Are foreign-owned spaza shops vital to the township economy?

South Africans, especially those residing in townships, have for the longest time called for growth in the township economy.

Spaza shops play a significant role in uplifting the township economy.

However, at least 10 deaths of children aged between six and 11 years in the space of a month have caused an uproar in townships calling for the closure of spaza shops owned and run by foreigners.

Children from different parts of South Africa allegedly consumed snacks from these spaza shops before their deaths.

If the government answers the call to close these spaza shops, can the township economy survive?

Township economy would suffer

Professor Bonke Dumisa, an independent economic analyst told The Citizen if spaza shops are to be closed, the process must be handled with diligence.

“The authorities must not just embark on this emotionally, because it will be more embarrassing if they start something they cannot finish.”

He acknowledged that spaza shops are the lifeblood of the township economy, used by many township residents for basic goods like bread, milk and eggs.

Dumisa is of the view that not only would the township economy suffer if spaza shops were to be closed, but also low-income households would suffer greatly. 

Foreigners mastered the art

Touching on foreigners owning spaza shops, he said whether legally or illegally in the country, they have mastered the art of running shops and other retail outlets in the township because they know the success of their businesses is entirely dependent on them.

“Some of these people even sleep at those businesses, which is very unhealthy and unhygienic,” he added.

He said unfortunately some local business owners believe the government must do everything for them. The difference between foreigners and local people running spaza shops is the other group knows everything depends on what they personally do to succeed, while the other feels entitled.

Consistent raiding of spaza shops is needed

When it comes to closing down businesses run by illegal foreigners, he said this is a group of people who have mastered the art of playing hide and seek with the authorities, including bribing their way through any obstacle they come across. 

“The authorities must rather focus on consistently raiding all township retailers to ensure they do not stock illicit goods, regardless of whether these are foreign-owned or owned by locals.”

ALSO READ: What’s with foreigners and spaza shops?

Locals must reclaim the township economy

Deputy Minister of Small Business Development, Jane Sithole told The Citizen that communities must not attack the owners of the shops, but rather reclaim the township economy. She said the department is ready to assist locals with starting their own shops.

Sithole added that spaza shops are a South African concept, but it has been hijacked because locals have stopped participating.

She recalled how grandmothers and fathers had been doing informal trading in the past, but the ball had been dropped, leading to locals renting out properties to foreigners to do their businesses.

“We are appealing to the locals to take back the ownership of the shops and by doing so they will be reclaiming the township economy,” said Sithole.

Locals must be on alert

Gauteng’s Acting Premier Kedibone Diale-Tlabela said South Africans who have decided to rent out their facilities to foreigners to conduct businesses there must take responsibility and make sure they are aware of what is being sold.

She has also urged parents to take extra precautions where food from these outlets is concerned, and their children must avoid it.  

Spaza economy is valued around R180 billion

Professor Waldo Krugell, an economist at the Faculty of Economic and Management Sciences at the North-West University (NWU) told The Citizen township economy definitely needs the spaza shops, therefore closing them would not benefit the economy.

“The spaza economy is valued at around R180 billion to R200 billion, which is about 2.5% of the SA economy, and is a major retail channel in townships.”

The role of spaza shops can be seen in how established grocery retailers are expanding into the township economy in different ways.

“In the past, they [spaza shops] mainly used two channels: getting spaza-shop owners to source their stock from stores, and opening and running stores in informal and rural areas.”

ALSO READ: Spaza shops: State urged to intensify policing of informal food outlets

USave and Boxer

He added that there has been a greater focus on the informal market and spending on expansion by retail giants such as Shoprite with USave and Pick n Pay with Boxer. “They are bringing the benefits of their bulk-buying and supply chains to this market segment.”

However, these retail giants are also bringing competition to the small informal, independent trader, who is likely to see margins shrink.

When asked what can be done to advance the township economy? He said: “personally, I am not in favour of too much regulation and initiatives to make the informal sector more formal. Policymakers should rather clear the way for informal entrepreneurs and let them create jobs.”

Compliance with regulations  

Investigators from the National Consumer Commission (NCC) conducted inspections at spaza shops in Gauteng, and Eastern Cape on 14 and 15 October to determine if shop owners comply with the Consumer Protection Act (CPA) and other applicable laws, regulations and bylaws.

It was discovered that some spaza shops do not adhere to date markings and still have food on their shelves past the sell-by or use-by/expiry dates.

Some goods were also not labelled and some were labelled in foreign languages, such as Mandarin, with unclear or no information on ingredients.

These goods included baby food, sweets, cool drinks, noodles, snacks, biscuits, juices, and other consumables.

ALSO READ: Joburg blames the ‘lack of resources’ in five children’s deaths

Sales records

Some shops were also not issuing sales records or invoices and if they did issue a sales record, it did not comply with requirements. The CPA states that suppliers of goods or services must provide a written record of each transaction to customers who buy goods or services.

Spaza shops were put in the spotlight in early October when five children from Naledi, Soweto died soon after eating snacks from a store in the area. The sixth one was admitted to Lesedi Hospital but later died.

Toxicology report

Health Minister Aaron Motsoaledi said their toxicologist revealed that the six children “unequivocally” died of organophosphate poisoning.

Organophosphates are a class of chemicals usually used for agricultural purposes, medications, and nerve agents.

“The organophosphate identified in this instance is called terbufos. All the six children died of terbufos injection,” he said. Terbufos is found in pesticides.

ALSO READ: 10-year-old Alex girl passes away after suspected food poisoning

Domino effect

Ever since the death of the six children, other school children have been falling like a domino effect with tens admitted for food poisoning, while others have died.

In October, 24 Mpumalanga primary school pupils were rushed to the hospital after consuming spaza shop snacks.

According to the report from the school, the children complained about abdominal pains, and some started vomiting. They allegedly ate some snacks procured from one of the local spaza shops.

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