40% of SA’s annual food spend goes to spaza shops, indaba hears

Whether people refer to them as tuck shops, shack shops, or spazas, these informal businesses are an inescapable feature of our economy and our physical landscape, KZN Premier Nomusa Dube-Ncube told the crowd at The Re-branding Spaza Shop Indaba at the Station in Durban on Monday.

In her address, the premier shared that she was born in KwaMashu at the height of the Apartheid era and grew up at a time when there was no free movement for black people. The Group Areas Act was at its zenith, she said.

“The unintended consequence of these restrictions is that it transformed labour camps, which the townships were designed as, into vibrant places of commerce and trade,” she said.

“We shopped at Udumo LwamaAfrika shopping centre within L-Section and many other so-called shack shops and tuck shops which were located in family yards,” Ms Dube-Ncube added.

“Generally, money circulated within the townships, feeding the local economy. Unfortunately, the political violence in the 1980s resulted in many township supermarkets being gutted by fire. When peace was finally restored, many supermarkets were not rebuilt because their owners were not insured and did not have the financial resources to do so.”

This tragic part of history contributed to the emergence of even more tuck-shops simply because the demand for goods remained and also because the resources required to establish a tuck shop were far lower than building a fully-fledged supermarket, said the premier

According to research done by Accenture Africa there are more than 150 000 spaza shops in South Africa.

It is also estimated that around 80% of South Africa’s population visit spaza shops daily. This represents about 40% of total yearly food spend. The same research found that market size of this sector is estimated to be R178 billion – far larger than the country’s largest retailer, Shoprite’s, R149.55 billion market cap.

“The potential of this sector within the broader informal economy sector, is pivotal for both economic growth and development. Critically, it is a strategic site for the economic transformation agenda, where all our efforts should be geared towards ensuring that the spaza economy is driven by, and benefits our people,” she said.

“It is in appreciation of the strategic importance of this sector that we are pleased to be part of. This Re-branding Spaza Shop Indaba is an important occasion for a cross section of stakeholders – from spaza shop owners to policy makers – to put our heads together and carve a new future for the spaza economy.”

Through the Department of Economic Development, Tourism and Environmental Affairs (EDTEA), the premier said, they are implementing a strategy that focuses on capacitating and growing spazas.

One of them is the Zimele Traders Fund, an empowerment initiative for township and rural shops, spearheaded by EDTEA in collaboration with Ithala Development Finance Corporation as part of the Economic Reconstruction and Transformation Plan.

“This programme is designed to uplift community shops by offering working capital loan funding, infrastructure grants for shop refurbishment, and payment automation facilities. Its goal is to help these businesses evolve into viable shopping outlets, providing a comprehensive one-stop shopping experience,” said Ms Dube-Ncube.

The fund, she said, will support local grant beneficiaries by equipping outlets with pay-point facilities, reducing transportation costs for grant withdrawals, and offering competitive shopping rates.