R500 million payday for rural and township businesses

The government has unveiled a R500 million fund to support businesses in rural and township areas, recognizing the sector’s food security challenges. The fund has outlined the criteria these businesses must meet to qualify.

Acting DDG at the Department of Trade and Industry, Susan Mangole explained on Newzroom Afrika that this fund is a collaborative effort involving the Department of Trade, Industry, and Competition and the Department of Small Business Development.

While the Small Business Development department contributed as much as its budget allowed, the Department of Trade and Industry stepped in to enhance the funding to R500 million.

Mangole said the fund aims to address two primary goals.

In the first place, it aims to help small enterprises, including spaza shops, provide affordable food to their communities.

The initiative also seeks to support these shops in refurbishing their premises, adhering to food hygiene standards, and complying with laws and regulations.

Additionally, the fund will focus on creating wholesale aggregation opportunities, enabling these businesses to access products at lower prices and enhance their competitiveness.

She explained that the government is currently gathering information to assess the status of registered spaza shops.

This involves conducting an audit to determine the location, condition, and specific needs of these businesses.

The process includes partnerships with Development Finance Institutions and other enterprises that are already supporting spaza shops.

Inspectors from the Department of Trade, Industry, and Competition and the Department of Small Business Development will visit registered shops to identify necessary upgrades and ensure compliance with standards.

The information they are seeking includes:

• Evaluating the infrastructure of the shops to identify required refurbishments, such as shelving, refrigeration, and overall infrastructure upgrades to meet hygiene standards.
• Determining the type of training required, particularly in food handling and hygiene, which are critical for operating these businesses.
• Introducing digital systems for point-of-sale operations to modernise and enhance efficiency.

The data collection process has faced challenges since a lot of the information received so far has been incomplete, Mangole said.

To address these challenges, the government is working closely with provincial and municipal authorities to compile a comprehensive database.

This will ensure that once the program is rolled out, they are aware of and able to address the specific needs of each shop.

Notably, Mangole said that the allocation of funding for spaza shops will not involve a fixed amount but will instead be based on the specific needs of each business.

This marks a shift from the pandemic assistance, for example, where businesses across the board received the same grant amount.

She said this is because the goal of this initiative is to support the sustainability of these businesses rather than merely distribute money.

A key aspect of the program is establishing wholesale aggregation facilities that allow spaza shops to access stock at lower prices.

According to a statement issued by the Minister, discussions are underway with various stakeholders to create this system and ensure that businesses can procure goods competitively.

For shops requiring additional support, such as cold storage or shelving, service providers funded and facilitated by Development Finance Institutions will handle the installations.

Mangole said each business will apply for assistance based on its unique requirements. For example, some shops may only need access to affordable stock, enabling them to offer competitive prices to their communities.

Others, especially those at earlier stages of development, might require comprehensive support, including infrastructure refurbishment, training in food hygiene, and other essentials.

Who qualifies

According to Mangole, the criteria for spaza shop owners under this initiative focus on supporting businesses in South Africa’s rural and township areas while ensuring compliance with local regulations.

First, the shop owner must be a South African citizen or have been naturalized before 1994.

Secondly, the business must operate in South Africa’s rural or township areas and serve the local community.

Lastly, the spaza shop must be registered with the local municipality in line with relevant bylaws and business licensing requirements.

While registration with the Companies and Intellectual Property Commission (CIPC) is ideal, flexibility is provided for informal or very small traders, allowing case-by-case transitions to formal registration.

Businesses requiring substantial support may need to complete CIPC registration to access certain benefits, though lack of registration does not automatically disqualify applicants.

Another requirement is registration with the South African Revenue Service for income tax or as a business entity.

Since taxpayer funds are being used, recipients must be taxpayers in good standing, either personally or through their business, Mangole said.