Spaza shops are what people do when they can’t get jobs.
No one quits a stable job paying a comfortable wage to go enter the spaza shop industry.
So, if your favourite politician fashions his political identity around “the spaza shop economy”, give him a call and ask him to start respecting your intelligence.
To be clear, spaza shops did not start becoming unprofitable recently. They’ve always been desperate subsistence activities ever since they were conceived. It’s not a coincidence that most people who open spaza shops do so after losing their jobs or as side hustles for an extra income while they continue working.
A 1991 article by N.S. Terblanché correctly defined and analysed the spaza shop as an informal retail innovation emerging from South Africa’s unemployment crisis during the 1980s and driven by massive Black unemployment, due to sanctions and a catastrophic lack of jobs throughout the 1980s.
Now, here’s where slick politicians mislead the people. According to Terreblanche, in 1989 already, spaza shops were bringing in an estimated R3 billion in revenue, accounting for ~25% of South Africa’s total grocery retail turnover. This is closer to R200 billion today.
This is not small change, so some politicians latch onto these figures to give the impression that tuck shop owners are somehow getting fleeced and should, in fact, be making good money.
But, the thing is, the high revenue figure doesn’t translate to high profits for individual owners due to the sector’s inherently thin profit margins. For one, spaza shops serve price-sensitive and unemployed or low-income customers, so they have to keep markups very low on basic goods. This means even a high turnover leads to tiny absolute profits.
In essence, yes, the total market is huge, but is fragmented into many tiny, low-margin operations where survival is the only reachable goal. In fact, in the paper, Terreblanche predicted that spaza shops would become permanent institutions due to persistent unemployment and lack of a welfare system. Because, again, there’s a natural link between high unemployment and spaza shop proliferation.
The overarching point here is that spaza shops are not, and have never been lucrative nor sustainable operations, and this is just their nature. Telling people that there’s a future in spaza shops is a political grift that romanticises precarity and must be condemned.
Ultimately, regardless of how much politicians harp on about “the spaza shop fund”, the spaza shop is not a scalable prosperity engine and the people, especially young people, deserve so much better than empty promises of being led to the promised land of spaza shop moguldom.