Spaza shops: rule of law under threat over failed supportive regulatory framework

SMALL informal retailers are a ubiquitous feature of any developing country’s urban landscape. Known as spaza shops in South Africa, they are an important, even vital, component in the townships. Numbering over 100000 across the nation, they make critical contributions to local food security, self-employment and community cohesion.

In the last decade, the sector has undergone extensive change. A new class of traders has emerged. They have often – but not always – been foreign. For this reason, this changing character of South Africa’s spaza sector has become associated with chauvinistic and xenophobic portrayals of immigrant shopkeepers.

On the one hand, angry locals, often egged on by opportunist politicians, have accused foreign traders of destroying South African livelihoods. On the other hand, those questioning this xenophobia have tended to argue that the new class of traders simply represent “better entrepreneurs” who are out-competing less dynamic traders.

To get to the bottom of changes taking place, the Sustainable Livelihoods Foundation and Plaas conducted business censuses and interviews with 1 100 township grocery retailers across all nine provinces of South Africa.

Our findings suggest that South Africa’s rule of law is in danger of becoming a casualty in an industry that has rapidly adapted in order to compete and survive.

Operating from rural, peri-urban and urban residential townships, virtually all spazas we encountered were unregistered and worked exclusively in cash. That, indeed, is why they are classified as “informal” businesses.

But this classification masked important differences. The shops we visited typically reflected one of two business types. On the one hand, about one-third were “survivalist” owner-operators trading from their homes. These resembled the “traditional” spaza shop. These businesses were informal because they had no choice. They were simply too small, or the owners too poor, to formalise and thereby enter the legal framework.

The remaining two-thirds were also informal, but were so by choice. They differed from their survivalist counterparts in that they were larger, operating from dedicated premises. They also employed staff.

More than half of those we interviewed reported working more than 15 hours a day, seven days a week. Some were earning R400 per month.

The exploitative nature of employment in the spaza sector directly results from the embrace of informality by operators that are large enough to conform to the rules of the formal sector. We categorise this form of entrepreneurship as “informalist”.

The government already has the capacity to create a fair and supportive regulatory framework. All that’s required is for the South African Departments of Labour, Home Affairs, State Security, South African Revenue Service, the South African Police Service,

and local municipalities to limit regulatory avoidance in township grocery markets.

South Africa’s corporate manufacturers and wholesalers have ignored exploitative business practices in order to get their brands onto spaza shelves.

But they are not the only victims. There are potentially thousands of vulnerable spaza shop employees – South African and foreign – who are labouring under conditions clearly proscribed by South African law. |