Together, we can transform these hidden gems of the township economy into township titans, driving economic growth and community empowerment for generations to come, says the writer.
Image: IOL
By Faiez Jacobs
The tragic deaths of children from consuming unsafe food sold in unregulated SPAZA shops have shocked us all, creating outrage and demanding change in the informal food retail sector. These heart breaking events demand immediate action, and President Cyril Ramaphosa’s decisive mandate to register all SPAZA shops within 21 working days , is an important and critical step toward ensuring consumer safety and fostering a vibrant, inclusive economy. This is a wakeup call that we all must heed!
This crisis surrounding SPAZA shops need us to move away from blaming and complaining to urgent action and immediate accountability. These informal food retail enterprises have not only provided essential goods but also embodied resilience and innovation in underserved and marginalised communities. To safeguard their future, we must address regulatory gaps, ownership patterns, and challenges like extortion while fostering collaboration among local entrepreneurs, foreign nationals, and the private sector. This is a rallying call for all stakeholders—government across all spheres, communities, and the private sector especially the big 5 food retailers —to support the registration and formalization of SPAZA shops, ensuring their continued contribution to South Africa’s economy and society
South Africa’s informal and semi-formal food retail sector has deep historical roots. General Dealers—larger, family-run stores often managed by Afrikaans, Indian, African, Greek, Portuguese entrepreneurs—once served as the backbone of township and rural retail during the 20th century. Known for their personal service and trust-based credit systems, these stores became cornerstones of their communities, offering a wide range of goods from groceries to hardware.
The term "SPAZA" originates from isiZulu, meaning "hidden," a fitting description of the sector’s origins during Apartheid era prohibition of Black ownership of formal businesses. Hidden within homes, they catered to local needs and became symbols of defiance against economic exclusion.
Post-apartheid, SPAZA shops have evolved from modest corner stores to integral components of township economies. Today, they serve millions of mainly indigent South Africans, providing goods ranging from basic groceries to household necessities. Despite their growth, many SPAZA shops remain informal, operating outside regulatory frameworks and facing significant challenges that threaten their sustainability.
South Africa is home to about 100,000 SPAZA shops, with a significant portion operating informally. Many operate outside regulatory frameworks, contributing to health risks, counterfeit food distribution, and unfair competition.
Recent investigations by the Department of Small Business Development (DSBD) highlighted the circulation of counterfeit and unsafe food products, often facilitated by unlicensed SPAZA shops. Compounding the issue, many of these shops are run by undocumented foreign nationals, which adds layers of complexity to enforcement and compliance.
SPAZA shops are more than just food retail outlets; they are pillars of township economies, contributing significantly to local employment and economic activity. Estimates suggest that the informal sector, where SPAZA shops operate, accounts for 30% to 40% of South Africa’s annual food expenditure, representing a market value of approximately R178 billions. In recent years, ownership patterns within the SPAZA shop sector have shifted.
Despite their contributions, SPAZA shops face numerous challenges that hinder their growth and sustainability:
A significant number of shops are now owned and operated by foreign nationals, particularly from countries such as Somalia, Ethiopia, Pakistan, and Bangladesh. While these entrepreneurs have brought some innovation and competitive pricing to the sector, their dominance, monopolistic , unregulated and in some cases exploitative business practises has raised concerns about the exclusion of local South Africans from economic opportunities. The recent death of children resulting from food poisoning has resulted to understandable anger and resentment towards especially these SPAZA shops owned and operated by foreign nationals.
Key challenges linked to this needed shift include:
This must change but immediately to foster harmony and mutual growth, we must promote compliance, cooperation and collaboration:
As we address the challenges within the SPAZA sector, we must also inspire South Africans to embrace entrepreneurship. SPAZA shops are more than small businesses—they are lifelines for communities. By formalizing and supporting these enterprises, we South Africans can unlock their potential to drive inclusive economic growth.
The Department of Small Business Development's efforts to integrate township enterprises into broader supply chains are commendable. However, we need to do more:
The Path to a Safer, Inclusive, and Thriving Sector
To transform the SPAZA sector, we must navigate the complex transition from its current state of informality and fragmentation to a regulated, inclusive, and thriving ecosystem. This requires a multi-faceted approach and a coordinated strategy that addresses immediate risks while laying the groundwork for long-term growth.
Immediate Actions
Mandatory registration of SPASA shops is not just a bureaucratic exercise—it is a critical intervention to:
To transform the current state of SPAZA shops into a vibrant and compliant sector, we must implement a multi-pronged approach:
Medium-Term Solutions
Long-Term Goals
The transformation of SPAZA shops is not solely a government responsibility. Communities and the private sector must play active roles:
Community Support: Encourage local consumers to support registered shops, fostering accountability and economic circulation.
Private sector players, particularly in retail and logistics, are critical to transforming the informal economy:
To create a vibrant and sustainable SPAZA sector, we must think beyond traditional approaches. Here are some innovative ideas:
In the ideal scenario, South Africa’s SPAZA shops will be:
The SPAZA shop sector stands at a crossroads. We call on all SPAZA shop owners—both local and foreign—to embrace registration and compliance without delay. To the private sector, we urge you to partner with government and communities in building a sustainable and inclusive SPAZA ecosystem. Finally, to all South Africans, let us support this initiative, rallying behind the President’s vision for a safer and more equitable future. STOP THE BLAME and COMPLAIN! The government’s interventions must inspire and empower citizens to build businesses that are safe, sustainable, and community-centred. Together, we can transform the SPAZA sector into a model of resilience and opportunity. It must reflects the values of safety, inclusivity, and shared prosperity. The journey ahead is challenging, but the rewards are immense. Let us take this step together, transforming SPAZA shops into beacons of hope and opportunity for generations to come.
Let us reclaim and reimagine the informal retail sector, honouring its historical roots while building a future that reflects South Africa’s values of safety, inclusivity, and resilience. Together, we can transform these hidden gems of the township economy into township titans, driving economic growth and community empowerment for generations to come.
* Faiez Jacobs, Former Chairperson of the Small Business Development Parliamentary Portfolio Committee.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.
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