Government’s R500m spaza shop support fund gets thumbs up

The government’s allocation of R500 million for spaza shop development is being welcomed by business experts and authorities.

Minister of Trade, Industry and Competition Parks Tau and Minister of Small Business Development Stella Ndabeni-Abrahams will launch the Spaza Shop Support Fund in Soweto next week.

Ndabeni-Abrahams said the fund, which will be jointly administered by the National Empowerment Fund and the Small Enterprise Development Finance Agency, will provide financial and nonfinancial support to township businesses, including community convenience stores and spaza shops.

Fund will provide support for spaza shops and community convenience stores

“The fund provides various types of support, including the initial purchase of stock via delivery channel partners, upgrading of building infrastructure, systems, refrigeration, shelving and security, as well as training programmes.

“This includes point of sale devices, business skills, digital literacy, credit health, food safety, business compliance.”

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Abrahams said the opening of applications for the fund marks another milestone in the government’s efforts to stimulate the growth of the rural and township economy, particularly by providing support to the convenience stores and spaza shops based in the townships and rural areas.

She said the government recognised the important role these small businesses can play in creating jobs, growing the economy and alleviating poverty.

Prof Peter Baur, an economist from the University of Johannesburg, commended the government.

‘This is a positive move’

“This is a positive move. The spaza shop community makes up a large portion of the informal sector, providing important opportunities, also to women entrepreneurs.

“This could contribute significantly to creating a better economic environment.”

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But Baur added that there were some key challenges, such as how the funds would be distributed into the community, what funds they would receive and whether it aligned with the needs of the spaza shop owners, such as security, storage for goods, managing and securing stock.

Baur said the targeted financial support could have a beneficial impact on township economies, as a great many spaza shops are in townships.

“The question again goes to how this funding will be allocated.

How will funding be allocated?

“For instance, will the funding go to training or health measures, which will improve the overall quality of services within townships.

“The approach should be holistic. For example, there needs to be broader based infrastructural support.”

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He added that to ensure that the money goes to the right people, the government must develop and maintain a clear and objective transparency and a suitable monitoring and evaluation process.

He added that it would be good if this were an inclusive programme as foreign nationals, spaza shops, entrepreneurs and business owners all contribute to job creation and the local economies.

Both foreign nationals and nationals also contribute to the local economy and great care should be taken when trying to differentiate between the two groups, he added.

Both foreign national and nationals contribute to local economy

President Cyril Ramaphosa has called for the registration of spaza shops so the sector can be regulated.

Many spaza shops are owned by foreign nationals.

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