Spaza Shops: South Africa's economic lifeline we can't afford to ignore
Kasi Economy
Paul Phume is a Johannesburg-based businessman and philanthropist.
Image: Supplied
IN MID-2025, the chief executive of Capitec, Gerrie Fourie, sparked debate about unemployment in South Africa. He argued that the actual unemployment rate in South Africa may be significantly lower than the official figure reported by Stats SA, potentially around 10% instead of the reported 32.9%.
He argues that the current methodology used by Stats SA does not adequately capture the economic activity within the informal sector.
The discussion about the rate of unemployment and the informal sector will always be both controversial and intriguing. Some of the controversy stems from the fact that the story of the informal market always reignites discussion about historical imbalances.
The intrigue comes from how the country may quickly learn and support the informal sector for the benefit of the country. It is frequently argued that most countries that flourish do so by supporting small businesses, leading to increased employment in the SME sector.
The discussion about the rate of unemployment is perhaps best left to economists, statisticians, politicians, and policymakers. However, the intrigue of how we may unlock the value of the informal sector should be a subject of discussion for everyone.
In the informal economy, an area of interest is the Spaza market. The spaza shop market in South Africa is a significant part of the informal economy, with estimates ranging from R180 billion to R197 billion annually. Realising the potential and value of the spaza shops, formal retailers like Checkers, Pick n Pay, Boxer, Spar and Tiger Brands have entered that market.
So why then do some people still frown upon the spaza market? One will often hear in talk shows, conferences, and business meetings, executives making comments that they are not running spaza shops. The statements are plain derogatory by suggesting that their areas of business operations are more important and strategic than spaza shops.
One wonders how many of such executives know what it means to operate a spaza? One will know that when those shops remain in operation for years, it takes special retail expertise to successfully operate them.
Spazas, like many informal businesses and Small and Medium Enterprises (SMEs) in South Africa, face a multitude of challenges like access to finance, cash flow management, crime, skills shortages, and the impact of load shedding, among others.
These factors contribute to the high failure rate among SMEs and hinder their ability to grow and contribute to the economy.
My take is that South Africans must support the informal market for it to thrive and grow. Our support must not be just words, as we want to grow employment.
It must translate to all of us giving respect and showing love to every sector of the economy, including the spazas and other small enterprises.
* Paul Phume is a Johannesburg-based businessman and philanthropist. The views expressed are personal.
** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.