VUSI VOKWANA | The spaza myth: how black South Africa is being sold a counterfeit economy

There is a story we keep telling ourselves about spaza shops. It is a story about resilience. About black ingenuity. About an informal economy that thrives despite apartheid’s legacy, despite infrastructure neglect, despite every structural disadvantage the post-1994 state failed to dismantle. It is a story told at SMME conferences, in ministerial speeches and in well-meaning development reports. It is also, in large part, a lie.

Not about the resilience — that part is real. But about what that resilience is building, and for whom.

I have spent more than 20 years working in township and rural markets. I have sat across tables from spaza owners in Gugulethu, Langa and Khayelitsha who work 16-hour days, seven days a week with no sick leave, no pension and no exit strategy. What I have watched, consistently, is a system that extracts value upward while concentrating risk downward, and then calls the person at the bottom an entrepreneur.

It is not entrepreneurship. It is informal labour wearing the costume of ownership.

Follow the margin. Follow the power.

A 2l cold drink retails in a township spaza for R22-R24. The owner buys it from a cash-and-carry in Epping or Brackenfell for R18-R19. That is a gross margin of R3-R5 on a unit they physically transport, store, insure against spoilage and theft, and frequently extend on informal credit to neighbours settling up at month-end. Net margins in a well-run spaza typically land between 8% and 15% before municipal costs, before load-shedding losses and before the landlord collects.

The wholesale distributor carrying that same product earns 12%-18% on volume, with none of the retail risk. The fast-moving consumer goods (FMCG) brand sitting in Sandton embedded its margin long before the product reached the township. Its pricing is non-negotiable. Its promotional support is calibrated for modern trade. Its sales rep drives a company vehicle to collect the order the spaza owner phoned in.

This is the architecture of the spaza economy: brands capture value at the point of production, distributors capture it at the point of movement, and the spaza owner — the black woman or man who took the risk, invested the capital and built the customer relationship — captures what is left. Which is not much. And it is getting thinner as input costs rise and competition from foreign-owned spazas, often better capitalised and better supplied, intensifies.

The value chain extracts upward. The risk sits at the bottom. This is not a market failure. It is a market design.

Policy as sedative

What disturbs me more than the economics is the politics of how we talk about it.

Government programmes consistently frame spaza shop ownership as evidence of black economic participation. The department of small business development has run support programmes targeting township retail. The department of trade, industry and competition references the informal economy as a priority sector. Development finance institutions (DFIs) speak of “township retail” as a growth opportunity. Business chambers feature spaza owners on conference panels as living proof the entrepreneurship ecosystem functions.

It does function — for everyone except the person behind the counter.

The FMCG multinationals achieve last-mile penetration into the densest consumer markets in the country without bearing the cost of running it. The wholesale sector gets volume. The commercial landlord gets rent. The fintech platforms get transaction fees. The policy class gets a usable narrative: black entrepreneurship is flourishing, the township economy is growing, the system is working.

The spaza shop, in this framing, becomes ideological cover. It allows us to count self-employed informal retailers as black business owners, to include them in SMME statistics, and to gesture at economic transformation without doing the harder, more expensive, more politically contentious work of restructuring who owns the upstream.

This is not benign neglect. It is active misdirection. Every rand of state energy spent celebrating spaza shops as economic empowerment is a rand not spent asking the more dangerous question: who owns the warehouse?

The question we are not asking

Who owns the distribution fleets that supply township retail? Who owns the cold chain infrastructure? Who controls the wholesale pricing spaza owners cannot negotiate? Who holds the brand licences? Who finances the logistics? Who captures the data on township consumer behaviour that is worth more than the products being moved?

Not us. Not yet. And not by accident.

The concentration of ownership in the FMCG supply chain, in wholesale distribution and in commercial property along township arterials did not happen despite post-apartheid policy. It persisted through it, in part because the policy conversation was consistently redirected toward the last 10m of the value chain — the spaza shop — rather than the upstream nodes where economic power is held.

Ownership of the shelf is not ownership of the economy. It is, at best, a subcontract.

What an honest policy would look like

I am not arguing against spaza shops. I am arguing against their glorification as a substitute for structural transformation.

An honest township economy policy would target wholesale ownership. It would use the broad-based BEE framework and public procurement leverage to open distribution to black-owned logistics businesses at scale. It would direct DFI capital not into microloans for stock but into the capitalisation of black-owned cash-and-carry operations, cold chain facilities and FMCG distribution companies in underserved regions. It would treat township consumer markets as strategic economic infrastructure, not as a photogenic backdrop for empowerment narratives.

Most importantly, it would stop confusing the worker with the owner.

The spaza shop is not a business model. It is a distribution node at the end of a value chain controlled by others. Until black South Africans own the upstream — the factories, the fleets, the franchises, the wholesale infrastructure — we are not participating in the economy. We are servicing it.

And being thanked for our resilience while we do.

• Vokwana is founder and CEO of Kasi Catalyst, a township innovation and advisory platform, and provincial secretary of the National African Federated Chamber of Commerce and Industry in the Western Cape.

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