Strategic Environmental Assessment continued . . .



4.2 Assessing The Bid Proposals

The key question addressed in this assessment is:

"To what extent are the developmental aims of the Cape Town 2004 Bid likely to be realised?"

This question is best answered by examining to what extent the Bid complements and consolidates three important national and metropolitan policies, namely the Reconstruction and Development Programme, the Growth, Employment and Redistribution strategy, and the Metropolitan Spatial Development Framework. At a national level, RDP and GEAR underpin government's approach to meeting the social and economic needs of South Africans, while at a metropolitan level the MSDF informs the spatial development of the Cape Metropolitan Region. Based on these policies, the following policy goals are central to this assessment of the Bid:

a) Promote economic development, investment, and exports, and manage inflation, exchange rate fluctuations and government deficits;
b) Create jobs, promote empowerment, human resource development, SMMEs and ABEs;
c) Provide for basic needs;
d) Restructure the metropolitan region and integrate urban areas and redress unequal distribution of access to facilities and opportunities;
e) Create and promote the use of a viable public transportation system;
f) Promote environmental awareness and sustainable use of natural resources;
g) Promote nation-building.

The findings of this assessment indicate that there are a number of opportunities, limitations and risks associated with hosting the Games.

4.2.1 Opportunities And Limitations

The SEA has identified the opportunities likely to arise from hosting the Games, and has assessed the extent of these opportunities. It is clear from the media, and from statements by political leaders and many in the business community, that there are widespread expectations that a successful Bid will generate significant opportunities and benefits for the Cape Metropolitan Region (CMR), South Africa and to some extent even the continent of Africa.

At the same time, however, it is important to recognise that there are limitations associated with these benefits.

a) Promoting economic development

Opportunities

Bidding for and hosting the Games provides a unique opportunity for accelerated public and private expenditure in the CMR. The economic benefits of this expenditure include an increase in Gross Domestic Product (GDP) and Gross Regional Product (GRP). The economic sectors which are likely to be most affected are construction and tourism. Hosting the Games is also likely to have a positive impact on the communications industry. It will provide a unique opportunity to promote the investment and tourism potential of Cape Town, the Western Cape, South Africa and Southern Africa as a whole. This, coupled with the potential involvement of international firms, could enhance the longer term economic opportunities associated with the Games and increase the competitiveness of South African companies. The Games could thus act as an important catalyst for future economic development. This has already occurred to some extent through the process of bidding for the Games and being shortlisted. Even if Cape Town is not awarded the Games, approximately R350 million will have been spent on priority projects, which are located in the disadvantaged areas of the CMR.

Of three scenarios, the best estimate suggested by the Development Bank of Southern Africa (DBSA) predicts that the Games are likely to result in an increase of R 30 000 million in GDP over ten years, which will in turn lead to an increase in government revenue of up to R 8 000 million.

Limitations

According to the specialist study which looked at the DBSA model, the increase in GDP which the DBSA predict as a result of the Games is optimistic. According to this specialist input, the DBSA model used to predict the socio-economic benefits of the Games is not regarded as an appropriate technique for assessing long-term complex projects, such as the Olympic Games. The model also inadequately reflects a number of factors affecting the expansionary capacity of the South African economy, including productivity losses, interest repayments on government borrowing and the impact of the Games on inflation. Considering experiences of previous host cities, the employment opportunities predicted by the DBSA may also be over-optimistic.

In summary, the specialist input to this SEA indicates that the overall macroeconomic benefits associated with the Games, as predicted by the DBSA, are probably optimistic. The overall increases in GDP and government revenue could therefore be lower than predicted by the DBSA. However, if the macroeconomic and public finance preconditions are met, this reduction should not be unmanageable.

b) Jobs and empowerment

Opportunities

An important developmental benefit of the Games is provided by the job opportunities created by preparing for and hosting the Games. It is difficult to assess the extent of such opportunities, in part because of the confusing use of terminology in the reference material. The jobs are likely to be located mainly in the construction and tourism sectors, and, according to the DBSA, may involve an increase of up to 90 000 person years. 2 A number of jobs have already been created through the priority projects currently underway. By raising the profile of Cape Town as a tourist destination, the Games should also contribute positively towards long term employment opportunities in the tourism industry.

Opportunities also exist for skills development and the empowerment of members of disadvantaged communities through job-training programmes, particularly in the tourism, construction and communications sectors. The additional skills will contribute towards improving overall productivity levels and provide incentive for further investment. This is, however, only realisable if both the public and private sectors actively participate in providing resources and support for skills development.

The involvement of small, medium and micro enterprises (SMMEs) in the construction sector on Olympic priority projects has been encouraging to date. In this regard the priority projects have provided training programmes and opportunities for partnerships between government, SMMEs and established private sector companies. Where the OBC has had direct control over the appointments of sub-contractors, a high percentage of contracts have been granted to SMMEs, particularly from disadvantaged communities.

Limitations

The DBSA report indicates that employment will increase by 90 000 person years. The terms person years and permanent jobs do not mean the same thing. Suggestions to this effect must therefore be regarded as misleading. 90 000 person years could mean, for example, that 9 000 jobs lasting 10 years would be created.

The DBSA estimate of 90 000 person years has been exceeded only by Barcelona, which had five times more capital expenditure than Cape Town, and Seoul, whose figures are not regarded as reliable. Sydney has estimated an employment increase of 70 000 person years. The DBSA prediction of 90 000 person years may therefore be optimistic.

The majority of Games-related job opportunities created in tourism and construction is likely to be temporary (and seasonal in the case of tourism), with most of them unlikely to last much beyond 2004. The extent to which permanent jobs are created will depend on the extent of long-term growth in tourism resulting from the Games. Most Games-related employment opportunities in the construction and tourism industry are likely to be in the lower skill, lower wage sector. Dominance of established players and capital requirement barriers are likely to make the involvement of SMMEs in other areas more difficult, unless government puts measures in place to support them. The involvement of SMMEs from the civil engineering sector on Olympic priority projects to date has been limited, in cases where local authorities rather than the OBC have been involved.

c) Basic needs

Opportunities

Games-related investment will address basic needs (as defined by the RDP) in the CMR to a limited extent through providing a large number of training venues and seven competition venues in disadvantaged areas. These venues are intended to form the basis of multi-purpose community facilities for use after the Games. About one-third of investment in Olympic sports facilities is going into the previously disadvantaged areas of the Cape Flats and Metro South East. The R 1 558 million in accelerated investment in public transport will also improve the overall mobility of disadvantaged communities, and improve access to recreation facilities.

The provision of bulk services and transport links for the training and competition venues located in the disadvantaged areas may also serve to attract future private sector investment in these areas, thus providing jobs and improving accessibility to potential future work places.

Limitations

Basic needs of disadvantaged communities in the CMR will only be addressed to the limited extent outlined above. In particular, hosting the Games in Cape Town in 2004 will not directly affect the provision of low-cost housing in the Cape Metropolitan Region, although the OBC has identified some land at Wingfield which could be used for low-income housing after the Games. No provision is currently made in the Olympic plan for cross-subsidisation of low income housing.

The focus of the Bid, in providing accommodation for the Games, is to meet the IOC requirements, and to ensure that this investment is financially sustainable, given the high land costs at Wingfield and Culemborg. The intention is for Olympic housing to be financed and developed by the private sector, and to be sold after the Games to middle-income households earning R 4 000 - R 7 000 per month (in 1997 terms).

Although the transport infrastructure and training and competition venues which will be provided are of tremendous value, upgrading of the transportation system is not expected to significantly improve accessibility of disadvantaged communities to work opportunities, in that distances to the workplace will not be reduced in the short term.

d) Restructuring the metropolitan region

Opportunities

The Bid Plan provides a limited but significant opportunity for redressing the physical and spatial imbalances which are characteristic of the apartheid city. The Bid Plan provides for at least 57 training venues (74% of all the training venues) and seven competition venues in disadvantaged areas of the CMR. Consultation is occurring with communities about their needs and the use of the training venues as multi-purpose community facilities after the Games. The provision of bulk services and transport links to these facilities will assist in attracting private sector investment required for future commercial development in these areas.

Seven priority projects are already underway at Mew Way, Belhar, Philippi East, Langa, Khayelitsha, Turfhall, and Scottsdene. These projects will have injected about R 81 million of investment into previously disadvantaged areas on the Cape Flats and in the Metro South East, even if the Games are not awarded to Cape Town.

Should the Games be awarded to Cape Town, a substantial portion of the R 1 558 million Games-related accelerated expenditure on public transport would go into previously disadvantaged areas of the CMR. Investment in transport infrastructure in the disadvantaged Metro South East could stimulate economic development in this area in the long-term, thus providing more accessible job opportunities. Priority Games-related transport funds of around R250 million will have been spent, regardless of whether or not Cape Town hosts the Games.

While the bulk of competition venue expenditure will occur in the relatively well-off areas of Wingfield and Culemborg, thus reinforcing existing spatial patterns, there are sound reasons for this. The major venues require good access to the CMR, existing transport and service infrastructure, and the ability to maintain expensive facilities in the long term. In addition, it should be noted that urban renewal is likely to occur around both Culemborg and Wingfield, with the adjacent lower income residential areas of Woodstock, Salt River and Factreton benefiting.

Limitations

Although the Games will be geographically dispersed, with money being spent on transport links and Olympic competition and training venues in disadvantaged areas, the majority of investment will take place in the relatively well-off areas around the two main competition venues at Wingfield and Culemborg. This will serve to reinforce the CMR's existing spatial patterns. The reasons for concentrating the majority of the Games-related investment in these areas are outlined above. However, while it would be unrealistic to expect the Games to achieve a total restructuring of the CMR, the concentration of the bulk of the spending in the relatively well-off areas is a significant limitation on the extent to which the Games are developmental.

Although substantial investment in transport and multi-purpose community centres will increase access by disadvantaged communities to recreation facilities, it will take a long time before improved transport infrastructure will lead to the changed patterns of economic investment necessary to bring work closer to people's homes. The structural inequalities of the CMR, with disadvantaged communities living far from their places of work, will thus not be significantly altered by Games-related investments.

An additional concern is that poor people living in the vicinity of the areas which are likely to experience urban renewal may not be able to afford to continue living in these areas, unless effective measures are put in place to prevent this displacement.

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Posted by the Olympics Assessment Team of the Stategic Environmental Assessment of the Cape Town 2004 Olympic Bid.
Email inquiries to the team from this point, or refer to the contact details above.