Can spaza shops create real jobs?

2014-04-08 17:00

Ngoetsana Sehlalo, a 36-year-old informal trader from Orange Farm, started selling atchar outside her local shopping complex because she was unemployed.

A few months later, customers asked her to add bread, polony and chips to the menu and that’s how her bunny chow business started.

Today, she employs a woman from her community and also runs a successful spaza shop.

“For me, it wasn’t a matter of running a business. I was not working and my children had to eat,” said Sehlalo.

The informal sector is seen as one of the answers to South Africa’s gross unemployment, but many in the sector see their trade businesses as a short-term necessity rather than a business venture.

StatsSA’s latest employment figures show employment figures increased by 141 000 in the fourth quarter of last year. The increase was largely because of the 123 000 jobs created in the informal sector compared with the 64 000 jobs created in the formal sector.

Sazini Mojapelo, CEO of Hand in Hand (HIH), a nongovernmental organisation created to eliminate poverty in poor communities by focusing on income generation through capacity building and empowerment, said South Africans lacked “business acumen and an entrepreneurial culture”.

She added: “Most informal traders become entrepreneurs because of the need to survive so they venture into business on an ad-hoc basis, which is why 70% of small businesses fail within the first 18 months and 90% die in their first 10 years of existence.”

Mojapelo said her organisation realised the need for South Africans to have an alternative form of income generation, which is why HIH helped informal traders run successful enterprises in their communities.

“We offer traders practical on-the-job training, which includes basic bookkeeping, record-keeping and the separation of business income from personal income,” she said.

Sehlalo told City Press she never saw herself as an entrepreneur or even thought her bunny chow business could be profitable.

“I didn’t know what profits were or why I should keep receipts or keep track of stock. If my child asked for money, I would just give it to her from the business. I didn’t even think I could hire people.”

Herman Mashaba, who started as a trader in the 1980s and founded Black Like Me, said this problem was widespread.

“South Africans don’t have an entrepreneurial spirit; they don’t view their spaza shops as business ventures but rather as an interim measure before moving to something else.”

He said most South Africans started trading stores out of “necessity” and not because they saw their informal businesses as a way of making money or potentially creating jobs.

Mashaba said funding was not the main constraint to small businesses but rather structural issues such as the implementation of sectorial wages.

“Many small businesses go bust because owners can’t afford to pay their employees wages set by bargaining councils.”

He said he joined the Free Market Foundation to fight restrictive labour legislation and to teach young entrepreneurs how to run a successful small business.

“The trade and retail sectors are highly competitive industries. Traders need customer loyalty programmes and customer keeping programmes, we tend to not be client focused,” he said.

Mashaba added that South African traders failed in business because they lacked stamina.

“We [South Africans] want immediate results. Development takes time, it doesn’t happen overnight.”

Sehlalo may have initially had a short-term view of her business but, with the help of HIH, she now sees her bunny chow business as a potentially profitable one. She said she used to make R1 750 a week before she started working with HIH. She now makes a profit of about R3 600 a week.

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