SA`s local organising committee for the 2010 World Cup is confident the necessary ICT infrastructure will be in place, in time, despite claims that the country may fail in this regard.
Speaking on behalf of the committee, Tumi Makgabo says although the exact requirements have not yet been determined, SA will be capable of upgrading its ICT infrastructure if the current economic climate continues.
Recent blips on the economic radar have been just that, temporary glitches, she says. "In general, SA`s economic conditions are stable."
However, international credit insurance company Coface`s director of underwriting, Pieter Breitenbach, argues that the weakening rand and increases in the lending rate could push SA`s credit rating down and result in the country being unable to import essential ICT infrastructure for the World Cup.
He argues that exporters of electronic and IT equipment into the local market may become concerned about the ICT industry`s ability to meet its payment commitments. SA has an A3 credit rating, described as "adverse political or economic circumstances which may lead to a worsening payment record, but with a low payment default probability," says Breitenbach.
"In order to grow our economy, it is crucial that SA at least maintains its credit rating."
No worries
Standard Bank economist Elna Moolman says while the Monetary Policy Committee is expected to push the repo rate up 50 basis points when it meets this Wednesday and Thursday, she is not concerned that the country will have an adverse rating as a result.
The rate hike, which would be announced on Thursday afternoon, will come as a result of a higher current account deficit, higher inflation, and a weaker rand and will see half-a-percent added to interest rates.
While SA`s current account deficit was 6.1% of its economic output in the second quarter of this year, this gap has been narrowing, she points out, as the deficit was 6.4% of GDP in the first quarter. Moolman adds that the increase in the current account - a short-term concern - is a result of the country`s increased spend on infrastructure.
Inflation, at about 5%, is expected to push through the Reserve Bank`s target of 6% in the first few months of 2007 on the back of depreciation, she says. This will result in an increase in the price of imported goods, but is not a long-term concern.
The increased cost of goods and increased finance costs on goods will affect SA`s ability to pay for ICT infrastructure, Breitenbach argues. This, he says, will have a knock-on-effect on credit rating.
Moolman disagrees, saying she does not see the rating taking a knock, unless international sentiment dives. Dawie Roodt, an economist with the Efficient Group, says even if the country losses a notch on its credit rating, SA will still be an attractive investment destination.
Coface anticipates that between R2 billion and R5 billion will be spent on ICT infrastructure by the public and private sector in the run up to the World Cup. In Germany this year, the list of equipment included 25 cameras at each of the stadiums transmitting through 24 fibre optic lines provided by Deutsche Telekom.
Technical service provider T-Systems says there were 1 500 technicians monitoring the streaming images around the clock. Four hundred and eighty gigabytes of data streamed through 310 miles of cable each second at the broadcast centre.
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