Local entrepreneurs welcome plans for new landscape on spaza shops

Government intends leveling the playing field for law-abiding entrepreneurs like Jennifer Mbongo by making it compulsory for spaza shop owners to operate within confines of the law.
Government intends leveling the playing field for law-abiding entrepreneurs like Jennifer Mbongo by making it compulsory for spaza shop owners to operate within confines of the law.
Image: Sandile Ndlovu

Small businesses have welcomed plans by the government to clamp down on spaza shops that are trading outside the confines of the law.

​Finance minister Tito Mboweni recently announced that after the Covid-19 lockdown it would be compulsory for spaza shops to have trading permits, bank accounts and be tax compliant as well as open their businesses for regular health inspections.

Mboweni's plan comes after years of complaints from township entrepreneurs that competition from foreign nationals who run spazas and big retail shops operating from malls was driving them out of business. The local entrepreneurs have also been crying foul that they were required to have trading permits and be registered for tax to run spaza shops while foreign-owned spaza shops flouted regulations.

Andile Ntingi, the founder of consulting firm GetBiz, said Mboweni's pronouncements were long overdue.

"After the fall of apartheid, our democratic government failed to regulate to protect locally owned spaza shops and general dealer stores. Before the encroachment by foreign immigrant shopkeepers and large white-owned retailers into township and rural markets, spaza shops were the face of black business in South Africa.

"The failure to regulate this encroachment ejected black South Africans from this market. This regulatory failure must be reversed to level the playing field and give locals the chance to re-enter the market," said Ntingi.

He said research studies have confirmed the majority of foreign shop owners in South Africa were unregistered, did not pay tax, and did not adhere to SA labour laws.

"I strongly recommend that our government must tighten regulation and law enforcement in that market. Government agencies like Sars, department of labour, department of small business development, SAPS, Salga and state security will have to  co-operate to address problems afflicting that market, including money laundering and illicit trading."

Ntingi added that it would be ideal for big retailers like Pick n Pay and Shoprite to enter the spaza shop market and offer franchises to locals at a reasonable price.

"Their licence fees will have to be affordable and should be geared towards equitably sharing the pie with their franchisees. As black South Africans, we can benefit from the involvement of big retailers in the informal retail market.

"The retailers have capital, technology, and retail know-how. Somali and Bangladeshi networks will not be easy to dislodge from the market. They are entrenched and they too are experienced and well-capitalised. We will see a big fight for that market and that will benefit consumers."

Ntingi said that local entrepreneurs could alternatively organise themselves into bulk-buying groups and, on the back of this, set up their spaza shops. 

"I hope our government will make funding available to help these groups enter the market," he said.

Nafcoc president Sabelo Macingwane said the small business organisation "was of the view that several acts of lawlessness in the economy must stop with immediate effect and government must work hard to ensure that culprits are brought to book".

"These include instances where foreign nationals own or conduct unregistered and/or unlicensed businesses, where foreign nationals are allowed to trade without paying tax and licence fees, thus giving them an edge against law-abiding South African businesses; and where some businesses are able to evade paying taxes.

"We feel that all businesses owners in our beloved country must be traceable and they must have all the necessary documentation and licences.

"Nafcoc endorses the reversal of the percentage of employees in the SA businesses. The post-lockdown economy has to be characterised by 80% to 90% South Africans employed in South African businesses..." said Macingwane.

Meanwhile, last week news surfaced on EWN that Pick n Pay and Shoprite would be setting up spaza shops in townships.

Pick n Pay yesterday shot down the article, saying it had no plans to start spaza shops in townships, though it was partnering with a number of township entrepreneurs to set up independent grocery retail outlets.

Shoprite Group had not responded by the time of publication.

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