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A Guide to Launching a Spaza Shop Business

Updated on 25 March 2022

Want to launch a spaza shop? This is one of the most popular township business ideas and a great way to make money. You just need to make sure you understand the opportunities and risks involved and set up your shop the right way.

Follow this guide for what you need to know about planning, funding, and launching a spaza shop.

Spaza Shop Industry Overview

A spaza shop is one of the biggest township business trends . They’re a major part of any township economy, providing essential goods to township residents. These township shops also form significant employment and income opportunities within townships.

The informal economy contributes about 5.2% to South Africa’s GDP, and spaza shops and informal grocers make up one of the largest sectors in this.

Why Spaza Shops Are So Important

Even with large-scale retailers becoming more prominent in townships, tuck shop sales aren’t slowing down.

In a busy area, the shop can make a great turnover, as long as they sell the right items with high enough demand. This usually includes food essentials, snacks and drinks, airtime and data, as well as household necessities.

There are many spaza shop success stories out there. Examples of small tuck shops receiving business assistance and development are not uncommon, which can help these businesses grow far beyond small tuck shops.

Tuck shops form the cornerstone of many township communities. They have helped all kinds of people build lives for themselves and develop successful businesses.

Challenges Of Running a Tuck Shop

Spaza shops may present lucrative township business opportunities, but they also come with plenty of challenges.

Running an informal shop can make it difficult for business owners to access seed capital or offer collateral for business funding. Finding the right location for a small tuck shop is also challenging, as retail infrastructure in townships is lacking. Tuck shop owners also can’t always access bulk orders and take advantage of economies of scale, which results in a smaller profit margin.

Of course, these shops are also in competition with the many larger retailers out there, who are able to offer a wider selection of products at lower prices.

Spaza Shop Opportunities

Wherever there’s a busy township, there are plenty of opportunities for spaza shops. This includes classic convenience store shops, as well as a township shop business like a food truck or cellphone shop.

These days, there are unique funding opportunities available for spaza shop owners, such as the Township and Rural Entrepreneurship Programme (TREP) . Some areas also offer tuck shop franchise opportunities.

The Spaza Shop Support Scheme also makes it possible for spaza shop owners to access an extra R7000 to help them get their business off the ground.

Spaza Shop Laws and Regulations

Starting a tuck shop requires the right licenses and permits . You will need a business license and a valid trading permit. If selling prepared food, you will need a certificate of acceptability.

By definition, spaza shops must not be larger than 30㎡, and they must exist in residential areas. These shops are not permitted to sell alcohol or any other restricted items.

You will need to contact your local municipality to find out more about the specific laws and regulations of opening a tuck shop.

Getting Started With a Spaza Shop

Besides finding the right location and getting all of your licenses and permits in place, there are a few things to consider when starting a spaza shop.

Setup Costs

The startup cost of your tuck shop depends on your location, the size of your business, and what products you will stock. Starting a new shop will require shelving, fridges, a cash register, and of course the stock you will sell. You may also require a vehicle.

Spaza Shop Tech Tools

Running a shop these days also requires certain technology. You should have a machine to accept credit card payments, which will require a smartphone at the minimum, or a computer or tablet. You should also have a point of sale (POS) system , which can run on a dedicated POS device or on a mobile app. Accounting software and inventory management software will make running your business a lot easier.

With a good location and a strong management system in place, you could turn a simple tuck shop into a lucrative business. Just make sure you are set up with the right tools and licenses, and that you know the ins and outs of running your business. Spaza shops are a great way to start a business and enter the world of entrepreneurship.

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A local spaza shop that is well stocked with basic necessities is a brilliant way to help out your community with the goods they need, and at the same time provide you with a steady income.

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The population growth rate in South Africa has been outstripping economic growth for some time now. People work longer hours, and extended traveling times sometimes cause people to be away from home for 14 hours of the day. Many people are also dependant on public or taxi transport, which does not perform scheduled stops at the shops for their customer’s convenience.

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How to start a spaza shop

February 22, 2020
72 Comments

The valuation of Spaza shops in South Africa keeps increasing on a yearly basis. The whole spaza shop market is currently worth 40 billion rands as of 2020. This article will discuss how to start a spaza shop with no previous experience.

Starting a spaza shop

I have practical experience of starting and running a spaza shop. Starting a spaza shop is not one of the most difficult things. It can be done by everyone, it does not require education besides basic literacy and math. The purpose of starting a spaza shop is to sell products to your local community.

What you will need

You first need to decide on where you will run your spaza shop from. Most foreigners in South Africa invest in building tuck shops or buying containers for their spaza shops. But for someone who does not have a huge budget; this can be difficult. In most rural areas of South Africa, people open spaza shops right from their homes. This is easier to do in rural areas than it is in townships.

After finding your operating premises; you will need capital for the first batch of your stock. I started my spaza with only R1000 specialising in wors, chicken, cool drinks, snacks and milk among other things. But you may need to start with way more than that, especially if you are in a busy area. You need to be careful of where you stock your goods, try to stock at wholesalers who sell them at a cheaper price so that you will be able to set competitive prices. It will be hard for you to set competitive prices if you buy your products from retail stores like Shoprite and Pick n Pay.

You need transportation, I did not know the importance of a reliable transport when starting a spaza shop. Transport is needed for buying products that are out of stock quickly. You may find that most of your products are in stock and a few are out of stock, you will need to replace them quickly, if not; you run the risk of your customers going to your competitors.

Spaza shop suppliers

It is very important to have about 3 reliable suppliers. Suppliers differ from place to place, the best way to find them in your area is to do a little research. Wholesalers are your best bet.

How much can a spaza shop make in a day?

The honest answers is: it depends. However I used to make around 1500 per day when I was running my spaza shop but that’s not the profit. A spaza shop in a very busy area can be able to make around 1500 – 5000 on a daily basis. This depends on the items it sells and their demand.

Read: how to protect yourself against crime in South Africa

Starting a spaza shop is a fun and exciting adventure, get started today. This article was a guide on how to start a spaza shop. Do you have any thoughts or questions? leave them in the comment section below

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This post has 72 comments.

Do you need a. Buisness license 4 a spaza, tuck shop in a container in a private property.

No, you don’t need a business license to run a spaza shop.

Soooo can I be able to register my turk shop/ spaza as my business?

Avhashoni Mahada

Yes I need a business licence

I need a business license How much is it? I just want to open a tuck shop for plz help me

i want to start a spaza shop in my garage .but my home is on a residental stand ..will it be a problem .and what permits do i need so i dont get harrased by athoroties

You don’t need permits ,all you need are an food safety certificate from your municipality,health inspecters will pay you an visit when they notice your shop and fill a application ,then charge you 270 for the certificate .you can open the shop ,just keep it clean and randomly remove expired products from your shelves ,so when health inspections pay you an visit ,you’ll be safe.

How much profit can a spaza make per day

I used to make anywhere between R1300 and R1700 in a day. Some spaza shops make way more than that and some make less. It depends largely on location, demand and competition.

Sithabile Vilane

I want to start a spza shop is it possible cos still on lock down

Hi Sithabile, I am not familiar with the rules and regulations for starting new businesses while we are still on lock down.

Yes ,you can start the shop

I need to start a shisanyama business but the problem my location of choice is along the gravel road which may compromise cleanliness of my business. Please advise me. Thanks.

I wanna start a spaza shop were can I get the containers in a cheaper price

I have capital, space and the willingness to employ surrounding community members. But the only thing stopping me is that alot of people said that most black community members prefer buying from Somalians, who by the way, dont have legal Food Health certificates, they manufacture some of their own goods & continue selling expired/counterfeit goods. This broke my motivation

I think you should continue with your vision. A lot of people like to say unproven things just to discourage people. You should strive for good customer service and you will do well.

I also want to start a spaza shop at giyini, at home we have a garage which is now rented by somalians for a shop so i want to own it i only hv 5500 is it enough

These foreigners must leave SA and everything will be OK.

Good day Can someone please shed a light on how to become a prepaid electricity vendor. I want to incorporate that in the spaza when I start. There’s companies I have contact but I am not getting any feedback. Eskom website is not helpful either. Do you know of any individuals/ corporates that can help with financial aid for start up when requested?

Hi have found any access on getting the device to sell prepaid electricity and airtime???

U Mus call kazang they give the machine for free u Mus just load the airtime and electricity on it

Do they give it for free ???? you don’t buy it what documents must you present to get it for free ???

Good day I have already build a room n money to buy stock. Could I please get help in process’s to follow. If possible in a point form what is the next step, Like registration of business, where to go for permits. Iam in Soweto. Thank you

I also started my spaza guys beaten all odds of somalian competition,i just wanted to persue my dream of making it possible even though people like to voice out unproven thoughts.

Congratulations 🙂 So happy for you.

I need your contact details

Christopher

Please help on what and how and the requirements needed to open spaza shop

I want to open a spaza shop at my garage. How to register for a spaza or get the license?

I need some advise on opening a spaza shop in my garage on my property. Lot of people have so many views and so I’m completely confused and just want clarity and hoping you can shed some light on my question. Do I need to register my spaza shop or do I just buy a certificate for food that I’ll be selling in the future. I will appreciate your input and response.

As far as I know, it’s not mandatory to register a Spaza shop, Tito Mboweni has said that Spaza shops will have to be regulated in the near future but for now you don’t have to register them.

I’m in the process of opening my spaza shop on my property and are also planning to sell food. Where do I go to apply for a licence.. Also I went to the police station just to make sure about registration of the spaza shop because most people told me that I have to have a permit but they (the police) told me that I have to register.. Can somebody please help..

I just like to say i learned alot from this blog . I lost my job cos of this Covid things eish . Now with the little i have iv decided to start my spaza shop . If foreigners can do it here why can’t we Thank you

How do I get tax certificate or tax number for my shop? How do I get permit for my shop? How much is needed for an above questioned ? How to register my shop as a SA citizen? What is needed to register my shop?

Good day my story is very sad. I have spent more than 20 000 trying to balance stock in my tuckshop i really don’t know why this business is not making any profit. Is there anything I can do to start a profitable business in this case.

Please tell me, what kind of everage net profits can a spaza shop make per day? I’m here in Kempton Park.

Hi I have the same question as Bongi. How do I run a profitable spaza shop. Every cent that I make goes right back into stocking up.how do I make a profit I can see. I work from 5h00 to 6h00 every day and have nothing to show for it. I’ve started my shop in December 2020 and thus far made only R22670.70 which is only on paper as this money went right back into stock. I’ve started up with a R2500. Please help!!!!!! I need advice

Hi, I don’t really know how you handle or run your business, do you keep formal records of how you spend your money? Making R22k from a R2 500 initial investment in just one month seems like a huge success to me.

Sinead Ryan

Hi Sibabalwe starting a spaza with R2500 to make R22k in a month is amazing. You should learn to manage your stock buy want sells and keep it stocked on a regular basis. Next you move onto controlling your float(money in your till/cash) try and set a target for the day if you want to make R500 a day for yourself put it aside once you reached it from your daily sales at your shop. The rest of the money in your float (till/cash) should be used to keep your shop running whether it be to stock on items that are selling out or just giving change to your customers. I have a successful shop which I started with a R10 000 but I sold alcohol as well and had a pool table for entertainment for my customers. I turned a profit of R20 000 a month just by managing the shop correctly. I have a lot of experience in running a shop as my uncle owned one as I was growing up and use to help during school holidays

Great stuff. Very encouraging. I’m also in the process of starting a spaza shop. I have learnt alot from this blog. Please continue with your real life stories and tips to better run and manage a spaza.

I have a space to open a spaza shop n I’m registered but I don’t have money to buy or get my self a container….so what can I do to have one please

@Tazz where did you register?

Hi I have the funds ready to open a spaza shop and I’m looking for somebody to partner up with as I’m not free to run it myself.if anybody is interested please call or what’s app me on 0605543696

Hi. Please help me I’m a student I’m planning to start up my own business in this coming December. I’d like to know how will I determine whether I’m making profit or not? Bcoz what I wanna make is profit here not just to sell in vein.

I have R3000 is it enough for me to start a spaza shop without a fridge?

It might be enough to get you started, but beware that some customers might not come back when they realize that you only sell limited staff. You will need to get a fridge as soon as possible; so that you can sell more things.

Refiloe Makhudu

Hello I want to open a spaza shop do I need a license and where cn I go apply for one?

You don’t need any special licenses or permits to open a spaza shop.

Hi can anyone who is running a successful shop please tell me how do I go about stocking up. Do I go and buy everyday or do I wait for stock to run out or do I go out and replenish when something run out. How do I manage my money. Do I put a certain amount away everyday regardless of much many has been made each day . The shop is my only income and right now I’m using money buying stock and providing for my home aswell as paying accounts and it get hectic at times . Most I make is R800 per day. Please advice on how to make thing run successfully and still be able to save and bank something. I need advice

Would it be possible to sell home cooked meals and cakes without a license

Hi I want to start a spaza shop in my home and I was discouraged to start my business and I want it business to work and be at a point of hiring people and turning it to a real business to minimise fail what is needed how important is pricing

I opened a shop at my home and was visited by a building inspector. I the got a letter telling me I am violating the building laws and will pay a fine of R4000 or go to Jail if I don’t stop because I am using residential property for business. What do I do? I am not even using my house or any part of the building but a carport from which a hatch has been opened on the boundary wall. Please assist and advise. There is no access onto my property.

Now im motivated. finished building a structure,shelves neatly arranged, the interior looks perfect, just not sure how much will be adequate to fill up my tuck shop. i wanna start on a good note, i hate it to start with limit products as this might turn the customers away. im just wondering if R15 000 CAN BE ENOUGH TO FILL UP THE WHOLE SPAZA SHOP?

R15 000 will definitely go a long way in filling up the whole spaza shop. You will have almost everything that customers usually buy from a spaza shop. I am very happy for you and good luck on your journey.

Hi I get a lot of queries if I sell airtime. I don’t have a speed point machine so how do I get airtime to sell. Presently I am buying vouchers from the shops and selling them for 50c more than its value.

Hi Navin, you can use Flash to sell airtime and electricity.

Hi Sibabalwe. I’m about to start mine I have good capital. May you please give me a call I need some advice please. Thank you. 0767794741.

Me and my two friends started a spaza shop March this year. We started with buying stock for R20 000. We are renting a building which we pay R2000 a month. I had a little bit of experience working in my sister’s spaza for over a year. What I have learned so far is that the initial phase of a spaza (that is the first 5 – 8 months) is about growing the total value of your stock and getting people to kind of get used to your business. In these initial months there is virtually no salaries (for owner). This requires sacrifice. If you are careful to keep to your commitment, after this phase, believe it or not, is a smooth sail. We are now able to make a comfortable R15000 a month in profits and it doesn’t stop growing because we keep on introducing new stuff. By the way we are black South Africans.

Thank you so much Moses for your insightful comment!

I started my shop on my premises at home without a permit or licence. I was paid a visit by the building regulations authority. The next thing I get a letter telling me I don’t comply with the building laws to run a shop as it is residential and I must stop or will get a fine of R4000.00 or imprisonment. A neighbour complained. What do I do? Please help. I am in Durban, Berea.

Nashua Ramsamy

Send me ur number

Hi I’m Jacob i need to start a spaza shop with a new container my budget is 20000 including to buy the container ..wth the same reason i want to sell chips like sphahlo wise….pls brief me

Jacob, whatever container you buy, be sure to buy with growth in mind. Your budget may only accommodate a small container but you need to consider your business will grow soon and you may find yourself having to buy another container. Be sure also to compile a list of start-up products as you say kota, chips etc…be sure on what this is exactly which will determine sufficiency of your budget.

Who’ll be running the business?

So many conflicting responses re need get a license to operate a spaza container shop. DO I NEED A LICENSE TO TRADE? The landlord has a registered existing business on the premises already. Do I just put up my container and trade on his license

Hi Tony, strictly speaking, any business in SA needs to be registered. Not only will you need to pay tax one day (unfortunately), but there are also incentives and support you may seek from government or other large companies and customers who will require your formal registration documents.

Having said the above however, if you’re under pressure to start, I’d say start your operations and let registration find you along the way. You can then file everything retrospectively when registration comes through. Just a few thoughts with the info you gave.

Hi team, Can I get a consultant to assist me with opening a spaza, no funding required just advise on how to run a successful spaza. I have a garage that I want to rent in a good location. My numbers 0662226891 … Linda

Thanks Sibabalwe and everyone this is so helpful and what I love about it,it’s recent and practical stories not only theory. I am now motivated to go all in..I have a little idea now on how to start up.

Thank you so much Ncumisa, wish you all the best 🙂

Good day, can someone please advise me on at least 3 food wholesalers within a 30km radius from Johannesburg city. I’m opening a spaza shop in a month or so. Thank you Lwazi

Good luck Lwazi 🙂

Thank you for much insight guys. I think I’m good start with the preparations.

hi there how do you go about to open a spaza shop on your premises

A Guide to Launching a Spaza Shop Business

Post author: Sipho Moganedi
Post published: 18/02/2024
Post category: Spaza Shop Business Plan
Post comments: 0 Comments

Starting a Spaza Shop business in South Africa can be an exciting and rewarding venture. Spaza shops, often referred to as “tuck shops” or “convenience stores,” play a vital role in the country’s economy and serve as essential hubs within local communities. In this guide, we’ll explore the steps involved in launching your own Spaza Shop, from market research and planning to marketing strategies and overcoming challenges.

1. Introduction to Spaza Shops

Spaza shops are informal retail outlets that cater to the daily needs of consumers in townships, rural areas, and even urban neighborhoods. They offer a wide range of products, including groceries, household items, snacks, and sometimes cooked food. These shops are deeply ingrained in the South African culture and are often owned and operated by entrepreneurs within the community.

2. Market Research and Planning

Before opening a Spaza Shop, it’s crucial to conduct thorough market research. Understand the demographics of the area, the purchasing power of potential customers, and their preferences. Additionally, scout for an ideal location that sees significant foot traffic but has minimal competition. Analyze existing Spaza Shops in the vicinity to identify gaps in the market that you can fill.

3. Legal Requirements and Regulations

Like any business, operating a Spaza Shop requires adherence to certain legal requirements and regulations. Register your business with the relevant authorities and obtain the necessary permits and licenses. Ensure compliance with health and safety standards, as well as zoning laws that govern where you can establish your shop.

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4. financing your spaza shop.

Determining the startup costs for your Spaza Shop is essential. This includes expenses such as rent, utilities, inventory, and initial marketing efforts. Explore various funding options, including personal savings, loans from financial institutions, or grants available for small businesses in South Africa.

5. Setting Up Your Spaza Shop

The layout and design of your Spaza Shop can significantly impact its success. Create an inviting and organized space that maximizes product visibility and accessibility. Invest in essential equipment like shelves, refrigerators, and cash registers, and carefully manage your inventory to ensure you always have popular items in stock.

6. Marketing and Promotion Strategies

Branding plays a crucial role in attracting customers to your Spaza Shop. Develop a unique name and logo that resonates with your target audience. Consider traditional advertising methods like flyers and posters, as well as leveraging social media platforms to reach a wider audience. Engage with your community through promotions, discounts, and loyalty programs to encourage repeat business.

7. Customer Service and Management

Building strong relationships with your customers is key to the success of your Spaza Shop. Provide excellent customer service, greet shoppers warmly, and offer assistance when needed. Efficiently manage your inventory to avoid stockouts and establish reliable relationships with suppliers to ensure timely deliveries. Invest in training for your staff to uphold high standards of service.

8. Challenges and Solutions

Operating a Spaza Shop comes with its fair share of challenges. Competition from larger retailers, fluctuating commodity prices, and cash flow management are just a few examples. Stay agile and adaptable, constantly reassessing your business strategies to overcome obstacles and seize opportunities for growth.

9. Future Growth and Expansion

As your Spaza Shop becomes established, you may consider opportunities for growth and expansion. This could involve scaling your business by opening additional locations, diversifying your product offerings to meet evolving consumer demands, or exploring new markets beyond your current area.

10. Conclusion

Starting a Spaza Shop business in South Africa requires careful planning, dedication, and a deep understanding of the local market. By following these steps and remaining committed to providing excellent products and service, you can create a thriving enterprise that not only sustains your livelihood but also contributes to the economic growth and development of your community.

While startup costs vary, it’s possible to start small and gradually expand your business as you generate revenue.
Focus on creating a welcoming atmosphere, offering competitive prices, and providing excellent customer service. Additionally, consider running promotions or partnering with local community events to increase visibility.
Competition from larger retailers, theft, and managing inventory and cash flow are common challenges that Spaza Shop owners may encounter.
While it’s possible to operate a Spaza Shop part-time, keep in mind that consistent availability and dedication are key to building a successful business.
Yes, various government programs and initiatives provide funding and support for small businesses in South Africa. Research available opportunities and eligibility criteria to see if you qualify.

Sipho Moganedi

Comprehensive Guide to Starting a Successful Spaza Shop Business in South Africa

How to Craft a Successful Spaza Shop Business Plan

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How to start a Spaza shop (convenience store) in South Africa

Spaza shops, the local convenience stores in South Africa, play a vital role in serving the daily needs of communities, particularly in townships and rural areas. These small-scale businesses offer a range of essential products and services, making them a cornerstone of the local economy. If you’re considering starting your own Spaza shop, this article will provide you with a comprehensive guide to help you navigate through the process and set yourself up for success.

Conduct Market Research: Before venturing into any business, it’s crucial to conduct thorough market research. Identify your target market, understand their needs, preferences, and purchasing power. Analyze the existing Spaza shops in the area, their product offerings, pricing, and customer service. This information will help you identify gaps in the market and develop a unique selling proposition.
Develop a Business Plan: A well-structured business plan will serve as a roadmap for your Spaza shop. It should include details such as the location, target market, product range, pricing strategy, marketing plan, and financial projections. A solid business plan will not only guide you but also attract potential investors or financial institutions for funding.
Secure Funding: Once you have a business plan in place, you’ll need to secure funding to start your Spaza shop. Consider personal savings, loans from financial institutions, or explore government grants or initiatives aimed at supporting small businesses. Ensure you have a clear financial plan outlining the required capital, operational costs, and potential revenue streams.
Select an Ideal Location: Choosing the right location is critical for the success of your Spaza shop. Look for areas with high foot traffic, such as residential neighborhoods, schools, or public transport hubs. Consider the competition, accessibility, parking facilities, and safety. Leverage existing infrastructure and avoid areas saturated with similar businesses to increase your chances of success.
Register Your Business: Register your Spaza shop as a legal entity with the appropriate government authorities. Consult with the Companies and Intellectual Property Commission (CIPC) or a business consultant to ensure compliance with all legal requirements. Obtain the necessary licenses, permits, and tax registrations to operate legally.
Stock Management and Inventory: Carefully curate your product range based on your market research. Stock essential groceries, snacks, beverages, toiletries, and other items relevant to the needs of your target customers. Establish relationships with local suppliers and wholesalers to ensure a consistent supply of products. Implement an efficient inventory management system to avoid stockouts or wastage.
Store Layout and Merchandising: Design an appealing store layout that maximizes the available space and facilitates a smooth customer flow. Clearly display products and use effective merchandising techniques to attract attention. Ensure proper signage, pricing labels, and product descriptions to assist customers in finding what they need. Create an inviting atmosphere that encourages customers to explore your store.
Focus on Customer Service: Providing excellent customer service is essential for building customer loyalty and attracting repeat business. Train your staff to be friendly, knowledgeable, and helpful. Offer personalized recommendations, discounts, or loyalty programs to reward regular customers. Actively seek feedback and continuously improve your services based on customer preferences and suggestions.
Marketing and Promotion: Develop a marketing strategy to create awareness and attract customers to your Spaza shop. Utilize both traditional and digital marketing channels. Distribute flyers, advertise in local newspapers, and build a strong online presence through social media platforms. Collaborate with neighboring businesses, community organizations, and schools to host promotions or sponsor events to increase visibility.
Adapt and Innovate: Stay abreast of market trends, customer demands, and industry developments. Adapt your product offerings, introduce new items, or offer unique services to differentiate yourself from competitors. Embrace technology where possible, such as mobile payment options, online ordering, or delivery services, to enhance customer convenience.

Starting a Spaza shop convenience store in South Africa requires careful planning, research, and dedication. By understanding your target market, selecting the right location, providing excellent customer service, and implementing effective marketing strategies, you can establish a successful and thriving business. Remember to adapt to changing customer needs and continually improve your offerings to stay relevant in a dynamic marketplace. With the right approach and a commitment to serving your community, your Spaza shop can become a cornerstone of the local economy while fulfilling the needs of your customers.

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How to Start a Spaza Shop in South Africa

Starting a spaza shop is a profitable business in South Africa. Spaza shops are also known as tuck shops. Many people don’t have time to go shopping at grocery stores and supermarkets; hence, they prefer spaza shops. The increase in population has created a high demand for spaza shops due to many people moving from towns to rural areas .

The retail industry has a large market, since many people buy household items in retail. Therefore, if you want to start a spaza shop business in South Africa, it is a profitable venture .

Write a Spaza Shop Business Plan

Before starting a spaza shop, it is good that you first write a business plan . A business plan helps you allocate resources where they are due and put down your ideas on paper. It is best to research the market first before writing a business plan.

Once you have the data you have researched from the market, you can put down figures on paper. You can then proceed to write a business plan. A good business plan should have the following:.

Startup costs
Risk analysis
Operational strategy
Marketing strategy
Marketing analysis
SWOT analysis

Find a Business Location and Premises

You need to find a reliable business location for your spaza shop. You must locate your business near your target customer. Look for business premises in a densely populated area where there is high foot traffic. Also, consider a business location where there is low competition. You can start a spaza shop in a metal container or rent a space.

Requirements for Starting a Spaza Shop Business in South Africa

To start a spaza shop business in South Africa, you need some equipment. The type of equipment is determined by the size of your business and the items you are going to stock in your tuck shop. Some of the equipment you need includes a refrigerator, furniture and shelves. Also, ensure that your spaza shop is safe and secure.

Read also: How to start a kota business in South Africa.

How Much Does it Cost to Open a Spaza Shop in South Africa?

The cost of starting a spaza or tuck shop depends on the size of your business, your location, and the products you want to stock. You can start a small spaza shop and grow it over time. You can start a small spaza shop with R2,000 and expand it as the number of customers increases.

Items to Stock in Spaza Shop Business

There are a wide variety of spaza shop products you can stock in a spaza shop business. Some of the products in high demand that you can stock in a spaza shop include groceries, detergents, snacks, juices, beverages, household items, cosmetic products and other accessories.

Researching the market before launching a spaza shop can help you identify products in high demand that you can stock. Look for reliable suppliers who can supply you with high-quality and affordable products.

For business consultancy, strategic planning, organizational development, market research, financial management & accounting, risk management and business plan writing at an affordable fee, please reach out to us through a phone call +254728 621 138, or WhatsApp , or email: [email protected]

Launch and Market your Spaza Shop Business

Once everything is set, you can launch your spaza shop business. You need to market your business to get customers. You also need to offer excellent customer service to keep customers and attract new ones. Also, make sure to stock products on demand so that customers don’t miss what they are looking for when they come shopping.

Is a Spaza Shop Business Profitable in South Africa?

A spaza shop is a profitable business in South Africa that requires small startup capital. A spaza shop is a good entry point to start a retail business before expanding to a wholesale business. It is a good business idea for young people and retired people.

How much can a spaza shop make in a day? Revenues from a spaza business depend on many factors, like business location and demand for products. However, a spaza shop in a busy area can generate R1,000 to R3,000 in a day.

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Running a Successful Spaza Shop: My Tips for Managing Your Business

As a business coach who works with spaza shop owners across Botswana, I’ve seen first-hand what it takes to build and run a successful informal retail business. After years of advising entrepreneurs in townships and rural areas, I’ve developed a simple framework to help spaza owners manage their finances, inventory, and operations efficiently.

First, get organized. Many spaza owners try to keep all their records in their heads, but this leads to mistakes. Start keeping detailed books showing daily sales, expenses, inventory purchased, and all financial transactions. I recommend a simple accounting ledger where you can log everything. This will give you visibility into the real profitability of your business.

Next, manage your stock wisely. Don’t overspend on items that sit on shelves for months. Track what sells quickly and focus on re-stocking your top sellers. I advise clients to limit slow-moving items and to introduce new products carefully to see if there is demand. Effective inventory management is key to maximizing profits.

Also, create a clean, appealing store environment. Many spaza shops feel cluttered and disorganized. Take time to tidy shelves, sweep the floors, and create a shopper-friendly layout. This will keep customers coming back. I helped one client boost sales by 25% simply through store improvements.

Finally, leverage local partnerships. Successful spazas connect with suppliers, community groups, schools, and other nearby businesses. This generates referrals and foot traffic. I guide shop owners on networking strategies and low-cost marketing tactics tailored for township and rural areas.

As your business coach, I’m here to provide the strategies and tools to help your spaza shop reach its full potential. With some organization and planning, your business can become a thriving hub for the community. Let’s work together to make your spaza a success story! Contact me today to get started.

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Spaza Shop Products

Posted by BizBolts | All Articles , Business Ideas

A spaza shop is an informal business that operates like a tuck shop. They can be seen as convenience stores that sell a wide variety of products. A large number of spaza shops in South Africa are run from home whilst others are set up like large stores that almost look like mini supermarkets. Most spaza shops especially the ones that operate from home are family run businesses. The larger ones are sometimes registered companies that are formed by a group of individual investors. These shops are usually located close to people’s homes and offer convenience to the customers they serve. Some of the products found in spaza shops include beverages, alcohol and ready made food like kotas. The list of some of these products is briefly described below.

One of the many products sold at a spaza shop in South Africa are beverages. It is common to find alcohol, softs drinks fruit juices and mageu to name a few beverages. In fact, beverage are some of the core products sold at spaza shops. These beverages are both local and imported. Most spaza shops earn a lot from selling alcohol. There are some spaza shops that sell hot beverages such as tea and coffee to their customers in the morning.

Baked Goods

Another popular product on the food and beverages group sold at spaza shops are baked goods. You are most likely going to find homemade donuts, scones, and buns and sometimes pastries. These products are convenient and quick especially for students and professionals that have busy lives and prefer a quick snack or meal from a spaza shop.

Canned Foods

A spaza shop is a mini grocery store for many people. Most food products that are sold in supermarkets can be found in spaza shops. Especially canned foods such as sardines, baked good and corned meat. Canned goods are products packaged in tin containers, such as tomato paste, sardines, canned sauces, and many other canned products. Most food found in a spaza shop is convenient and quick to prepare. Canned products are also popular with a lot of spaza shops because they are affordable.

Food products such as maize meal, pasta and rice can be found in South Africa spaza shops. Sugar, salt and many other essentials and house hold staples or basic groceries are sold in spaza shops. However, compared to other types of retail stores such products are sold at a slightly higher price. The benefit of being able to buy any of these goods at any time of the day make the products a bit more expensive as spaza shop owners charge for the convenience they provide.

Dairy products and Meat

Also on our list of spaza shop products are dairy products and all kinds of meat. Many spaza shops sell meat including beef, chicken, and dairy products such as milk and yoghurt, to name a few. Some spaza shop owners even source directly from farm owners in order to become the shop that supplies fresh products. Other products such as eggs or any food products you find in supermarkets is more than likely going to be sold at a spaza shop.

Sweets and Snacks

A range of sweets and snacks including chips, chocolates, biltong, chewing gum, canned pudding, sweet cakes and nuts are usually displayed at front window of a spaza shop or right by counter in an attractive and colorful way. This is done to lure customers to buy these snacks and sweets whenever they come to purchase from the spaza shop.

Prepared foods

In addition to the staples, sweets and beverages spaza shops are known for selling prepared sandwiches, pastries, and readymade meals designed to appeal to customers who visit the store hungry. Popular prepared meal sold at spaza shops are bunny chows and kotas. Kotas are so popular that there are spaza shops and franchises that strictly sell kotas nowadays. A lot of spaza shops’ income is from selling kotas and alcohol.

Packaged Products

Packaged products are also part of the products sold at a spaza. These packaged products comprise of packaged goods. They include bread, assorted biscuits, rice, maize-meal, macaroni, and flour.

Spaza shop products include toiletries for the household. These toiletries include toothpaste, household detergents, soap, and other cleaning chemicals and bathing gels. Personal hygiene products such as wet wipes, feminine products, and lotions can be found at a spaza shop. Most of these products can be found at competitive prices in various spaza shops.

Hair Products

Products in this category include every item needed to keep the hair neat, such as: hair extensions, hair cream, hair relaxing creams shampoos, conditioners, and styling gels. Spaza shop owners understand the need for hair and beauty products and add them to their inventory. There is a large market for hair and beauty products given that these products are found in large supermarkets, salons and even spaza shops.

Over the Counter Medication

Over the counter medication can be found in many spaza shops. You can buy a range of over-the-counter medications including aspirin, cough medicine, lip balm, sinus medication and throat lozenges.

Body lotions, hair cream, deodorants and make-up kits can be bought at spaza shops. Some spaza shops have become so large and have a wide range of products, you can find almost anything. Also, such products are on high demand that is why they can be found at many spaza shops.

Other Items

There are other miscellaneous products that are sold at spaza shops such as cigarettes, candles, matchsticks, batteries, bandages, and antiseptic liquid or anything that can be needed by consumers during an emergency. Other products such as kids’ toys and accessories can be found in some spaza shops for impulsive buyers. Also, books, pens, pencils, rulers and other stationary for students and infants are sold in these shops.

There are plenty more spaza shops in the country that sell a variety of products. The list above is not exhaustive but gives an idea of the kind of products sold at spaza shop.

About The Author

BizBolts (Pty) Ltd is a business research company based in Johannesburg, South Africa. We sell prewritten business plans for various industries including livestock production, crop farming and retail businesses. BizBolts also publishes articles on business ideas, business news, business tips, personal finance, and entrepreneur profiles.

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How To Register A Spaza Shop In South Africa

Below is How To Register A Spaza Shop In South Africa

To Register A Spaza Shop In South Africa

You are eligible to apply if you are a spaza shop or general dealer owner who is a South African and hold a business license or valid trading permit. If you fit these criteria,

Go to your nearest Nedbank Branch, Nedbank desk at your nearest BOXER store, or your nearest Standard Bank branch for assistance to apply.

Bring along the following documents:

A valid South African ID document

A valid and original municipal trading license/permit to trade or business license in case of a general dealer (copies will not be accepted). Only permits or licenses issued by the municipality, not a councilor are valid

If you are currently not a registered business, tax compliant, or paying the Unemployment Insurance Fund (UIF), you must be willing to accept assistance to do this. The scheme will provide you with assistance.

At the Nedbank or Standard Bank branch or desk, you will be assisted to register on the department’s SMMESA database and complete the applicable application form.

The terms of Registering A Spaza Shop funding In South Africa

Here are the terms you will need to agree with in order to participate:

To buy products from a basket of goods approved by the department that will change from time to time. The department does this in order to boost sales for South African small businesses

To operate a business banking account, and be willing to participate in the Small Enterprise Development Agency (SEDA) supported business management support program.

This will include assistance with inventory management and stock control, and the preparation of annual financial statements.

To uphold health and safety guidelines, including:

Sanitizing before and after serving each customer

Disinfecting the service counters

Maintaining social distancing

Not selling counterfeit goods and stale/expired foodstuffs;

Not using trading spaces as sleeping quarters.

How do I start a spaza shop in South Africa?

The spaza shops must be owner-managed and must have a bank account.

Spaza shops must be willing to buy products produced by South African small businesses as part of the bulk-buying schemes.

They must be willing to submit monthly management accounts for at least 12 months.

Starting A Tuck Shop Business Plan (PDF)

The term ‘ tuck shop ’ is tied to an Australian origin. There is the term ‘ tucker ’ which refers to food. There is also a phrase ‘ tuck into ’ or ‘ tuck into a meal ’ which means to eat, especially with gusto. What all of this indicates is that ‘ tuck ’ denotes food. Originally or conventionally a tuck shop is a small shop that sells confectionary. This is particularly so in Britain, Australia, and New Zealand regions. However, the ‘ tuck shop ’ has expanded in what it can offer. In most parts of the world it is now literally a small retailer or small grocery shop. Just like supermarkets tuck shops are a very common line of business. In fact, you can be sure to say that these two lines of businesses are for the most part competitors. Starting a tuck shop business is actually a good decision due to quite a number of reasons. One of the reason is that it is much less expensive to start a tuck shop as opposed to a supermarket. The other one is that tuck shops can effectively niche and also drive repeat purchases by having a loyal customer base. Tuck shops are normally situated in neighborhoods where they will be serving a certain target area. This is what makes the aforementioned issues easy to do. This article will outline how to start a tuck shop business as well as the tuck shop business plan – PDF, Word and Excel.

Market Research

Never mind that it is just a small tuck shop; conduct market research first. Remember that you will be targeting people within the vicinity of the tuck shop’s location. That will be your core target market, but these people also go to the shopping centres. This means they might be used to buying their goods somewhere else. Why are we mentioning this? It is to make you realize why it is important to conduct market research.

You have to ascertain that there is a market that you can serve. Even if it is not there or it is small, you can find ways to grow it. You have to study people’s buying habits. Do surveys to find out the most sought-after commodities that they look for. You must also look around for the presence of other established tuck shops. What type of products do they offer? How do they operate their businesses? Where are they located? These are some of the questions you might seek to answer because they will provide you with invaluable insights into starting your own tuck shop. Your competition is the most important case study in your market research. You also require a good tuck shop business plan.

Tuck Shop Business Model

The tuck shop business has a basic business model i.e. how it makes money. You source or make products, then peg prices, and sell. It sounds that simple but you must be meticulous in your costing. You must factor in all the related costs e.g. sourcing products, raw materials, making products, packaging, storage, transportation, remunerations, utility bills, and so on. Contexts will differ from one tuck shop business to another though. After putting all that together you then determine the selling price of a product. The selling price must be affordable, outdo competitors, and yet still resulting in profitability. Pricing flexibility will mostly come from significantly lowering costs (though not compromising on quality).

Location And Premises for A Tuck Shop

The choice of location has to factor in proximity to target market, visibility, ease of access, presence of other competitors and so on. However, one of the overriding factors can be directives from local authorities. The thing is, you must consult with local authorities before setting up a tuck shop. Possibly you can be allowed to set up where you would have intended or you might not be allowed. So just bear that mind that it is recommended that you check with the local authorities before setting up the tuck shop. Of course other aspects such as being presentable, hygiene, and cleanliness must be considered. A tuck shop doesn’t require a lot of space as compared to a supermarket. Even a small structure/building can make a good tuck shop. A tuck shop can also be built in front of the house – if permitted by the local authorities. You can build a tuck shop using metal shipping containers. Your tuck shop business plan should include costs of building or renting the tuck shop.

Products And Services

The products you have in-store can be the sole reason why you get high or low sales. Your aim should be to have in stock virtually anything people would ever look for. Examples include basic commodities such as groceries, food, beverages, toiletries, cosmetics, detergents, stationery, airtime vouchers and so on. Depending on the size of your tuck shop you can include even more products that others will not be having to create a unique value proposition. So being able to stock well requires a close study of competitors and understanding the needs of your target market. The tuck shop business plan should include the products you are going to provide.

The other key issue pertains to suppliers where you get your stock from. You must look into that before starting the business so that you know where affordable, flexible and reliable suppliers are. Even as you run the business you must always be on lookout for better options when it comes to suppliers. You must work towards creating symbiotic working relationships with your suppliers. If done well this can lead to a lowering of your costs thus making it easy to adjust your prices. If you get to this point you can edge past your competitors by lowering you prices marginally to lure customers.

Stock Management

Proper stock management is the heart of a tuck shop business. Your thrust is to always have in stock what your target market needs. This means you cannot just stock up with what is not needed. Otherwise that will hurt your cash flows and compromise your ability to restock. That is why it is imperative that you closely study the buying habits of your customers. That way you will know the average quantities of products that need to be ordered. This cannot be overemphasised especially given that some products have very short shelf lives. Forge relationships with suppliers to ensure stock is always replenished in good time.

Staff And Management

Running a tuck shop is not usually labour-intensive since it can be effectively run by just one person. You as the business owner can do all the management-related issues without a problem. The serving of customers can be done by one cashier. The tuck shop cashier must be friendly and sociable. Good customer service is a vital component that can lead to the sustainable growth of your business. Salaries of your employees should be catered for in the tuck shop business plan.

Competitive Analysis

The tuck business often offers vast room to set it up somewhere strategic. Basically you have to have to be somewhere that is not too close to competitors. Regardless you must study the competitors to see what they are offering. It is possible to have zero direct competitors i.e. other tuck shops. However, just because there are no other tuck shops around does not mean you do not have competition.

Your competitors might be tuck shops outside your area. You must also appreciate that shopping outlets such as supermarkets are your competitors. It does not matter they are not in your vicinity; they can be your indirect competitors. You must dig into all that to see the extent of the competition you are up against. Once you know you will be better placed to differentiate your tuck shop business.

The market of basic groceries is large and ever increasing. Your customers are those in the vicinity of your tuck shop. People want the convenience of shopping close to their homes. If you over a wide variety of products at competitive prices, you will not struggle to get customers. Good customer service is key to attracting repeat customers. These are some of the things you must know in starting a tuck shop business. It is generally a simple and low-cost business to start with tremendous room for growth. Do not let that drive you into a slumber though; treat it like you are doing a big business. Use all the basic approaches to any business venture such as market research, customer relationship management and marketing. Your tuck shop business plan should include a proper marketing strategy.

Marketing Plan

Your marketing plan will be informed by the nature of your target market. Tuck shops are usually situated close to varying communities or groups of people. For example, a tuck business can be situated within a residential area. It can also be situated close to strategic institutions e.g. schools or hospitals. Thus when marketing your tuck business you have to consider its context.

Physical Promotional Materials

This involves handing out fliers, putting up posters, banners, and any strategic signage. You can have onsite initiatives such as giving out free samples. You could also run onsite competitions in order to generate buzz for your tuck shop business. Prizes must deliberately include promotional materials e.g. branded t-shirts, caps, and the like. You can set up a public address system that draws people in by announcing what is in store. All these physical promotional aspects are meant to make your tuck shop visible. Invest in alluring interior and exterior décor to make the tuck shop stand out.

Ignite Word Of Mouth And Referrals

Find ways to inspire people to spread a positive word about your tuck shop business. The most effective way to achieve that is by providing wholesome customer service. People are naturally wired to share their good experiences with others. After all, these days, people trust what other people say more than what a business says. Word of mouth builds the much-needed social proofs for your tuck shop business. You must also figure out cost-effective ways to reward word of mouth. No wonder it would be wise to start some form of customer loyalty program.

Digital Marketing

In this day and age you cannot escape the use of the internet and social media. The most basic thing you can do is to set up active social media accounts. You also need to take advantage of instant messaging apps e.g. WhatsApp, if applicable. It can bring out great results if you build online communities e.g. WhatsApp groups, Facebook groups, and the like. Then you would use those channels to regularly promote your tuck shop business. Tuck shop businesses tend to be set up in places with certain groupings.

For instance, a tuck business in or near a residential areas can consider the residents’ association platform. If it is near a college or university you can tap into student communities of the institution in question. Tapping into relevant online communities can also enable you to build email lists. That way you will be able to promote your tuck shop using email marketing. These are just some of the many digital marketing approaches you can use.

Keys To Profitability

The core key to profitability is to get operating costs as low as possible. Tuck shops are often unique in that they are relatively cheaper than bigger outlets. That is the value proposition tuck shops often come with. This means you can be somewhat limited in pricing flexibility. That is why always finding ways to reduce operating costs is the key to profitability. What you put on the shelves must almost match the demand from your market. Having products that are not being sought after will ruin your tuck shop’s performance. Those slow or non-moving products will not be translating into revenue. Plus they will be depriving more deserving products of space. No wonder you must do thorough daily analyses of your tuck shop business to keep abreast with the trends and data. Just like most retail businesses, the tuck shop business is about pushing volumes. That is only possible if you provide exactly what is needed, with affordable prices, and overshadowing your competitors. That is the winning formula for a tuck shop business.

Pre-Written Tuck Shop Business Plan (PDF, Word And Excel): Comprehensive Version, Short Funding/Bank Loan Version and Automated Financial Statements

For an in-depth analysis of the tuck shop business, we encourage you to purchase our well-researched and comprehensive tuck shop business plan. We introduced the business plans after discovering that many were venturing into the tuck shop business without enough knowledge and understanding of how to run the business, lack of understanding of the financial side of the business, lack of understanding of : the industry, the risks involved , costs and profitability of the business; which often leads to disastrous losses.

The StartupBiz Global tuck shop business plan will make it easier for you to launch and run your tuck shop business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. This is a complete business plan for a tuck shop business. It will be easier to plan and budget as you will be aware of all the costs involved in setting up and running the tuck shop business.

Uses of the Tuck Shop Business Plan (PDF, Word And Excel)

The tuck shop business plan can be used for many purposes including:

Raising capital from investors/friends/relatives
Applying for a bank loan
Start-up guide to launch your tuck shop business
As a tuck shop business proposal
Assessing profitability of the tuck shop business
Finding a business partner
Assessing the initial start-up costs so that you know how much to save
Manual for current business owners to help in business and strategy formulation

Contents of the Tuck Shop Business Plan (PDF, Word And Excel)

The business plan for a tuck shop includes, but not limited to:

Marketing Strategy
Financial Statements (monthly cash flow projections, income statements, cash flow statements, balance sheets, break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortization)
Industry Analysis
Market Analysis
Risk Analysis
SWOT & PEST Analysis
Operational Requirements
Operational Strategy
Why some people in the tuck shop business fail, so that you can avoid their mistakes
Ways to raise capital to start your tuck shop business

The tuck shop business plan package consists of 4 files

Tuck Shop Business Plan – PDF file (Comprehensive Version – 71 Pages)
Tuck Shop Business Plan – Editable Word File (Comprehensive Version – 71 Pages)
Tuck Shop Business Plan Funding/Bank Loan Version- Editable Word File (Short version for applying for a loan/funding – 43 pages)
Tuck Shop Business Plan Automated Financial Statements – (Editable Excel File)

The business plan can be used in any country and can be easily edited. The financial statements are automated. This implies that you can change eg the costs, salaries etc, and all the other financial statements will automatically adjust to reflect the change.

Click below to download the Contents Page of the Tuck Shop Business Plan (PDF)

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Get the Tuck Shop Business Plan (PDF, Word And Excel)

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If you want to purchase multiple business plans at once then click here: Business Plans Store.

The business plan package is a zipped compressed file containing the PDF, Word and Excel documents. To open the package after downloading it, just right click, and select Extract All. If you have any problems in downloading and opening the files, email us on [email protected] and we will assist you.

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South Africa’s spaza shops: how regulatory avoidance harms informal workers

Director, Institute for Poverty, Land and Agrarian Studies, University of the Western Cape

Disclosure statement

Andries du Toit does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Western Cape provides support as a hosting partner of The Conversation AFRICA.

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Small informal retailers are a ubiquitous feature of any developing country’s urban landscape. Known as spaza shops in South Africa, they are an important, even vital, component in the townships. Numbering over 100,000 across the nation, they make critical contributions to local food security, self-employment and community cohesion.

In the last decade, the sector has undergone extensive change. A new class of traders has emerged. They have often – but not always – been foreign. For this reason, this changing character of South Africa’s spaza sector has become associated with chauvinistic and xenophobic portrayals of immigrant shopkeepers.

On the one hand, angry locals, often egged on by opportunist politicians, have accused foreign traders of destroying South African livelihoods. On the other hand, those questioning this xenophobia have tended to argue that the new class of traders simply represent ‘better entrepreneurs’ who are out-competing less dynamic traders.

But much more is going on than simply the replacement of locals by foreigners. Rather, the structure of the spaza sector itself is changing.

To get to the bottom of changes taking place the Sustainable Livelihoods Foundation and PLAAS conducted business censuses and interviews with 1,100 township grocery retailers across all nine provinces of South Africa.

What we found should give politicians and policy makers pause for thought. Our findings suggest that South Africa’s rule of law is in danger of becoming a casualty in an industry that has rapidly adapted in order to compete and survive.

Changing retail landscape

Operating from rural, peri-urban and urban residential townships, virtually all spazas we encountered were unregistered and worked exclusively in cash. That, indeed, is why they are classified as ‘informal’ businesses.

But this classification masked important differences. The shops we visited typically reflected one of two business types. On the one hand, about one-third were ‘survivalist’ owner-operators trading from their homes. These resembled the ‘traditional’ spaza shop. These businesses were informal because they had no choice. They were simply too small, or the owners too poor, to formalise and thereby enter the legal framework.

The remaining two thirds were also informal, but were so by choice. They differed from their survivalist counterparts in that they were larger, operating from dedicated premises. They offered a wider range of stock, gave credit and had business ties with wholesalers. The also employed staff. The field work revealed about 45% of the shop keepers we encountered were in fact employees.

Rather than being owner operators they tended to work for those who owned the larger upstream wholesale business that supplied their outlets with stocks. Some of these upstream warehouses operated in networks with turnovers of hundreds of thousands of Rands per week. We also found extensive South African supermarket chains and shopping-malls in the retail mix.

The rise of these larger vertically integrated spaza outlets and supermarkets has intensified business competition. Many smaller (mostly South African) independent businesses have exited the market.

This new class of informal traders has brought about important social benefits. These include access to a wide variety of cheap consumer goods. But this has come at a cost - especially where the active avoidance regulation has become an explicit business strategy.

Exploitation

The spaza employees we encountered predominantly worked in poor conditions. Foreign nationals were particularly vulnerable to exploitation.

More than half of those we interviewed reported working more than 15 hours per day, seven-days-a-week. Some were earning as little as R400 (about US$27,22) per month. Some shop assistants claimed to be working towards becoming shareholders in the business. But more than three quarters of our sample reported being employees only. None had written employment contracts, and all worked for cash wages.

Half of the Cape Town employees we interviewed in a follow-on investigation (and many interviewed elsewhere) reported that employers held back their pay. In some cases, a portion of the wages was paid to the employee and the balance reportedly paid to their family elsewhere (commonly in their home country).

In Cape Town, over half the Ethiopian respondents claimed to be repaying financial debts to their bosses for travel expenses to South Africa. In almost all cases employers retained foreign employees’ passports. Across the sample, 71% of spaza employees were required to sleep in the building, with nearly half sleeping (illegally) in the shopfront.

These conditions clearly violate the country’s labour laws , which stipulated at the time that retail workers must earn at least R3,701 per month for a 45-hour work week. The law stipulates 12 hours of rest in each 24-hour period, or 36 consecutive rest hours per week, including Sundays, unless agreed in writing.

Further, the working conditions we encountered trigger the great majority of the working conditions identified by the UK Gangmasters and Labour Abuse Authority as warning flags that people might be working as bonded labour.

If our sample is anything to go by, there may be many thousands of shopkeeper employees who toil behind the sales counter under these circumstances.

Bypassing laws

The exploitative nature of employment in the spaza sector directly results from the embrace of informality by operators that are large enough to conform to the rules of the formal sector. We categorise this form of entrepreneurship as ‘informalist’. This is a new form of informality where an otherwise legitimate activity (retailing groceries) relies on labour and retailing practices that evade regulatory oversight. These practices break the law.

Informalist strategies for spaza competitiveness capitalise on the concessions accorded to survivalist enterprises. These include municipal allowances for home-based businesses in townships. But these businesses then bypass other important forms of regulation including labour laws. This brings negative implications for inclusive growth, fair work, and rule-of-law.

An increasing number of politicians have simplified this development. They have done so by stoking social tensions by scapegoating these foreign-national spaza shop workers. As our research shows, these workers are themselves deeply vulnerable. They are operating at the coalface of xenophobic hatred and crime.

One problem is that debates about informal township businesses have been framed in an unhelpful way. For example, it is assumed that the regulatory choice lies between ‘protectionist’ regulations favouring South Africans, or deregulation and tolerance of immigrant entrepreneurs. This approach underestimates the seriousness of the situation that has evolved and misrepresents the nature of the regulatory choices required.

What’s to be done

The South African government already has the capacity to create a fair and supportive regulatory framework. All that’s required is for the South African Departments of Labour, Home Affairs, State Security, South African Revenue Service, the South African Police Service, and local municipalities to limit regulatory avoidance in township grocery markets.

Secondly, municipalities must stop succumbing to the corporate developers of shopping malls in the townships. They must also reconsider expansion of supermarket chains into the heart of townships. Both these developments have forced the township grocery sector into a choice between shutting down or embracing informalist business practices.

Responsibility also lies with South Africa’s corporate manufacturers and wholesalers. They have ignored exploitative business practices in order to get their brands and products onto spaza shelves.

One of the losers in this transition have been South Africa’s traditional spaza shops. But they are not the only victims. There are potentially thousands of vulnerable spaza shop employees – South African and foreign – who are labouring under conditions clearly proscribed by South African law.

Leif Petersen, a co-director of the Sustainable Livelihoods Foundation , was the lead investigator of this project and is a co-author of this article

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18 April 2020

To improve access to the Spaza shops and General Dealers Support Scheme , the Department of Small Business Development wishes to clarify the following:

a) The support scheme also benefits the general dealers/ traditional grocery stores in townships and villages with applicable licenses that are 100% owned by South Africans.

b) Whereas the local hardware stores are also beneficiaries under this scheme, their funding package is being finalised to ensure their ability to operate as their businesses have been included in the updated list of businesses offering essential services. The support for artisans (e.g.: plumbers, electricians etc.) whose services have been classified as essential will also be announced during the week.

c) The Department has finalised an Agreement with NEDBANK to support Spaza shops and general dealers on the back of the Khula Credit Guarantee Scheme of SEFA. Engagements to on-board the other banks continuing. Support through NEDBANK and its channels became available from Saturday, 18 April 2020. d) Given their footprint, NEDBANK has availed the NEDBANK Desks that are found in all the BOXER stores countrywide to serve as additional service points.

1. How to apply for support under the spazas and general dealers support scheme?

1.1 A spaza shop/ general dealer owner who is a South African and holds a valid trading permit (including temporary) or business license in the case of a general dealer qualifies to apply.

1.2 The qualify spazas and general dealer owner must go to their nearest Nedbank Branch or Nedbank desk at their nearest BOXER store for assistance to apply. The following documents will be required:

a) A valid South African ID document

b) A valid and original municipal trading license/ permit to trade or business license in case of a general dealer (COPIES ARE NOT ACCEPTABLE). Only permits or licenses issued by the municipality, NOT a councillor are valid.

1.3 The qualifying Spazashop/ General Dealer owner must be willing to accept assistance to register with CIPC, SARS and UIF, in the case were the owner is not already registered before approval to participate in the scheme.

1.4 At the NEDBANK branch/ desk, the owners will be assisted to register on the SMMESA database, and complete the applicable application form.

1.5 The participating owners will be required to commitment and undertake to the following:

a) To buy products on the department approved basket of goods that will change from time-to-time, in particular products produced by South African SMMEs and cooperatives; b) To operate a business banking account and will accept to participate in the SEDA supported business management support programme that includes assistance with inventory management and stock control, preparations of management and annual financial statements. c) To uphold Environmental Health and Food Safety Standards and the Guidelines of the Department of Health, which will include:

i. Sanitizing before and after serving each customers; ii. Disinfecting the service counters; iii. Maintain the applicable social distance between customers and customer and service point; iv. No sale of counterfeit goods and stale/ expired foodstuff; v. Not use trading spaces as sleeping quarters.

2. What is the support available under the scheme?

2.1 Access to working capital investment and revolving credit facility that is backed by the Khula Credit Guarantee scheme of SEFA in partnership with NEDBANK. The facility is available at participating wholesalers that are distributed country-wide. The list of participating wholesalers will be shared with approved spaza and general dealer owners.

2.2 Business Management support that includes assistance with basic financial management with support of Financial/ Business graduates that will be assigned to give dedicated support to the business over a 24 month period.

2.3 Legal compliance that includes assistance to register with CIPC, SARS and UIF, and other compliance requirements that may be necessary for participation in the scheme.

For additional assistance or enquiries, spaza shop and general dealer owners may call 0860 663 7867 or e-mail to [email protected] (link sends e-mail) Additional information may be obtained from any of our official websites:

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www.sefa.org.za ;(link is external)
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R22 million for KZN spaza shops and general dealers

A total of R22 million has been allocated to support South African spaza shop owners, supermarkets, and general dealers in KwaZulu-Natal.

The Zimele Traders Fund by the Ithala Development Finance Corporation was announced by Economic Development, Tourism and Environmental Affairs MEC, Siboniso Duma, on Tuesday.

Duma said spaza shop owners, including supermarkets and general dealers in the province, who are strictly South Africans can apply for a grant in the form of trading stock to the value of R20 000.

“A total of R10 million has been set aside for this purpose. We are targeting 500 spaza shops across the province,” Duma said.

This follows an announcement made towards the end of last year, where the MEC revealed the department’s intention to embark on an entrepreneurship revolution, focusing on spaza shops located in rural areas and the townships.

Ithala SOC limited and Ithala Development Finance Corporation (IDFC), which are the department entities, are deepening support for entrepreneurs in the informal economy.

Spaza shop owners have long complained about being forced out of the market because they lack the buying power, while their competitors, who are mostly foreigners, buy in bulk which makes them have a competitive edge.

The MEC said the department has reconfigured the bulk buying warehouse at KwaSithebe in Mandeni, with a cost of more than R15 million.

“We have added a call centre and the online ordering system. The first bulk purchase stock for spaza shops, supermarkets and general dealers is valued at R10 million.

“In addition, we have made available 17 trucks to move the stock across the province. This is to create direct access stock, reduce costs of goods and further make them accessible within local municipalities,” Duma said.

As a permanent arrangement, the department is identifying buildings that are owned by Ithala across the province to be used as warehouses.

The MEC called on eligible spaza shop owners, supermarkets, and general dealers to submit their applications for the grant.

The applications opened on Tuesday, 20 February, and will close on 16 March 2024.

“Successful applications will be announced on 15 April 2024. Applications will run indefinitely,” he said.

Duma also announced that through the Zimele Fund, a total of about R11.9 million has been set aside for a soft loan of up to R100 000 at 2% interest for a co-operative and 4% fixed interest for a Close Corporation/ Pty.

For a quotation request, shop owners are requested to use the WhatsApp number 072 521 0897 or 031 319 5500 for enquiries.

Emails can be send to [email protected]/ Website: http://www.kznbulk-buying.co.za . - SAnews.gov.za

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In most rural areas of South Africa, people open spaza shops right from their homes. This is easier to do in rural areas than it is in townships. After finding your operating premises; you will need capital for the first batch of your stock. I started my spaza with only R1000 specialising in wors, chicken, cool drinks, snacks and milk among ...
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The spaza shops must be owner-managed and must have a bank account. Spaza shops must be willing to buy products produced by South African small businesses as part of the bulk-buying schemes. They must be willing to submit monthly management accounts for at least 12 months. How To Register A Spaza Shop In South Africa.
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They have ignored exploitative business practices in order to get their brands and products onto spaza shelves. One of the losers in this transition have been South Africa's traditional spaza shops.
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1.1 A spaza shop/ general dealer owner who is a South African and holds a valid trading permit (including temporary) or business license in the case of a general dealer qualifies to apply. 1.2 The qualify spazas and general dealer owner must go to their nearest Nedbank Branch or Nedbank desk at their nearest BOXER store for assistance to apply.
R22 million for KZN spaza shops and general dealers
Duma said spaza shop owners, including supermarkets and general dealers in the province, who are strictly South Africans can apply for a grant in the form of trading stock to the value of R20 000. "A total of R10 million has been set aside for this purpose. We are targeting 500 spaza shops across the province," Duma said.

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