Juggling the dynamics of foreignowned spazas in SA
At all levels of the economy, learning from ‘outsiders’, foreign companies, whose know-how spills over into our economy, is an important driver to raising standards and making us more competitive as a nation.
Something seemed amiss as I drove around Soweto over the weekend. On the street corners, almost all stores were locked with no sign of activity. It would appear that foreign-owned small businesses servicing the local communities will remain shut until further notice. This was quite the opposite to just two weeks ago, when the township was bustling with informal trading between foreign-owned spaza shops and locals.
It’s not the first time that South Africa has experienced attacks against foreign spaza owners, however. When they orginally started in Diepsloot township in 2008, the attacks spread to other townships like Alexandra, but Soweto hardly experienced any.
However, these were not seen as xenophobic attacks, but criminal acts, where unemployed youths took advantage of the anger towards one foreign-shop owner. This also raised the issue of why foreigners’ spaza shops were more successful than those of locals. Last week, minister of small business development Lindiwe Zulu proposed that foreign shop-owners share their trading secrets with local small businesses.
Tashmia Ismail, head of the Gordon Institute of Business Science’s (Gibs) Inclusive Markets Programme, who conducts research into informal economies and mass-market dynamics, does not think this is the answer. She says that in a free market economy it cannot be expected of foreign-owned spaza owners to reveal their competitive edge, as much as big corporates would not reveal their competitive advantage to their competitors.
“We can’t have different sets of market-based principles depending on
Residents looting a shop owned by foreign nationals on January 22, 2015 in Soweto.