Though SA has at least 200,000 spaza shops, they are rarely acknowledged for their contribution to the country’s economy. And many of them are in the hands of foreign nationals. But King Sabata Dalindyebo municipality bosses are on a quest to change the status quo, particularly in the rural areas.
KSD mayor Nyaniso Nelani has unveiled an ambitious plan to invest at least R2.6m in the next two financial years towards supporting SA-owned spaza shops in rural villages in its 37 municipal wards.
Tabling a report to council recently, Nelani said the idea was to provide informal retail shops with start-up capital that would help rejuvenate the rural economy while empowering these stores to compete on an equal footing with formal supermarkets.
“We want to ensure there is increased participation of SA citizens in the mainstream economy while also contributing to the reduction of unemployment within the KSD municipal area,” Nelani said. “Rural spaces remain untransformed, dependent on the urban centres for survival and with no hope for economic renewal.
“KSD is largely composed of rural areas that are characterised by high unemployment rates, especially among youth and women. The informal sectors like spaza shops were previously not given the necessary support.”
According to the mayor’s report, the response was meant to be both interventionist and strategic in nature as part of a holistic solution provided by the government to rural communities and SMMEs. Nelani said the market for village-based retail outlets was dominated by individuals of foreign origin.
The barriers to entry in this sector are very low, which makes it a suitable vehicle for previously disadvantaged communities.
— KSD mayor Nyaniso Nelani
He said spaza shops were a vital component of the informal sector because they contributed to the reduction of unemployment and the stimulation of the economy.
“The barriers to entry in this sector are very low, which makes it a suitable vehicle for previously disadvantaged communities.”
Mthatha businessman Vuyisile Ntlabati, who also serves as Eastern Cape Chamber of Business president, said the initiative was long overdue. He said as a formal business structure, it was also working with government departments including small business development, the Eastern Cape Development Corporation and OR Tambo district municipality to set up a distribution centre in Mthatha to service spaza shops.
He said they wanted all spaza shops to be fitted with the latest technological equipment and be properly branded to make them viable. But instead of giving them money, spaza owners would receive vouchers they could use to buy stock at some warehouses.
“They are already doing this in KwaZulu-Natal. We believe the spaza retail business must go back to its rightful owners. We want them to be mentored.”
Ntlabati said the introduction of the government tender system had effectively killed the spaza shop business in rural areas as many people had gravitated towards securing state contracts. He said spaza shops had a big role to play in job creation and stopping the influx of rural people into urban centres to look for work.
“It would also help reduce rampant crime in rural areas fuelled by unemployment.” He said rural farmers could sell their products to these spaza shops and rural-based general dealer stores, or even to the envisaged distribution centre, which was still in the planning stages.
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