Trade, Industry and Competition Minister Parks Tau and Small Business Development Minister Stella Tembisa Ndabeni have launched a R500-million Spaza Shop Support Fund, which was initially announced by President Cyril Ramaphosa in November last year.

The official launch event, in Soweto, on April 8, was also attended by City of Johannesburg executive mayor Dada Morero and Gauteng Finance and Economic Development MEC Lebogang Maile.

The fund, which will be jointly administered by the National Empowerment Fund (NEF) and the Small Enterprise Development Finance Agency (Sedfa) will provide financial and non-financial support to township businesses.

The fund will provide support to eligible South African black-owned township community convenience shops, including spaza shops, to increase their participation in the townships’ and rural areas’ retail trade sector.

“The opening of the applications for the fund marks another milestones in government’s efforts to stimulate the growth of the rural and township economy in the country, particularly by providing the necessary support to the convenience stores and spaza shops that are based in the townships and rural areas.

“Government recognises the important role that small businesses, including those operating in the rural areas and townships, can play in creating jobs, growing our economy and alleviating poverty,” Ndabeni said.

The fund provides various types of support, including the initial purchase of stock through delivery channel partners, upgrading of building infrastructure, systems, refrigeration, as well as shelving and security. The fund will also provide training programmes on the use of point of sale devices, business skills, digital literacy, credit health, food safety and business compliance.

Tau pointed out that the fund, aimed at supporting economic inclusion, was aligned with national priorities to formalise informal sectors, safeguard consumers and promote local production. He said it was part of a holistic approach to revitalise township economies.

“Beyond individual support, the fund seeks to bolster the broader supply chain by fostering partnerships with local manufacturers, black industrialists and wholesalers. Through bulk purchasing arrangements and the promotion of locally produced goods, spaza shops will benefit from reduced costs and increased access to quality products,” he said.

However, while Maile voiced his approval of the fund launch, he believed it was insufficient to effect the change envisaged and encouraged local governments to add to it.

“R500-million will not be enough. As local government, we will look at how we can augment this,” he committed.

He added that it was critical for the multibillion-rand township economy to migrate from a consumerist economy to a productive one.

“Our biggest concern, since we started the Township Revitalisation Programme in 2014, is that production is not taking place in the township. They are consuming.

“There is a lot of money in the township but [it] does not go into the hands of the people and does not circulate likely as a result of the fact that the township does not produce. We must build big industrial parks. So we will be focusing on making sure that we build productive capacity,” Maile said.

To qualify for the fund, spaza shops must be 100% South African-owned and must operate in South Africa, serving local communities. Foreign-owned businesses are not eligible, even those owned by naturalised citizens, unless the owner was naturalised prior to 1994.

Qualifying businesses must be registered with their local municipalities and be fully compliant with the relevant by-laws and licensing requirements. They must also be registered with the South African Revenue Service for income tax and value-added tax.

The fund will prioritise entrepreneurs aged between 18 and 35, as well as female-owned spaza shops or businesses owned by persons with disabilities.

Two funding packages were introduced at launch.

The first package, valued at up to R100 000, includes a R40 000 grant for initial stock purchases, and a 50:50 blended R50 000 grant and low-interest loan component for the upgrading of building infrastructure, systems, refrigeration, shelving and security. The package also involves R10 000 worth of non-financial support which will go towards training.

The second package, geared at fully registered and compliant entities, is valued at up to R300 000. It also involves a R40 000 grant component for initial stock purchases, along with R250 000 blended finance component for upgrades, marketing, and the purchase of digital equipment such as point of sale devices and inventory management software.

This package also includes R10 000 worth of non-financial support geared towards implementing systems for efficient stock management, accounting and payment gateways, as well as integrating logistical solutions to make deliveries and warehousing as affordable as possible.

The fund will champion the procurement of locally produced goods and services that have been accredited with the Proudly South African campaign.

Businesses that sell alcohol will not be eligible for the fund.

Portfolio Committee on Small Business Development chairperson Masefako Dikgale advised eligible spaza shop owners who are interested in applying for the fund to visit their nearest Sedfa offices for assistance.