A R500 million spaza shop support fund pledged in late 2024 faces mounting scrutiny as beneficiaries report receiving significantly less than promised amounts, while regulatory hurdles continue to impede access for township entrepreneurs.
The concerns emerged during a discussion featuring Township Economic Commission of South Africa founder Bheki Twala and spaza shop owner Bongani Jele, who confirmed receiving R40,000 from the fund—substantially below the R100,000 per shop initially communicated to applicants.
According to Jele, who operates in Katlehong, the promised breakdown allocated R10,000 for business training, R50,000 for infrastructure upgrades, and R40,000 for stock purchases. However, he stated he has only received the R40,000 designated for stock, with the infrastructure component never disbursed.
“The money was not much. It’s around 40k,” Jele said. “The promise was 100,000 per shop… for infrastructure they promise us 50k which I’ve never seen.”
Twala acknowledged that while registration processes are underway through partnerships with the Department of Small Business Development, SEDA, the National Empowerment Fund, and local economic development offices, significant bottlenecks remain. He emphasized that the R500 million allocation, while substantial, may be insufficient given the scale of the township economy.
“We need to make that follow-up” regarding Jele’s funding discrepancy, Twala stated, adding that beneficiaries should receive the full R100,000 commitment.
Regulatory Barriers Complicate Access
Both speakers highlighted systemic challenges preventing equitable fund distribution. Registration requirements—including title deeds, approved building plans, Certificates of Acceptability, and fire safety compliance—create barriers for informal operators who often run businesses from modified residential structures.
“When you look at the landscape of our families in the township, it’s not easy sometimes for a trader that wants to start a spaza shop and ask family to give a title deed,” Twala explained.
Jele described a catch-22 situation: applicants must demonstrate compliance with health and safety standards—such as installed ceilings and tiled floors—before qualifying for funding, yet lack the capital to make these upgrades without support.
“There are so many friends of mine who have shops who didn’t qualify because they didn’t have money to put ceiling at least ceiling or tiles,” he said.
Additional obstacles include an online-only application process that excludes entrepreneurs in areas with limited connectivity, and a disbursement model that channels funds directly to service providers rather than beneficiaries’ accounts, reducing flexibility for shop owners.
Fronting Allegations Under Review
The conversation also addressed claims raised by Small Business Development Minister Stella Ndabeni-Abrahams, who warned that her department discovered some South African applicants were fronting for foreign nationals. The minister indicated that such practices would disqualify applicants from the fund’s second disbursement phase.
Twala stated he had not personally encountered verified cases of fronting but welcomed investigation into the allegations. “I won’t dispute it, but I say let’s find out what happened because we need to get to the bottom of this,” he said.
Jele, operating in Katlehong, reported that his immediate area is predominantly served by South African-owned spaza shops, with limited presence of foreign nationals. “The issue of fronting I don’t know… it doesn’t exist at least in my area,” he said.
Calls for Collaborative Solutions
Both speakers urged a coordinated, multi-stakeholder approach to streamline registration and fund access. Twala advocated for physical registration drives bringing together municipal, provincial, and national officials alongside business support agencies to assist applicants on-site.
“Let’s get all the stakeholders in one room… so that we are able to assist people,” Twala said. He also called for improved government communication regarding registration numbers, challenges, and progress metrics.
Jele emphasized personal resilience alongside systemic reform: “In life, you don’t have to depend on someone. You have to try for yourself… I’m struggling, but I’m going to keep up with my shop.”
The discussion comes amid heightened community tensions, following recent arrests of seven individuals during inspections targeting allegedly illegal spaza shops and undocumented foreign nationals on the East Rand. As the second phase of fund disbursement approaches, stakeholders stress that addressing administrative bottlenecks and ensuring transparent implementation will be critical to achieving the fund’s intended impact on township economic development.
