Minister of Small Business Development, Stella Ndabeni-Abrahams has announced that the government’s R500 million stimulus fund for spaza shop owners is part of a broader effort to revitalise the township and rural economy.

The fund is a result of a joint effort between the Department of Small Business Development and Department of Trade, Industry and Competition.

“This support is specifically designated for South African-owned spaza shops as we work to reclaim and strengthen the township and rural economy,” Ndabeni-Abrahams said in an interview with broadcaster Newzroom Afrika.

The fund, introduced earlier this month, is one of the department’s initiatives to improve food safety and combat food-borne illnesses. It follows the February 28 deadline for the registration of spaza shops and food-handling businesses.

The minister has previously acknowledged that the R500 million budget might not be adequate given the large scale of the spaza shop industry.

Sibusiso Ngcobo from the South African Spaza and Tuckshop Association has welcomed the government's support and expressed hope that the fund will help create a sustainable economy in townships. He urged the government to engage more with spaza shop owners, noting that some previous programmes have not been successful.

"We are very much excited about the minister's announcement of the fund. We hope that it will create a sustainable economy for both formal and the township economy. In the past there was spaza shop programmes that were not sustainable to date it's not clear how the funds had bettered the sector," Ngcobo told the SABC.

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How will the fund Work?

Explaining how the fund will work, Ndabeni-Abrahams outlined two categories of support for qualifying spaza shop owners:

Category 1: A grant of up to R40,000 for stock, along with an additional R10,000 for business development support.

Category 2: Blended financing, ranging from R100,000 to R300,000, where 50% will be provided as a loan and the remaining 50% as a grant.

The minister added that the assistance provided to spaza shop owners will enhance their market competitiveness, enabling them to compete with larger retailers.

"We are saying through this process we are looking at bulk buying which means if we have a group that will support 50 spaza shops in Soweto, then when they go and buy, they are able to negotiate a discount that can enable them not be too expensive than the big retailers," she said.

“People are leaving spaza shops to buy from larger retailers because they find prices that are R50 or R20 cheaper,” she added.

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