDP, which is not much.

As a word of advice, after researching the major economies in the globe over the previous 30 years that have hosted major sports games like the Olympic Games or the FIFA Globe Cup, Symanski concluded that the growth of these nations was much slower during the FIFA World Cup years. His findings may suggest that authorities occasionally overestimate overall revenues and ignore appropriate parameters.

Let’s approach the preparation for AFCON 2027 strategically and with an open mind to avoid needless analysis that could result in the economic impacts of a significant game event: the counterfactual.

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