The department has encountered considerable difficulties with the pace of funding applications since the fund's launch in April.
The minister of the Department of Small Business Development, Stella Ndabeni-Abrahams, recently revealed that the Spaza Shop Support Fund (SSSF) is dealing with significant operational and structural challenges that are preventing its ability to disburse financial assistance to small shop owners across the country.
In response to MK party MP Delisile Ntshaba, the minister outlined how the department is experiencing difficulties that continue to affect both the implementation and uptake of the fund, with slow application rates and verification problems creating major bottlenecks in the system.
Earlier this year, Ndabeni-Abrahams outlined the intervention programmes entrepreneurs will have access to via a R500 million allocation from her department and the trade industry and competition department.
The fund was created to support South African-owned spaza shops and food-handling outlets in townships and rural areas.
Licensing requirements slow application uptake
The department has encountered considerable difficulties with the pace of funding applications since the fund’s launch in April.
Ndabeni-Abrahams explained that “applications have been slow due to the business licensing requirements, as many spaza shop owners do not possess trading permits or business licences”.
This lack of proper documentation reduced the number of fully compliant applications received by the department.
The minister noted that delays are compounded by bureaucratic processes.
“Delays are due to the fact that in many cases business license applications are processed through various departments in municipalities, before they are finally approved by the business licensing unit,” she explained.
This multi-departmental approval system has created additional time lags that prevent shop owners from accessing the fund quickly.
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Document verification proves problematic
Beyond the slow uptake of applications, Ndabeni-Abrahams revealed that the Small Enterprise Development and Finance Agency (Sedfa) is facing ongoing difficulties confirming the legitimacy of submitted documentation.
The agency continues to experience challenges verifying the authenticity of trading permits, business licences, and Certificates of Acceptability issued by municipalities, according to the minister.
She said these verification delays are hindering timely application approvals and preventing funds from reaching intended beneficiaries.
The minister also highlighted that “many municipalities lack the necessary business licensing officials and Environmental Health Practitioners (EHPs).”
This shortage of qualified personnel at the municipal level has created a dependence on district municipalities to provide Environmental Health Practitioners, since the Businesses Act requires that licences can only be issued after health and spatial planning requirements have been met.
New measures to improve access
In response to these systemic challenges, the department is implementing several interventions designed to improve application uptake and strengthen verification processes.
Ndabeni-Abrahams revealed that the department has undertaken a comprehensive, risk-based analysis that has informed proposed changes to eligibility requirements, aimed at enhancing accessibility while maintaining programme integrity.
The recommended approach involves a significant shift in how compliance will be managed.
“Municipalities issue temporary permits and Certificates of Acceptability as conditional licences in terms of the Business Licensing Act, while they work to address the challenges outlined above,” the minister explained.
Under this new framework, spaza shop owners will be given a twelve-month grace period from the date of disbursement to comply with all other relevant legislative and registration requirements necessary for lawful operation.
This revised approach ensures a minimum threshold of food safety and hygiene compliance while enabling timely disbursement of funding to qualifying spaza shop owners, according to the minister.
Furthermore, the minister indicated that she will issue formal communication to all mayors regarding the changes.
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Financial support for compliance costs
To address the financial barriers that many applicants face in meeting licensing requirements, the department intends to allocate a portion of the existing fund specifically to support compliance-related costs.
This will include assistance with acquiring Certificates of Acceptability and other statutory documentation required for licensing, helping to reduce the burden on shop owners who may struggle to afford these expenses.
Enhanced municipal collaboration
The department is also requesting greater cooperation from municipalities to expedite the verification process.
Municipalities are being asked to assist by verifying the authenticity of spaza shop permits issued to date.
Ndabeni-Abrahams noted that “municipalities are further requested to share lists of approved business permits, licences, and Certificates of Acceptability with Sedfa to expedite verification and reduce the risk of fraudulent submissions.”
The minister acknowledged that these challenges have limited the number of compliant and verifiable applications.
This affects the disbursement rates of the fund. However, she expressed confidence that the new interventions will improve access to financial support for spaza shop owners across the country.
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