Why 85% of SPAZA shop fund applicants fail to meet requirements
Government’s spaza shop fund is facing major hurdles, as fewer than 15% of applicants have met the compliance requirements.
Four months after its launch, the R500-million spaza shop fund has fallen short of expectations. The Department of Trade, Industry and Competition recently announced that it received over 10,000 applications.
However, a large number of applicants have failed to meet the fund’s compliance requirements. Officials split the applications into two categories: 14% of applicants who comply and 86% who currently don’t meet the requirements but will receive support to improve their compliance.
SPAZA SHOP FUND
A group representing the informal traders says government’s ‘rigid compliance criteria’ is to blame for the low uptake, reports Daily Maverick. Minister of Small Business Development Stella Ndabeni-Abrahams introduced the fund after several young children were poisoned in 2024.
However, Kgothatso Ramautswa from the South African Spaza Shops Association says the association is deeply concerned about the widespread lack of compliance. “This is not a reflection of spaza shop owners, but rather a failure of government to design a realistic funding support system. The fund is failing its intended beneficiaries. If 86% are non-compliant, the problem lies in the system, not the people,” Ramautswa says.
ASSISTANCE WITH APPLICATIONS
In response to the low compliance rate, the department has committed to offering non-financial support. It will help spaza shop fund applicants apply for the necessary documentation through their local municipalities. Each applicant can receive up to R100 000 in funding, offered as a blended finance package,50% as a grant and 50% as an interest-free loan. The loan portion must be repaid but carries no interest.
As a reminder, the government’s R100 000 per qualifying owner is made up like so. R40 000 for stock purchases, R10 000 for business training and R50 000 for infrastructure upgrades. As such, the package is designed to promote sustainability, competitiveness and regulatory compliance versus larger retailers.
WHY APPLICATIONS CAN BE DENIED
As of now, no spaza shop fund applications have actually been denied. However, in future they could be for the following non-compliance:
- Applicant is not a South African citizen.
- If the applicant is misrepresenting ownership or control of the business.
- Any fraudulent or misrepresentation documents in the application.
- Invalid or non-existent trading permit or a business licence.
- Use of funding for personal or non-business-related purposes.