Spaza Shop Case Study

Introduction

For many years local South Africans have made use of Spaza Shops as a channel to feed their families. In the past black entrepreneurs were disregarded and discouraged by policies and reforms to take part in trade. They found an avenue through the informal sector to trade with locals within their immediate vicinity. Spaza shop move grew and entrepreneurs flourished and were able to grow their businesses. Spaza shops play an important role within communities as it allows for those who cannot make it into the formal labour market or those whose household incomes cannot carry the family’s monthly spend to make a living. Since, the influx of immigrants in this fragile market has been clutched from the local’s hands. Government’s lack

Plastow runs downs how ‘rising transport cost’ result in locals buying staples from Spaza shops with in their reach. F. Basaidien, H. Parker… identifies ‘job creation’ and ‘providing livelihood’ as the social benefits Spaza shops bring to each community. Spaza shops have a great business model. For this reason bigger retail brands such as ShopRite have invested in creating smaller retail outlets close to townships as well as other urban areas [A. Plastow]. The Spaza shop makes its profit from being able to make it accessible to locals who cannot afford to travel far distance to buy necessities [A. Plastow]. Not only does it creates jobs in rural South Africa Spaza shops are considered have social benefits. Most Spaza shops in rural areas offer television, video games and other activities to entertain the youth. The most important thing is that both A. Plastow and F. Basaidien, H. Parker… highlights the fact that Spaza shops just don’t add value to the economy but to the social welfare of South Africa. More and More young male South Africans [A.A Ligthelm] are opting to open Spaza shops as lucrative business that will one day expand and afford them greater

M.A Chen clearly states that the governments overlook certain activities in the formal sector. Thus entrepreneurs in this sector are not protected. M.A Chen further illustrates that President Thabo Mbeki and his presidency tried to create a section in the economy that will include micro-enterprises such as the Spaza. M.A Chen discusses how the president short fall in his endeavour is that he failed to recognise that strong stand of the informal sector. E. Auriol concurs with M.A Chen’s stand as she put in perspective that government in developing countries use barriers to entry in formal sectors to create market power for firms whose profits are confiscated by tax. She further illustrates the fact that these barriers make it difficult for start-up entrepreneurs to become successful. The informal economy size is a result of this. What makes it more attractive to enter is that there are no tax levies or entry fees [E.