Built on entrepreneurial ingenuity, the sector plays a vital role in meeting essential community needs, particularly in areas that are often underserved and overlooked. These businesses are active economic contributors, not helpless participants in need of rescue.
Instead, they operate in highly challenging conditions. These include red tape, permit delays, displacement, limited infrastructure, crime and unsafe trading environments, as well as restricted access to formal finance.
Despite this, the informal economy remains one of the most precarious yet vital parts of the labour market, with research noting it as a lifeline for millions. Even in these conditions, traders continue to build and sustain businesses. They do so with limited formal training, relying instead on instinct, experience and strong commercial awareness.
Their role extends far beyond survival. These entrepreneurs also support local manufacturers and large South African companies that supply goods into the informal market.
The upstream impact of the spaza economy is significant, contributing to service delivery, local economic activity and employment. The ingenuity within this sector is striking. Traders constantly adapt to competition and customer demand.
There is always another spaza nearby, which drives innovation in products, pricing and service. Their ability to remain competitive in dense, informal markets reflects strong entrepreneurial instinct.
This model has also influenced how larger FMCG brands enter the market. Informal retailers typically do not charge listing fees, unlike formal retail chains. The main barriers are logistics and access to finance.
This creates opportunities for brands to reach communities in new ways. For example, Unilever has distributed and branded around 4,000 spaza shops to strengthen brand recognition and loyalty. Increasingly, more companies are investing in this channel for growth and market share.
Traders in this economy have built their businesses with minimal government support. They are defined by resilience and self-determination. Their entrepreneurial drive is not simply about survival. It is about long-term business building and local employment. What they do not need is to be “saved”. They have already built functioning, valuable businesses in difficult environments.
What they do need is infrastructure. They need tools, systems and reliability that make their work easier and more efficient. They need policy support from government that allows them to operate more effectively, and more solutions like the South African Reserve Bank’s Payments Ecosystem Modernisation (Pem) programme that’s overhauling the national payment system that has slowed innovation and kept parts of the population, including informal traders, effectively locked out of the formal digital economy.
Don’t save the spaza. It has already done that for itself. The opportunity now is to equip it with the tools it needs to become even more valuable to the communities it serves.
