Township business owners are raising concerns about the rollout of a R500 million spaza shop support initiative announced in late 2024, citing discrepancies between promised and actual disbursements alongside persistent administrative barriers.
During a recent public discussion, Bongani Jele, a spaza shop operator in Katlehong, confirmed receiving R40,000 from the fund—less than half of the R100,000 per business that applicants were initially told to expect. Jele explained that the original commitment included R10,000 for training, R50,000 for infrastructure improvements, and R40,000 for stock. To date, he has only accessed the stock allocation.
“The promise was 100,000 per shop… for infrastructure they promise us 50k which I’ve never seen,” Jele stated. “The only money I’ve seen is 40k for the stock only.”
Bheki Twala, founder of the Township Economic Commission of South Africa, acknowledged ongoing implementation challenges while affirming progress through collaborations with the Department of Small Business Development, SEDA, the National Empowerment Fund, and municipal economic development units. Twala stressed that the R500 million pool, while significant, may not match the full scope of need across South Africa’s township economy.
“We need to make that follow-up” on individual cases like Jele’s, Twala said, reiterating that approved beneficiaries should receive the full R100,000 commitment.
Compliance Requirements Create Entry Barriers
A central obstacle identified by both speakers involves stringent registration criteria. Applicants must provide title deeds, approved building plans, Certificates of Acceptability from health authorities, and fire safety clearance—documentation that many informal traders operating from converted homes or garages struggle to produce.
“When you look at the landscape of our families in the township, it’s not easy sometimes for a trader that wants to start a spaza shop and ask family to give a title deed,” Twala noted.
Jele described a circular challenge: health and safety compliance—such as installing ceilings and tiling floors—is required to qualify for funding, yet entrepreneurs lack the upfront capital to make these improvements without support.
“There are so many friends of mine who have shops who didn’t qualify because they didn’t have money to put ceiling at least ceiling or tiles,” he said.
Further complications include a digital-only application system that disadvantages entrepreneurs in areas with poor connectivity, and a disbursement structure that routes funds directly to pre-approved service providers rather than to beneficiaries’ accounts, limiting operational flexibility.
Minister Addresses Fronting Concerns
Small Business Development Minister Stella Ndabeni-Abrahams recently indicated that her department identified cases where South African applicants applied for support only to transfer operational control of their shops to foreign nationals. She warned that such “fronting” arrangements would result in disqualification from the fund’s second disbursement phase.
Twala said he had not personally verified instances of fronting but supported thorough investigation. “I won’t dispute it, but I say let’s find out what happened because we need to get to the bottom of this,” he stated.
Jele, whose shop is located in Katlehong, reported that foreign national ownership is not prevalent in his immediate trading area. “The issue of fronting I don’t know… it doesn’t exist at least in my area,” he said, noting that local South African traders, alongside a small number of Zimbabwean nationals, operate most spaza shops nearby.
Stakeholders Urge Coordinated Reform
Both participants called for integrated, on-the-ground support mechanisms to improve access. Twala proposed joint registration clinics where national, provincial, and municipal officials, alongside business development agencies, could assist applicants in person.
“Let’s get all the stakeholders in one room… so that we are able to assist people,” Twala urged. He also emphasized the need for clearer public communication on registration statistics, identified bottlenecks, and resolution timelines.
Jele balanced calls for systemic change with a message of personal agency: “In life, you don’t have to depend on someone. You have to try for yourself… I’m struggling, but I’m going to keep up with my shop.”
These discussions unfold against a backdrop of heightened community tension, following the arrest of seven individuals during recent inspections targeting allegedly unregistered spaza shops and undocumented foreign nationals on the East Rand. With a second phase of fund disbursement anticipated, stakeholders underscore that resolving procedural delays, clarifying eligibility criteria, and ensuring transparent fund allocation will be essential to realizing the initiative’s goal of strengthening township-based enterprise.
