Study is just another waste of public funds, says Township Economic Commission founder as programmes show little impact.
A general view of a spaza shop. Picture for illustration purposes. Picture: Gallo Images/Ziyaad Douglas
The department of small business development has come under fire for its tender to appoint an external team to research why only some spaza shops succeed – data that is available for free, critics said.
Official figures also show only R57 million of the state’s flagship R500 million Spaza Shop Support Fund has been disbursed to local traders, adding more pressure on the department to accelerate township economy interventions.
Study is just another waste of public funds
The study is just another waste of public funds, said Bheki Twala, founder and president of the Township Economic Commission SA.
On top of that, millions of rands had been spent on programmes ostensibly aimed at supporting spaza shops, yet little impact was evident on the ground, raising questions about who ultimately benefited from the funds and how they were spent, Twala said.
“The tender raised a broader question of whether government needs to spend more money researching the problems facing spaza shops, when existing programmes, and the data generated through them, have yet to deliver the full support promised to township businesses.
“The fact is that, in many cases, the spaza shops that succeed are those owned by foreign nationals, because they can operate as they please, flout compliance requirements and seemingly get away with it.
“South African-owned spaza shops, on the other hand, face a raft of requirements, including municipal registration and trading licences, certificates of acceptability, zoning certificates and proof of lawful occupancy.
Why does department need another study?
“The department is aware of these challenges, so why does it need another study to establish what is already known?” Twala asked.
“They know their programmes are fragmented. National departments have their own spaza shop programmes, provinces have theirs and municipalities have theirs. That fragmentation is the problem – and we all know that corruption thrives in chaos and uncertainty,” Twala said.
The data the department intends paying for could be obtained from organisations such as theirs for free – and even department officials could collect it, he added.
“Government already holds substantial information about the sector, including data from its national spaza shop registration drive and information generated through existing support programmes.”
The department could use state institutions such as the Human Sciences Research Council, or partner with universities.
Previous research identified challenges
The department said previous research has identified challenges including access to finance, competition and regulatory compliance, but added there was limited empirical evidence explaining why some spaza shops remain sustainable and competitive, while others stagnate or close.
The proposed study will, therefore, examine ownership arrangements, procurement systems, entrepreneurial capabilities, operational practices, supplier networks, customer relationships and technology adoption.
The tender, which closes on Monday, did not state a specific estimated contract value for the research.
The department wants the successful bidder to assess existing government support programmes, including their objectives, budgets and expenditure, and identify gaps, duplication and opportunities for better coordination.
The tender refers to research estimating that between 70% and 80% of spaza shops fail, with half allegedly closing within their first five years.
About 80000 spaza shops registered
It also cites a 2025 parliamentary report estimating the failure rate of South African micro, small, and medium-sized enterprises generally at between 65% and 75%.
According to the tender document, about 80 000 spaza shops were registered with municipalities during the registration period between November 2024 and February last year.
The department acknowledges the registration exercise does not capture the entire sector because some businesses may operate without registration.
It had not replied to questions at the time of publishing.
According to the Standard Bank Township Informal Economy Report 2025, SA’s township informal economy contributes an estimated R900 billion, yet remains largely excluded from the formal economy, with 80% of township businesses unregistered.
