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CAASA ECONOMIC SPOTLIGHT June 2015 SLIP Economic impact of AAD 2014 achieves new record The return since 2012 of the bi-annual Africa Aerospace & Defence (AAD) Exhibition to Waterkloof Air Force Base (from Ysterplaat in Cape Town) has proven to be a boon for both the Tshwane economy and South African Revenue Services (SARS). An economic impact assessment of AAD 2014 conducted by the author on behalf of the AAD Organisers’ Office shows a further expansion of the fairly sharp increase in macro-economic benefits that accompanied the 2012 Exhibition. Under the auspices of a long-standing partnership between the South African Aerospace, Maritime and Defence Industries Association, the Armaments Corporation of South Africa, the CAASA Trust and the Department of Defence, the AAD Exhibition has evolved into an event that is widely regarded as a national asset. AAD attracts decisionmakers in the aerospace industry from all over the globe and aviation enthusiasts from every Province in the country. The key objective of the study was to determine the impact that the AAD 2014 Exhibition had on the South African macro-economy and the economy of Tshwane. This involved the impact on key economic indicators such as final demand (emanating from private consumption expenditure, government expenditure, capital formation and exports), total output in the economy, employment creation (formal – in terms of different skills levels & informal) and taxation revenues (mainly personal income tax, value added tax and corporate tax). As was the case in the impact assessment conducted for the 2012 Exhibition, the expenditures of foreign visitors constituted the single most important category of value added to the economy. It should be noted that the total of 2,170 foreign visitors is based on verifiable, registered attendees and excludes visitors that did not attend as official guests of the host organisations. It should therefore be regarded as a conservative estimate. 1 Summary of macro-economic impact of AAD 2014 GDP effect - international visitors GDP effect - domestic visitors GDP effect – Organisers’ Office GDP effect - other Taxation revenue raised Jobs created Number of exhibitor countries Countries as visitors Advertising value equivalent of media exposure Public day tickets R 227m R 273m R 137m R 154m R 309m 5,000 29 86 R 19m 74,000 The table summarises the key quantifiable impacts of AAD 2014 on the economy, which serves to justify the huge effort of the Exhibition’s partner organisations in arranging an event of such stature. It also serves to enhance the lobbying power of the Organisers’ Office in securing greater assistance from the Tshwane local government and Waterkloof Air Force Base in upgrading some of the facilities for the 2016 event. Aviation supply chain Aviation makes a significant contribution to the South African economy, particularly via a multi-dimensional supply chain. This includes activities and occupations involved in the importation and financing of aircraft; general operations linked to the movement of people and freight; and industry-specific operations including such diverse activities as geological surveys, crop spraying, eco- and adventure- tourism, and wildlife management. Emergency operations such as medical rescue, fire fighting and policing also have significant need for aviation services. In addition to determining the effect of AAD on GDP, employment and taxation revenues flowing from the expenditures of visitors; the costs of stands & chalets; catering; and other demand factors generated by the event, a number of ancillary effects also exert a positive impact on the economy. These include substantial media exposure, with an advertising value equivalent of more than double the 2012 figure, as well as business subsequently procured as a result of exhibiting products and services at the Exhibition. Finally, the AAD event undoubtedly enhances South Africa’s reputation as a country that is capable of hosting mega-events, with substantial longterm positive effects on the economy, in general and tourism, in particular. 2