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From Local Survivalism to Foreign Entrepreneurship: The Transformation of the Spaza Sector in Delft, Cape Town

Andrew Charman, Leif Petersen, Laurence Piper

Abstract


Small-scale, home based, grocery stores, known as spaza shops, are ubiquitous throughout the City’s township environment. These stores offer residents convenience in assess to necessities, such as bread and milk, fulfilling a market opportunity between weekly or monthly purchases on the high street or malls. Spaza shops are situated, in legal terms, within the informal economic sector. In the literature on the South African informal sector, spaza shops fulfil various propositions: some authors see these stores as incubators of entrepreneurship, providing a means of wealth accumulation and thus pathway out of poverty; others seen them as little more than a (desperate) survivalist strategy, equivalent to a coping mechanism undertaken by households confronted by unemployment. In recent years, the spaza market has become a site of fierce competition between South African spaza shop keepers and foreign entrepreneurs who have entered this market. There is anecdotal evidence and studies which confirm that these foreign shop keepers are beginning to dominate the spaza market. The scale of this transition and the response of South African shop keepers to the loss of their livelihoods has not been studied at the street level.

The paper addresses the poorly understood nature of this market transformation hrough considering detailed empirical evidence from Delft South, a relatively new township located on the City outskirts. The paper draws upon detailed qualitative research undertaken by the Sustainable Livelihoods Foundation in 2010. This research i) mapped the location of all spaza shops ii) surveyed the prices of key commodities in 106 stores; iii) engaged with spaza shop owners through workshops; and iv) conducted a house surveys to understand individual attitudes towards different spaza stores and to assess their reliance on these businesses. The research found that over 50% of the spaza market in Delft South is run by foreign entrepreneurs, notably Somalis. The steep competition from these entrepreneurs (many of whom own a string of these stores and are well resourced in comparison with the typical township entrepreneur, able to employ workers and operate vehicles) has evidently bankrupt local spaza shops or forced them to pursue alterative businesses strategies. There is much tension between spaza shop competitors with violence utilised as a tool to destabilize new entrants and threaten their business. The paper argues that spaza shop enterprises have shifted towards a business model base on aggressive price competition and economies of scale in procurement which, whilst benefiting wealth business persons, excludes economic opportunities survivalist businesses and new entrants from communities such as Delft South.


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