Chaos as large crowd swamps launch of government’s R500m support fund for spaza shops

The R500-million Spaza Shop Support Fund was launched in Soweto on Tuesday by the minister of trade, industry and competition, Parks Tau, and the minister of small business development, Stella Ndabeni-Abrahams.

Tau said that supporting spaza shops while maintaining a culture of innovation was essential for building competitive industries in South Africa and that entrepreneurs helped strengthen local manufacturing and distribution networks connected to the ecosystem of small enterprises.

The government initiative was also meant to increase competitiveness on the global stage and to “instil a culture of excellence, safety and innovation across our country”.

“We appeal to all industry partners and community leaders to join us in this fight,” said Tau.

Tau said his department and that of Ndabeni-Abrahams would contribute equally to the R500-million funding.

Stella Tembisa-Ndabeni speaks at the launch. (Photo: Fani Mahuntsi/Gallo Images)

The initiative was an opportunity for entrepreneurs to graduate from owning spaza shops to owning proper businesses.

“Spaza shops are the lifeblood of our communities where the big retailers cannot reach,” said Tau.

He commended the resilience of Dobsonville entrepreneur David Maluleka, who started his business selling a packet of 20 cigarettes.

“That got me two boxes of cigarettes. The two boxes of cigarettes got me a carton.” From there, his business grew, and he now employs three people. “I would like to employ at least 10 people,” said Maluleka.

He has been in the spaza business for 15 years, and has been assisted by the government, including through the provision of a point-of-sale machine, which helps him track his stock.

The president of the South African Spaza Shops Association (Sassa), Kgothatso Ramautswa, told Daily Maverick, “I believe this initiative has the potential to make a significant difference, but it ultimately depends on how effectively and transparently the funds are managed.

“It offers much-needed hope to stabilise the spaza shop industry, which has faced ongoing challenges. However, our primary concern lies in the management and accountability of the funds.”

Chaotic launch

The launch event, intended as a grand unveiling, descended into chaos as attendance far exceeded expectations. At the entrance to the venue — the Heritage Hall at Eyethu Shopping Centre — the crowd swelled and frustration mounted as throngs of hopeful attendees were unable to enter. Eventually, space was cleared inside the hall, allowing those locked out to participate, but only from standing positions.

Security personnel at the entrance barred some accredited journalists while granting entry to others.

Sibongile Dlamini from Dobsonville in Soweto said, “This is the worst planning ever. Whoever was involved did not know what they were doing. We have been locked out without even being made to understand what the criteria is for one to access the venue. Why were we invited?”

Zola Soweto resident Ntokozo Masilela said he was excited to be part of the launch and was confident the initiative would benefit entrepreneurs.

“It is one of the biggest programmes aimed at supporting spaza shops to have ever been launched. It’s a groundbreaking initiative and I am confident that, like the ministers said, it will graduate us from spaza shops to businesses,” said Masilela.

Nomalanga Mokoena from Protea North, Soweto, said, “I managed to get in because I arrived very early. Other than the chaos, I am very excited by this initiative. It shows that the government has been paying attention to the cries of South Africans.”

Mokoena said the disbursing of the fund must be conducted in a just manner.

“With Minister Parks Tau part of the programme, I believe that it will succeed. Minister Tau is untainted, but there will always be those who cannot resist the urge to eat what belongs to the people. I trust Minister Tau to protect the fund against corruption,” said Mokoena.

The Gauteng MEC for economic development, Lebogang Maile, said they were aware that R500-million was not enough and the Gauteng government would also provide funding.

“As the Gauteng government, we will see how we can augment it. We will train entrepreneurs.” Maile said it was important to educate entrepreneurs before handing out money, which had to go to the right people.

Johannesburg’s executive mayor, Dada Morero, said it was fitting that the launch was held in Soweto. “Soweto accounts for almost two million people. That’s the population of Botswana. That’s the population of Lesotho. Soweto is the birthplace of entrepreneurs.”

Morero said the City of Johannesburg would reserve some money to assist entrepreneurs in the 2025/2026 financial year.

However, some attendees expressed scepticism.

“That is, if they will be able to protect all the pledged funds from corrupt officials or themselves. Our government officials have a poor track record of handling public funds. This money will disappear like the Covid funds, and we will soon forget about it,” said Bonga Mkhize.

“But other than the corruption factor, as an aspiring business owner, I am optimistic after this launch.”

Formalisation

The government has long been talking about formalising the informal business sector.

Sassa’s Ramautswa said, “For this initiative to have a lasting impact on formalising the sector, it’s essential that the funds are used appropriately and not squandered. There needs to be strict oversight to ensure the money directly benefits spaza shops and contributes to sustainable growth.

“Additionally, we urge that the Consumer Commission takes more tangible action to protect consumers, ensuring ethical practices within the industry.

“Sassa is committed to monitoring the sector closely, including ensuring spaza shops source their stock responsibly and from reputable suppliers. We also want to see the proper regulation of NGOs and municipal workers who might be exploiting businesses for personal gain.

“Without accountability and transparency, these issues could undermine the efforts to formalise the spaza sector.”

Tau said that equipping the entrepreneurs was setting the stage for the creation of employment. Businesses supported by the fund will be responsible for local economic growth.

“The launch of this fund is investment in the grassroots of the economy,” he said. 

Spaza shop owners who want to apply for assistance from for the fund can visit the website or call 011 305-8080 for more information. DM