Govt Launches R500M Spaza Shop Support Fund to Boost Township Retail Sector

The Spaza Shop Support Fund offers a combination of crucial financial and non-financial resources to entrepreneurs in the retail sector.

The South African government, through the Department of Small Business Development (DSBD), has announced the launch of a significant initiative aimed at helping entrepreneurs set up, expand, and strengthen their spaza shop businesses across the country. The R500 million Spaza Shop Support Fund (SSSF) is designed to empower South African-owned township community convenience shops, including spaza shops, by offering both financial and non-financial support to enhance their competitiveness in the retail market.

This move follows a push to encourage the formal registration of spaza shops, a vital sector in South Africa’s retail landscape, especially in townships and rural areas. As of now, the government has received an impressive 87,407 applications for spaza shop registration, with 53% of these submissions coming from South African-owned spaza shops. This response highlights the growing interest in formalising township businesses and growing the local economy.

Minister of Small Business Development, Stella Ndabeni-Abrahams, emphasized that the SSSF aims to assist entrepreneurs who have already registered their spaza shops, encouraging them to further develop their businesses and ensure they thrive in the competitive retail market. “We are here to help turn your ideas into successful businesses. Whether you are looking to start a business, expand your shop, or acquire essential skills to improve your operations, we are committed to supporting you,” Minister Ndabeni-Abrahams said during the fund's launch in Soweto.

Key Features of the Spaza Shop Support Fund

The Spaza Shop Support Fund offers a combination of crucial financial and non-financial resources to entrepreneurs in the retail sector. The funding is designed to address a range of business challenges, including infrastructure improvement, stock management, and access to training. The support includes:

• Financial Assistance: The fund offers financial support to help spaza shops purchase stock through delivery channel partners, upgrade physical infrastructure, and improve store systems such as refrigeration, shelving, and security.

• Business Skills Development: The SSSF also provides training programs to enhance entrepreneurs' business capabilities. These programs cover essential areas such as point-of-sale devices, business management skills, digital literacy, credit health, food safety, and compliance with industry regulations.

• Bulk Purchasing and Economy of Scale: One of the main goals of the fund is to help spaza shops overcome the disadvantages of smaller operations by facilitating bulk purchasing and linking businesses to buying groups. This will enable shop owners to gain better pricing through aggregation and significantly improve their market competitiveness.

• Logistical Support: Spaza shops will also benefit from logistics management services, such as warehousing, storage, and delivery solutions, which will reduce transportation costs and streamline supply chains, ensuring products are delivered efficiently and stored safely.

Minister Ndabeni-Abrahams stated that the fund would enhance the ability of spaza shops to compete with large retailers by building their capacity to serve their communities better. The initiative also targets rural and township markets, helping entrepreneurs navigate challenges specific to these areas.

Government’s Commitment to Localisation

A crucial aspect of the initiative is the government’s commitment to localising supply chains within townships and rural areas. The fund will prioritize spaza shops in sourcing products from local suppliers, ensuring that entrepreneurs are not solely reliant on imported goods or large corporate supply chains. This approach aims to strengthen the economic base of South African communities by promoting local businesses and products.

In collaboration with various support instruments such as the Small Enterprise Manufacturing Support Programme (SEMSP), Township and Rural Entrepreneurship Programmes (TREP), and the Informal and Micro Enterprise Development Programme (IMEDP), the government aims to create sustainable and self-sufficient local economies. The establishment of new localised supply chains will also create job opportunities and help grow small businesses within townships.

The initiative also envisions involving municipalities, the private sector, and business associations to contribute to building these localised networks. This will ensure that the supply chains are robust, sustainable, and effective in empowering township and rural businesses.

Collaborative Efforts and Support Networks

The Minister also emphasized the importance of collaboration among spaza shop owners. The government encourages business owners to form cooperatives, pooling resources, knowledge, and best practices to achieve mutual growth and development. This cooperative approach will help spaza shops leverage resources, reduce costs, and improve operational efficiency.

Additionally, the DSBD has introduced the DSBD Connect system to help small businesses collaborate and work together. The platform will match businesses based on geographical location, skills, and industry, allowing them to collaborate on projects and access shared resources. The department has also recruited 52 Business Regulation Officers to assist businesses with registration and other regulatory processes.

Access to Funding

Entrepreneurs interested in accessing the Spaza Shop Support Fund can apply through two primary channels: the National Empowerment Fund (NEF) and the Small Enterprise Development Finance Agency (SEFDA). Applications must follow the prescribed process outlined on the respective websites of these institutions.

• Spaza Shop Support Fund: www.spazashopfund.co.za

• NEF: www.nefcorp.co.za

• SEFDA: https://systems.sefa.org.za/SMMEPortal/

For further assistance, applicants can contact the call centres of the Spaza Shop Support Fund, NEF, or SEFDA. The Spaza Shop Support Fund call centre can be reached at 011 305 8080 or via email at Spazafund@nefcorp.co.za. The NEF call centre is available at 0861 843633, while SEFDA’s helpline can be contacted at 012 748 9600 or through helpline@sefa.org.za.

The launch of the R500 million Spaza Shop Support Fund marks a significant step forward in empowering township entrepreneurs and strengthening the South African retail sector. By providing crucial financial support, training, and resources, the government is laying the groundwork for a more competitive, sustainable, and locally-driven retail industry in townships and rural areas. Through collaboration, localisation, and targeted assistance, the government aims to create lasting economic opportunities for entrepreneurs, helping them thrive in a rapidly changing retail environment.