Since its establishment in 2020, the Spaza-shop Support Programme has funded more than 6 000 small businesses around the country but many shop owners have bemoaned the poor communication around the scheme. Photo: Supplied
Since its establishment in 2020, the Spaza-shop Support Programme has funded more than 6 000 small businesses around the country but many shop owners have bemoaned the poor communication around the scheme.
The programme, an initiative of the department of small business development in partnership with Nedbank, is meant to benefit general dealers and grocery stores in townships and villages that are 100% owned by South Africans and 70% of whose staff are citizens.
Mantombi Khumalo, who owns a spaza shop in Johannesburg’s Alexandra township, says her business would have not survived the Covid-19 pandemic had she not heard about and made use of the scheme.
“I heard about the programme from my daughter’s colleague. There is not a lot of information on it and we are old people who find the application process very confusing,” Khumalo told the Mail & Guardian, adding: “These people are asking for a lot because, before getting the funding, I never saw the need to have a bank account and tax number.”
Khumalo says she does not understand why the age of the business matters. They must have been in existence for at least six months to qualify for funding.
“I opened my spaza shop in the early 1990s and I found it disturbing that the existence of my shop is measured by when I registered it with the SMME South Africa.”
Bulelani Balabala, founder of the Township Entrepreneurs Alliance, which works to support small businesses, is concerned that many owners are not aware of the funding initiative.
“I do not know anyone who is currently funded by the programme. There are initiatives that are out there but are not being clearly communicated and that is where the consistent disparity lies,” he said.
There also appears to be limited information about the requirements for funding, resulting in many applications being rejected.
According to the Small Enterprise Finance Agency (Sefa), 10 446 applications for the spaza programme have been received but only 6 351 were approved, with KwaZulu-Natal accounting for 2 667 recipients.
The main reason most of the applications were declined was the businesses were not owned by South Africans and the majority of their staff were not locals, Sefa said.
Some applicants were assigned to other Sefa programmes or referred to the Small Enterprise Development Agency (Seda) for pre-investment support.
(John McCann/M&G)
One Seda beneficiary is Josephine Katumba, who is the operations manager of Gcwalisa Tuckshop in Alexandra, which allows customers to buy basic food items by weight — for as little as R5.
Advocacy group the One Voice for All Hawkers Association is concerned that the spaza programme’s criteria effectively shuts out informal traders.
“What about the hawkers that basically do the same only [they are] selling in the streets and to schools — or is that not counted?” a representative of the association asked.
Approved businesses receive R15 000, of which 70% is an outright grant and 30% is debt funding which must be repaid. This is an improvement on the R7 000 which was offered at the inception of the scheme, split 50-50 between grant money and a loan.
Sefa says its support for the township economy is broader than the spaza-shop programme, highlighting its Township and Rural Economy Programme which offers support of up to R1 million to small, medium and micro enterprises.
The small business development department and Sefa monitor the spaza-shop initiative funds to ensure they are used for the intended purposes by disbursing them through a closed-loop purchasing card which only works at approved wholesalers who are part of the programme.
Depending on whether all the necessary information is available for the due diligence process, the turnaround time for processing funding applications is about a week.
Various forms of support are available under the spaza-shop programme, including:
• Access to working capital investment and a revolving credit facility that is backed by Sefa’s Khula Credit Guarantee Scheme in partnership with Nedbank, Standard Bank South Africa, Seda and the small business development department. The facility is available at participating wholesalers countrywide.
• Management support, which includes assistance with basic financial management from business graduates. They are assigned to give dedicated help to the enterprise over a 24-month period.
• Legal compliance, which includes assistance with registering with the Companies and Intellectual Property Commission, the South African Revenue Service and the Unemployment Insurance Fund, and help with other compliance requirements for participating in the scheme.