As the 2018 World Cup kicked off on Thursday June 14 in Russia, spending on sports merchandise is expected to boost Nigeria’s Gross Domestic Product (GDP), especially in manufacturing and entertainment sectors of the economy.
Meanwhile, the 2018 new Super Eagles jersey kit was sold out completely at Nike at the rate of N41,000, higher than the nation’s minimum wage of N18,000.
The Nigeria Football Federation (NFF) had, last year, said its total budget for 2018 activities was N6.4 billion. Marketing and promotions around the World Cup are expected to double this year compared to total spend in 2014, when Nigeria did not qualify for the tournament hosted by Brazil.
Taiwo Oyedele, Head, Tax and Regulatory Services, PWC, says the World Cup was the biggest sporting event in the world commanding billions of dollars in spending across the world.
“Nigerians love football, not just for entertainment but also as a matter of national pride and sense of unity. These feel good factors mean that more money will be spent on merchandise, entertainment and related services. We’ve already seen the frenzy surrounding the Super Eagles’ jersey which sold out in just a few days,” Oyedele said.
Overall, he says the World Cup spending will boost the GDP of the manufacturing sector like brewing and entertainment sector, among others.
On the downside, he notes that although the recent increase in excise duties on sin products may taper the effect.
In June 2014 FIFA World Cup, Nigeria’s GDP grew by 6.23 percent (year-on-year) in the third quarter of 2014, higher by 1.06 percentage points from rates recorded in the third quarter of 2013, and lower by 0.31 percentage points from the second quarter of 2014.
Relative to the second quarter of 2014, the economy grew by 8.67 percent in the third quarter, according to the National Bureau of Statistics (NBS).
In the third quarter of 2014, the human health and social services sector grew by 24.25 percent (year-on-year) in nominal terms.
This was by 6.20 percentage points higher from the corresponding quarter of 2013 and 17.13 percentage points higher from the second quarter of 2014. Quarter-on-quarter, the sector grew by 1.08 percent.
The contribution of Human Health and Social Services to nominal GDP was 0.68 percent. The third quarter of 2014 was up by 0.07 percentage points from the third quarter of 2013 and 0.71 from the second quarter of 2014.
“Looking at the structure of the GDP, the World Cup hosted by Russia may not necessarily be large enough to influence GDP,” Ayodeji Ebo, managing director, Afrinvest Securities Limited, said.
Ebo said the impact of the world cup on consumer spending would be in terms of spending on TV Subscription, Jersey Purchases, and Flight Travels.
It doesn’t have significant weighting on the GDP as such, not substantial enough to influence GDP figures in Q2:2018, which ends in two weeks.
The country to feel the major impact of such a major tournament would be the host nation, so when Nigeria hosts one, we could feel the impact.
However, the World Cup organisers are expecting 570,000 foreign fans and 700,000 Russians to attend World Cup matches in Russia, giving the tourism sector, ranging from hotels to restaurants, a boost, albeit a short-term one.
NBS figures show that Nigeria’s GDP grew by 1.95 percent (year-on-year) in real terms in the first quarter of 2018.
This shows a stronger growth when compared with the first quarter of 2017, which recorded a growth of –0.91 percent indicating an increase of 2.87 percent points.
Compared to the preceding quarter, there was a decline of –0.16 percent points from 2.11%. Quarter-on-quarter, real GDP growth was –13.40 percent.