Government Expands Support for Spaza Shops Through R500 Million Fund

The Department of Small Business Development (DSBD), working alongside the South African Local Government Association (SALGA), is completing a nationwide process to assist informal businesses with registration and compliance requirements.

The South African government is intensifying efforts to help spaza shop owners formalise their businesses and gain access to financial support through the R500 million Spaza Shop Support Fund. The initiative forms part of a wider strategy to strengthen township and rural economies while creating opportunities for small business owners to participate more actively in the formal economy.

The Department of Small Business Development (DSBD), working alongside the South African Local Government Association (SALGA), is completing a nationwide process to assist informal businesses with registration and compliance requirements. To encourage greater participation, government will launch a new nationwide outreach and awareness campaign from June 2026. The campaign will provide practical guidance on licensing, business compliance and funding applications, helping entrepreneurs overcome obstacles that often prevent them from accessing financial assistance. Officials believe that improving compliance levels will allow more businesses to qualify for support and benefit from programmes designed to promote growth and sustainability.

The Spaza Shop Support Fund was introduced by the Department of Small Business Development and the Department of Trade, Industry and Competition (the dtic). Implementation is being carried out through the Small Enterprise Development and Finance Agency (SEDFA) and the National Empowerment Fund (NEF). Since its launch, the fund has attracted significant interest from entrepreneurs across the country. Government has received 4,522 complete applications, with 4,240 already assessed.

The review process has revealed one of the major challenges facing the informal business sector. Only 58% of applicants have valid business licences or temporary permits issued by municipalities. This has prevented many applications from moving forward until compliance requirements are met. Despite these hurdles, progress has continued. To date, 2,369 businesses have been approved for support. SEDFA has approved 1,316 applications valued at R79.6 million, while the National Empowerment Fund has approved 1,053 businesses worth R99.9 million. Together, the two agencies have approved approximately R179.6 million in support across all nine provinces.

Financial Assistance Accompanied by Business Development Support

The assistance package extends beyond direct funding. Approved businesses receive support for stock purchases, point-of-sale devices, infrastructure improvements, inventory management and other operational needs that help strengthen competitiveness and sustainability. Government agencies are also providing extensive non-financial support to help entrepreneurs build stronger businesses. This includes training in financial management, business administration, digital literacy, credit management, regulatory compliance and business formalisation.

Officials said the programme is designed to create long-term economic benefits rather than short-term financial relief. The broader objective is to improve the viability of township and rural businesses while encouraging local economic growth and job creation. The fund has also contributed to transformation goals. Women-owned businesses account for 43% of approved enterprises, while youth-owned businesses represent 18%. Businesses owned by persons with disabilities make up 2% of successful applications. Government believes these outcomes demonstrate the fund's role in expanding economic participation, supporting underrepresented groups and building more inclusive township and rural economies.