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Daily Maverick
25-07-2025
- Business
- Daily Maverick
Majority of spaza shops fail to meet R500m support fund's criteria
The organisation representing spaza shop owners says that the low compliance rate can be blamed on outdated and rigid compliance criteria. Nearly four months after the launch of the Spaza Shop Support Fund, only 14% of aspirant entrepreneurs have met the fund's compliance requirements. The fund was launched by the minister of trade, industry and competition, Parks Tau, and the minister of small business development, Stella Ndabeni-Abrahams, in Soweto on 10 April. The Department of Small Business Development has stated that despite the spaza shop sector playing a vital role in township economies, it still faces significant challenges, including intense competition from large retailers with greater buying power, limited access to working capital and inadequate business development support. The launch of the fund attracted just over 10,000 applications, which are currently under review for funding. The applications have been split into two categories, with the first group made up of the 14% who comply with the requirements. The Department of Small Business Development said these applications were being finalised for funding. The second group of applications comprises the 86% who do not yet meet the compliance requirements for various reasons, including not providing documentation such as business licences or trading permits. 'Failure of government' The spokesperson for the South African Spaza Shops Association, Kgothatso Ramautswa, said it was deeply concerning that only 14% of applications met the fund's compliance requirements. 'It reflects not a failure by the spaza shop owners, but rather a failure of government to design and communicate a realistic and accessible funding support system,' said Ramautswa. 'Most spaza shops operate in the informal economy, and the current compliance framework is not tailored to the lived realities of township entrepreneurs.' Ramautswa said the 86% figure showed that the fund was failing its intended beneficiaries. If 86% of applicants were non-compliant, the problem lay in the system, not the people. He said it was unacceptable that such a large portion of the informal economy was non-compliant with the fund's requirements because of outdated and rigid compliance criteria. The department has said that instead of declining the non-compliant applicants, it was providing non-financial support, including assistance in applying for the necessary documentation through their local municipality. Outreach programme Siphe Macanda, the spokesperson for the Department of Small Business Development, said: 'This support is part of a broader outreach programme, which serves as an extension of the non-financial support available under the fund. The countrywide outreach programme is implemented by officials from the Department of Small Business.' However, Ramautswa insisted, 'The requirements are overly technical, bureaucratic, and not reflective of township business operations. The average spaza shop does not have access to accountants, registered business documents, or internet connectivity.' The Spaza Shop Support Programme provides targeted financial and non-financial support, with funding of up to R100,000 per qualifying spaza shop owner. The department said this support package is designed to promote sustainability, competitiveness and regulatory compliance. It includes: Up to R40,000 for stock purchases, facilitated through approved delivery partners to ensure reliable and cost-effective supply. Up to R10,000 for business training, covering key modules such as point-of-sale systems, basic business and financial management, digital literacy and credit management, and food safety and regulatory compliance. Up to R50,000 for infrastructure upgrades, including improvements to shop buildings, refrigeration and shelving, security systems, and other essential business assets. 'This comprehensive package aims to strengthen the operational efficiency of local spaza shops, improve their competitiveness and foster inclusive economic participation within township communities,' said Macanda. The department said that despite no applications being formally declined, as part of the due diligence process, applications may be declined in future under specific circumstances, including the following: The applicant is not a South African citizen, as the fund is intended to support South African-owned spaza shops; Fronting — where the applicant is misrepresenting ownership or control of the business; Fraudulent documentation or misrepresentation in the application; An invalid or non-existent trading permit or a business licence that cannot be resolved through the support process; and/or Use of funding for personal or non-business-related purposes, which goes against the objectives of the fund. 'It is important to emphasise that the fund does not immediately decline applications that are non-compliant. Instead, these applicants are provided with client-specific non-financial support to assist them in complying with the fund requirements,' said Macanda. Job Creation The department said the R500-million fund fully covers the cost of training as part of its comprehensive support package. An amount of R10,000 per beneficiary is allocated for targeted business training and capacity building. This amount is included within the broader R100,000 funding package per qualifying spaza shop owner. The training component is designed to develop critical business management skills. To qualify for the Spaza Shop Support Fund, spaza shops must operate within South Africa's townships or rural areas and must serve the local communities in those regions. 'This focus is aligned with government efforts to revitalise township and rural economies by promoting local entrepreneurship, job creation and access to essential goods and services,' said Macanda. 'Spaza shops located in more affluent or urban areas are not eligible under this specific fund, as it is designed to support historically underserved and economically marginalised communities. 'However, spaza shops or retail outlets in urban areas may still qualify for support through existing funding programmes offered by the NEF [National Empowerment Fund] and Sedfa [Small Enterprise Development and Finance Agency]. These programmes cater to a broader range of businesses outside the scope of the Spaza Shop Support Fund,' she said. Corruption Daily Maverick asked the department how it ensured that the fund was used effectively, transparently and free of corrupt elements. The department said it had a comprehensive set of oversight and governance mechanisms in place. 'All applications are processed through an automated system, allowing for real-time tracking and daily reporting on approvals and disbursements. Funding is only disbursed following formal approval by the Investment Committee, which rigorously evaluates applications in line with the fund's due diligence protocols and eligibility criteria,' said Macanda. 'To safeguard the integrity of the disbursement process, the Finance Division applies strict internal controls to verify and validate each transaction prior to payment. 'Post-disbursement, the NEF's Post-Investment Unit conducts audits and site visits to confirm that funds are being used in line with approved business plans. Importantly, disbursements are made directly to vetted and pre-approved suppliers, rather than to beneficiaries, reducing the risk of fund misuse.' Macanda said governance was further strengthened through regular oversight and coordination. 'These combined mechanisms ensure that the fund operates with a high degree of transparency, accountability and alignment with its developmental objectives,' added Macanda. The current maximum funding available per spaza shop owner is R100,000, and this support is offered as a blended finance instrument, with a 50% grant and a 50% interest-free loan. The debt portion is repayable, but carries zero interest. The South African Spaza Shops Association was critical of the non-financial support, asserting that business owners chiefly require finances. 'While training and support are welcomed, they should not replace the urgent financial assistance that these businesses most require to survive. Spaza shops are struggling with load shedding, high crime, inflation and dwindling foot traffic. 'Training without financial backing is a Band-Aid over a gaping wound. Non-financial support should be integrated with immediate access to funding in a practical manner,' said Ramautswa.
IOL News
22-07-2025
- Business
- IOL News
South Africa aims to shape the future of entrepreneurship in global startup ecosystem
Vuyani Jarana, chairperson of SU20, provided a concise overview of the StartUp20 engagement group within South Africa's G20 Presidency, highlighting the country's vast ecosystem. Jarana was speaking at the StartUp20 (SU20) Midterm Engagement Meeting in Ekurhuleni on Monday. Image: Supplied South Africa has positioned itself to take a leading role in shaping the future of entrepreneurship and innovation within the global startup ecosystem. This was revealed on Monday by the Department of Small Business Development (DSBD) at the StartUp20 (SU20) Midterm Engagement Meeting as part of the first-ever Global Small and Medium-sized Enterprises (SME) Ministerial Meeting organized by the International Trade Centre, the UN small business agency, in partnership with the South African government. Minister of Small Business Development, Stella Ndabeni, said the Engagement Group was unwavering in its mission to propel innovation, digital transformation, and policy collaboration. Ndabeni said this initiative aims to forge robust connections between global startup communities, ultimately better equipping local enterprises to navigate international markets.'We have identified five priority areas for the StartUp20 Engagement Group. 'First, Foundation and Alliance with the focus on enabling policies, and ways to build a more supportive and resourced eco-system for early-stage entrepreneurs and scale-ups,' Ndabeni said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ 'Second, Finance and Investment with the focus on addressing gaps in early-stage financing, cross-border financing, and ways to derisk investment, for underserved regions and groups like women and youth, including through pre-investment capital readiness support. Third, Inclusion and Sustainability with the focus on circular economy models, green innovation incentives, and pre-investment business support for youth and women led enterprises to improve capital readiness. 'Fourth, Market Access with the focus on facilitating international trade, enabling e-commerce, reforming public procurement systems and supporting regional integration, and fifth, Township and Rural Entrepreneurship with the focus on strengthening local value chains, improving infrastructure and connectivity, and improving access to finance and eco-system support for supporting co-operatives and micro enterprises.' Ndabeni said the establishment of Task Teams composed of both South African and international stakeholders marked a significant step in this collaborative venture, allowing for the exchange of policy recommendations and best practices. These discussions are crucial as they lay the groundwork for a clear action programme to be finalised at the upcoming Startup20 Summit on 13th and 14th November, which will also host the inaugural Startup20 Awards to highlight the best startups and ecosystem enablers from G20 nations. Salome Baloyi, acting chief operations officer and G20 engagement lead coordinator for South Africa's G20 Presidency, shared insights on the StartUp20 initiative. 'Our mission is to empower township and rural communities by breaking down barriers for small businesses, driving structural reforms, and accelerating digital innovation,' Baloyi said. 'We're pushing a bold agenda for startup and MSME development, prioritizing innovation, inclusion, and meaningful participation across all sectors.' Vuyani Jarana, chairperson of SU20, provided a concise overview of the StartUp20 engagement group within South Africa's G20 Presidency, highlighting the country's vast ecosystem. 'South Africa, as a member of the G20, participates in an international forum comprising 19 countries and two regional bodies, namely the European Union and the African Union,'Jarana said. He further noted that the primary objective of this international forum is to enhance multilateral cooperation, with a focus on recovering the global economy, stabilising global financial systems, promoting sustainable long-term growth, and strengthening international economic governance. Nkosi Khumalo, MTN general manager for SME and indirect channels, said they were partnering with various sectors to support small enterprises, drive innovation, and sustainability. 'As the MTN Group, we have invested in 4G and 5G technology to support businesses, developed a fintech platform to support small businesses with insurance capabilities and payment options, and leveraged powerful machines to assist small businesses,' Nkosi said. 'We develop innovation, offer digital skills, and certify businesses to position them for opportunities and contracts, such as those in Information Technology. We are also empowering black female business owners to ensure small businesses stay online.' BUSINESS REPORT
IOL News
29-05-2025
- Business
- IOL News
Pray for entrepreneurs: the devil is in the details
Finance Minister Enoch Godongwana's Budget 3.0 may have spared us a VAT hike curse, but he unleashed a slow poison in the form of a 4% inflation-linked increase in the fuel levy, the writer says. Image: Picture: IOL Finance Minister Enoch Godongwana's Budget 3.0 may have spared us a VAT hike curse. Still, he did unleash a slow poison in the form of a 4% inflation-linked increase in the fuel levy, adding 16 cents per litre on petrol and 15 cents on diesel, effective from 4 June 2025. Small businesses that dodged the blue 'VAT devil' now face a red 'fuel-levy demon' pushing up transport and input costs, squeezing already razor-thin margins. Between a VAT hike that would have been a broad-based bite or a fuel levy that's a sneaky surcharge on every wheel that turns, entrepreneurs must decide which monster stings less—and learn to sidestep whichever serpent gets under their bonnets. The last time South Africans danced to 'the devil made me do it' was during the 2021 budget speech, cooked by the late Finance Minister, Tito Mboweni. On that fateful day, fuel levies were increased by 27 cents per litre- comprising 15 cents for the general fuel levy, 11 cents for the Road Accident Fund levy, and 1 cent for the carbon fuel levy. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading I won't bore you with the political mixed reactions of that time, which amounted to nothing more than hot air- without even a hint of Nando's aroma. Even the term 'small business' appeared only once in a 23-page budget speech document, where it was noted that the Department of Small Business Development has allocated R4 billion over the medium term to township and rural enterprise development, including blended finance initiatives. Only the devil knows who bewitched South African small businesses to remain an invisible, tiny dot -in the corridors of power. Once again, if we take a step back to the 2020 budget speech crafted by the late Minister Tito Mboweni, the ghost of the fuel levy appeared mysteriously much like his famously unusual 'tin fish' cooking times. (R.I.P. Chef Tito, we miss you). In that 2020 budget speech, the fuel levy increased by 25 cents per litre, with 16 cents going to the general fuel levy and 9 cents to the Road Accident Fund levy. I'm not against the experts' sentiment that the scope of fuel primarily relates to transport-related costs, while VAT is broad-based, covering all goods and services. However, the Finance Ministers' budgets from 2020, 2021, and now in 2025 have been 'hacking' small business pockets with sneaky fuel levies. South Africa's small-business battleground is quietly becoming a tax buffet. For SMMEs that earn a living out of an already slim profit margin, these charges are like tiny termites taking a bite from every rand of hard-won revenue. What looks like a humble R0.16/L extra at the pump is a profit drain for township SMMEs. Every extra penny on fuel will be etched in every invoice that lands in the mailboxes of small businesses. Logistics companies, where fuel accounts for 40% of costs, could see operating expenses rise, further eroding their razor-thin margins. Retailers and service providers who depend on delivery services now face a choice: absorb the cost or pass it on to customers, risking churn in a price-sensitive market. Taxi commuters will also feel the pinch, as it is one of the few industries where fare discounts offer a rare sanctuary. The budget speech resembles a spiritual brawl in Bushiri's church arena, where the worshipers spared from the curse are those who hope and learn to pray, 'go deeper Papa,' because the devil is in the details of every budget tweak. To survive, savvy small business owners must incorporate these extra levies into their pricing, tighten logistics, embrace technology, and get creative on how to manage the levy vampire—at least until the next budget brawl. Bongani Ntombela is an executive: programmes at 22 On Sloane. Bongani Ntombela is the Programmes Director at 22 On Sloane, Africa's Largest Entrepreneurship Campus. Image: Supplied BUSINESS REPORT Visit:
IOL News
27-05-2025
- Business
- IOL News
Joburg launches outreach drive to help spaza shops access R500 million fund
The City of Johannesburg, in partnership with the Department of Small Business Development, has launched a series of outreach sessions aimed at helping spaza shop owners The City of Johannesburg, in partnership with the Department of Small Business Development, has launched a series of outreach sessions aimed at helping spaza shop owners access the R500 million Spaza Shop Support Fund. Initially announced by President Cyril Ramaphosa in November 2024, the fund is administered by the National Empowerment Fund (NEF) and the Small Enterprise Development Finance Agency (SEDA) and aims to support township businesses, including spaza shops and convenience stores, through a mix of grants and interest-free loans. IOL previously reported that the Portfolio Committee on Small Business Development has expressed frustration over the limited progress in approving applications for the R500 million Spaza Shop Support Fund, with fewer than 400 out of more than 3,200 submissions being processed since the fund was introduced in April.
IOL News
25-05-2025
- Business
- IOL News
Spaza shop support fund: Only 387 applications processed, Committee urges greater participation
The Portfolio Committee on Small Business Development has expressed concern over the low number of processed applications for the R500 million Spaza shop support fund, with only 387 out of 3,269 applications successfully processed since the fund was launched in April this year. The committee was recently briefed by the Department of Small Business Development on the disbursement progress for the fund, which is aimed at supporting registered spaza shops and food-handling businesses across South Africa. The department revealed that while the processing of applications is ongoing, many submissions failed to meet basic requirements, primarily providing proof that the businesses are registered with their local municipalities. Committee chairperson Masefako Dikgale said that although the fund was relatively new, the committee had expected a much higher number of applications to be processed by now. 'We expected our people from townships and villages throughout the country to take advantage of this fund to uplift their businesses and create jobs,' she said. Dikgale added that funding of this nature should be making a tangible difference in the lives of small business owners. 'Funds of this nature are there to make a real impact in the lives of small business owners who have a collective duty to help government grow the economy,' she said. The fund allows recipients to use the grant for refurbishments, wholesale aggregation, and non-financial support such as skills training, regulatory compliance, and capacity building. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Despite the challenges, the committee welcomed the department's plan to roll out a nationwide roadshow aimed at educating small business owners on the application process and required documents. The committee acknowledged that many small-scale entrepreneurs, especially those in rural and township areas, struggle with access to capital, high operational costs, and limited opportunities to buy in bulk. Dikgale stressed that the committee would closely monitor the fund's implementation to ensure it reaches its intended goals. Meanwhile more than 150 spaza shop owners and entrepreneurs attended an outreach awareness session hosted by the Department of Trade, Industry and Competition (the dtic) and the Department of Small Business Development (DSDB) in Ndwedwe, in KwaZulu-Natal at the weekend. The session aimed to educate the business owners about how to apply for funding from the support fund. Local spaza shop owner, Musawenkosi Mkhize who attended the session, said a lot of shop owners were struggling to keep their shops open as competition is rife in the area. 'We have long engaged the local and provincial government to assist in regulating and investing in our local businesses so that we can compete with foreign-owned shops that sell products and food at a cheaper price. I am glad that government has taken a positive step in directing their efforts in assisting all of us that you see today. It is long overdue, but we as a collective are happy with the intervention,' said Mkhize. When asked if he already applied for funding from the fund, Mkhize indicated that he had some few outstanding documents that he needed to gather in order to qualify for the fund. Speaking at the same event, Enterprise Ilembe Economic Development Agency CEO Siyabonga Mazibuko said as of February 2025, the district had processed and registered 1 395 spaza shops in the iLembe District Municipality alone. THE MERCURY
