EP 9: The Spaza Survival Crisis with Kabelo Rathobei

Most of us have never stopped to think about the tiny spaza shops in South Africa’s townships hidden engines of resilience that tell a much bigger story about survival, injustice, and the future of local economies. These small, often overlooked businesses survived apartheid’s bans, carried communities through economic hardships, and now face an existential threat from corporate retail giants and government crackdowns. What does their fight for survival reveal about the true meaning of sustainability? And who really benefits when the rules are rewritten?In this eye-opening episode, Kabelo Rathobei takes you inside the complex world of South Africa’s spaza shops family-run microenterprises that are the heartbeat of poor communities. Discover how these shops, built during apartheid’s covert economy, have become a fragile symbol of economic resilience and social justice. As migration, foreign competition, and corporate giants enter the scene, these small businesses are under siege facing threats from zoning laws, food safety crackdowns, and ruthless expansion by multinationals. The story isn’t just about business; it’s about community survival in the face of systemic inequality.

 This episode hooks from the start with a vivid portrait of South Africa’s ubiquitous spaza shops, familiar yet powerful symbols of resilience. It uses concrete examples and recent crises to create urgency and relevance while weaving in broader questions about justice and sustainability. The targeted focus on community impact and systemic failures makes it compelling for listeners who care about social issues, small businesses, and equitable economic futures.

Transcript

Kabelo (00:00)
There's a spaza shop in almost every township in South Africa. It is small, sometimes it's a little window cut into a wall or maybe a converted garage or a shipping container. It sells bread, airtime, mazimba chips, candles. You probably grew up buying something from there. I did. So right now, the spaza shop is at the center of one of the most complicated socio-economic stories in the country.

A story about who gets to own a business,

who gets pushed out or who gets to profit or who gets fined for selling vetkoeks from their kitchen. Today, I'm going to walk you through it. Welcome to Candid Sustainability Podcast, a podcast about real conversation at the intersection of people, planet and progress hosted by me, Kabelo Rathobei

So let's talk the spaza Shop survival crisis and why it is a sustainability story.

Let me give you a little bit of background. Under apartheid, black South Africans were severely restricted from owning formal businesses. They couldn't move freely into town as we know and they couldn't access the formal economy on their own terms. So they did what people under oppression will do. They found a way. They built hidden shops, I'll say, inside their homes. were selling basic goods to their neighbors.

And yeah, we're talking meal-in-meal, bread, sugar, paraffin, the survival essentials, you know? So up until the late 1980s, spaza shops were technically illegal. They were tolerated but not recognized. And still people built them because the township had to feed itself, you know? And when democracy came in 1994, the spaza shop moved from the shadows into the open. It became a symbol of

black entrepreneurship. It was black resilience, resilience also of the community really to be self-sufficient. Families who had been running these shops for years were finally able to be legally recognized for the first time township residents could be formal business owners without fear. At peak, South Africa had tens of thousands of these shops mostly were black owned and mostly

were family-run and they were embedded in the communities that they served. They were not just businesses, they were really the economic heartbeat of the township.

Okay, so then came the post-apartheid immigration wave that we all know of. From the mid-1990s onwards, there was a lot of asylum seekers and refugees that arrived in South Africa in large numbers. We're talking from Somalia, Ethiopia, Zimbabwe, Bangladesh, and really everywhere else, often fleeing conflict and severe economic hardship.

So by late 2000, South Africa was receiving some of the highest number of asylum applications in the world, with hundreds of thousands submitted over just a few years. Many of these migrants settled in townships and with limited access to formal employment, many tend to informal trade, especially spaza shops. This is where it becomes more complex.

Foreign-run spaza shops, particularly those run by Somali and Ethiopian traders, often operated within a different business model. They relied on strong social networks, they pulled a lot of resources, they bought stock in bulk, and they really reduced operating costs And they...

competed aggressively on price and hours in which they opened. So research from case studies in places like Delft and Cape Town show that in some areas, this model actually allowed foreign owned shops to rapidly come and dominate the market within a short period. Across different studies, foreign nationals make up a significant share of spazza shop operators

with Somalis and Ethiopians particularly prominent in some locations. Of course, it varies widely by the area. Now, I want you to understand and I want you to hold this carefully. This is not a story of villains and victims. Many of these foreign nationals who entered this sector were themselves surviving, often after fleeing war or extreme hardship. But the structural reality remains is that local South African shop owners

were largely left to compete without access to credit, supply networks, or just coordinated support. And many just could not keep up. So the result is that there's a form of economic dispossession that has happened. And it has happened quietly through this market to the same communities that apartheid had already dispossessed once. That is really a sustainability failure.

It is a social justice failure. is one the state largely ignored until children started dying. Unfortunately, in late 2024, a wave of foodborne illness shook the country. Around September, hundreds of cases were reported and at least 22 children died after consuming contaminated food.

In most cases, these were linked to snacks bought from spaza shops or just informal vendors. The government really moved quickly. In November, it ordered that all spaza shops and food handling businesses register with the municipalities in which they existed within 21 days or they would face closure. But here is what or where it becomes a little bit complex is that the investigations actually showed that the crisis was not simply about who owned the shops.

The primary cause included the presence of highly toxic pesticides in the informal market unsafe storage practices. was just weak enforcement altogether on food safety regulations. So analysts and trade organizations argued that the problem reflected deeper systemic failures, including inconsistent inspections, were gaps in municipal oversight and just poor infrastructure in township areas. So

By the registration deadline that was set, around 43,000 applications had been submitted, with only around 19,000 approved. The sector really remains unevenly regulated and the tragedy exposed how dangerous these gaps can actually be.

So just when you thought this puzzle shop had survived enough disruption, here comes the third wave. And that's what I want you to get into.

South Africa's big formal retailers have now identified the township economy as their next growth frontier and they are moving really fast. ShopRights Usave Brand, its discounter are aimed at more low-income communities

has a format called Ekasi. It is a container store, literally a shipping container. They set it up in the township, it's branded, it's stocked, and it's run by one of the most powerful retailer groups on the continent. In 2024, Usain opened 44 Ekasi store containers. It plans to get a thousand more in five years.

Boxer, which is also owned by Pink and Pay and was recently listed on the JSE, has 500 stores and plans to add another 500 over the next seven years. this township market they're all chasing, it's actually valued over 600 billion rands

and contributes more than 6 % to South Africa's GDP. Now, what does this mean for the spaza shop owner, Maamak Egasi? The honest answer is it's complicated. The positives are real and they're there. These formal retailers bring consistent quality, food safety compliance, stable pricing, and sometimes local jobs. Communities that have been...

long underserved by these formal retailers suddenly have access to trusted brands. And that matters, you know, that's access. But here is the problem. These container stores do not exist alongside spaza shops. They compete directly with them for the same customers in the same street for the same 50 rand in someone's pocket. and they compete with massive

advantages. have supply chain muscle, marketing budgets, corporate banking, FMCG supplier relationships that really an individual spaza owner simply cannot match. A SPAR executive recently acknowledged publicly that informal retail growth has taken money out of the baskets of formal retailers. So the formal sector's response is to go after the money by moving into the townships.

And when they do, this puzzle shop owner who survived apartheid, who survived the foreign national price competition now has to survive the JSE listed corporation setting up just next door. It's tough. But then there is the story that brought all of this home for me. And I was just like, and like what's happening? just this, I actually saw this yesterday.

now in May. Residents in Hanover Park in Cape Town,

a community that is already under serious economic pressure, started receiving warnings from the city of Cape Town. Elderly pensioners, I'm talking people surviving on social grants, people selling the koeksisters and doughnuts and vetkoeks from their homes, are being threatened with fines of up to 800,000. And possible jail time if they can't pay for what they call

zoning violations. So let's sit with this for a second.

Funny, isn't it? It's crazy. Community leader Gary Hartzenberg put it plainly, how can the city of Cape Town target the poorest of the poor? These are the people who cannot survive on their monthly grants. Sailing sweets or vetkoeks from home is not a criminal enterprise. It's literally survival.

It's the same kind of grassroots entrepreneurship that spaza shops grew out of. And the city's argument rests on zoning violations and land use laws. Officials say that the enforcement is aimed not at the small scale home baker, but.

more larger unapproved businesses operating in residential areas. But critics argue that in practice, these rules are actually falling hardest on the poorest residents, raising deeper questions about how the urban regulation interacts with informal survival economies in post-apartheid South Africa. Meanwhile, a shipping container, branded Yousave or Boxer, whatever, is perfectly legally

two streets away. And yeah, this contradiction is really at the heart of the story.

I want to name why this is actually a sustainability issue. Because it is easy to see it only as a business story. But it's not. Sustainability is not just about carbon and climate. It's about whether communities can sustain their own livelihoods. It's about...

whether economic systems produce outcomes that are equitable, whether people who build something are the ones who end up benefiting from it. The spaza shop sector is a billion rand economy and it supports millions of jobs. It is a critical part of how poor communities feed themselves, how they generate income and really how they stay afloat. So if that economy is systematically taken over,

First by foreign capital, then by formal corporate capital without any protection or support for local owners.

That is not just bad business. It's a justice failure. And when the regulatory response to all of this is to find pensioners for selling magwinya while waving in container stores from JSE listed corporations, you have to ask yourself, who is this system designed to protect? I'm not saying that formal retailers should not exist in townships. I am not.

saying that all foreign national shop owners are in the wrong. This is not a simple story and I will not pretend that it is. What I am saying is that spaza shops were built by communities that were excluded from the economy. It survived apartheid, it survived the migration wave and right now it's facing...

one of its most sophisticated challenges yet. Corporate retail with a township strategy. you know, people who own these shops, who run them from their homes, who sell three nappies instead of a full pack because that's what the neighbor needs and that's what the neighbor can afford. These people actually deserve protection and support and ⁓ really policy that is actually built for them. Yeah.

That is my candid take. Let me know in the comments where you stand on this and yeah, if this is the kind of conversation you want more of, please subscribe to the channel. Remember to leave us a review on Spotify, Apple Podcasts or wherever you listen to your podcast.

And remember to share this with someone who needs to hear it. I am Kabelo Rathobei and this has been the Candid Sustainability Podcast.