Why 85% of applicants don't comply with SPAZA shop fund
However, a worryingly low amount of spaza shop fund applications have meant compliance requirements. As such, applications have had to be split into two categories. The first group, made up of 14% who comply. And a second group of the remaining 86%, 'who do not yet meet requirements' but will be assisted. Experts say if you include South Africa's informal sector, the country's unemployment rate is actually closer to 10%, and not 33% as reported by Stats SA. Image: File
A group representing the informal traders says government's 'rigid compliance criteria' is to blame for the low uptake, reports Daily Maverick . The fund is the brainchild of the Minister of Small Business Development, Stella Ndabeni-Abrahams. And it came about following the 2024 poisoning of several young children.
However, the South African Spaza Shops Association's Kgothatso Ramautswa, says it is 'deeply concerned' by the lack of compliance: 'This is not a reflection of spaza shop owners, but rather a failure of government to design a realistic funding support system. The fund is failing its intended beneficiaries. If 86% are non-compliant, the problem lies in the system, not the people,' Ramautswa says. South Africa's tax-free informal sector is worth billions, say economists. And the fund is a way to 'get them on the books.' Image: File
However, in the face of such low compliance, the department says it will provide non-financial support. This will include assistance in applying for the necessary documentation through their local municipality for spaza shop fund applicants. The current maximum funding available per spaza shop fund is R100 000. And this is offered as a blended finance instrument, with a 50% grant and 50% interest-free loan. The debt portion of which is repayable with zero interest.
As a reminder, the government's R100 000 per qualifying owner is made up like so. R40 000 for stock purchases, R10 000 for business training and R50 000 for infrastructure upgrades. As such, the package is designed to promote sustainability, competitiveness and regulatory compliance versus larger retailers.
As of now, no spaza shop fund applications have actually been denied. However, in future they could be for the following non-compliance: Applicant is not a South African citizen.
If the applicant is misrepresenting ownership or control of the business.
Any fraudulent or misrepresentation documents in the application.
Invalid or non-existent trading permit or a business licence.
Use of funding for personal or non-business-related purposes.
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