Black Business Council Warns Against Fronting for Foreigners in R500 Million Spaza Shop Fund

South Africa’s informal economy is under the spotlight once again as the government rolls out a massive R500 million fund to support spaza shop owners — but controversy is already brewing.

The Black Business Council (BBC) has issued a stern warning to South Africans: do not front for undocumented foreign nationals in applying for the recently launched Spaza Shop Support Fund.

The fund, officially launched by Minister of Trade, Industry and Competition Parks Tau on 8 April 2025 in Soweto, aims to uplift local township businesses by providing both financial and non-financial support, including shop refurbishments, wholesale aggregation, and regulatory assistance.

But not everyone is confident that the fund will reach its intended beneficiaries.

“This fund is meant for black South African entrepreneurs. If locals front for undocumented foreign nationals, they are not only committing fraud but also denying genuine entrepreneurs the support they need,” said Gregory Mofokeng, Deputy President of the Black Business Council.

Mofokeng called on law enforcement to take action against individuals or landlords enabling such practices, especially those profiting from foreign-run spaza shops in township spaces.

Locals Raise Concerns on Social Media

Despite the government’s intentions, many South Africans on social media are skeptical. Some believe the fund, like others before it, will fall into the hands of politically connected individuals rather than grassroots entrepreneurs.

“Only 10% of that R500 million is going to spaza shops. The rest is for ANC comrades,” one Facebook user claimed under a post by Sunday World.

Others expressed fears that the system will be exploited by foreigners using South Africans as proxies — a sentiment that has become common in township economic debates.

Minister Tau’s Vision

At the launch, Minister Parks Tau emphasized that the fund marks a “concrete step to formalise and empower the informal sector,” adding that the initiative is part of the government’s broader vision to support small, micro, and medium enterprises (SMMEs).

This is not the first time government has signaled its commitment. In November 2024, a R500 million support fund was announced, followed by Tau’s announcement in January of a future R100 billion transformation fund for small businesses.

President Cyril Ramaphosa has also consistently highlighted the critical role of SMMEs in rebuilding South Africa’s economy.

Concerns Over Product Safety in Spaza Shops

In a related incident, a Soweto child was hospitalised after consuming snacks purchased from a local spaza shop. This raised further concerns about the regulation of these businesses.

Minister of Cooperative Governance and Traditional Affairs, Velenkosini Hlabisa, has since urged communities to remain vigilant and prioritise children’s health.

The Road Ahead

While the fund could offer meaningful support to thousands of township entrepreneurs, the BBC’s warning is a reminder that accountability, transparency, and community involvement are essential to its success.

As the implementation of the Spaza Shop Support Fund unfolds, the challenge lies not just in disbursing the money — but in ensuring it reaches the people it was designed to help.

{Source: MSN}

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