Exploring the challenges to expansion faced by local Spaza shop entrepreneurs in the Kagiso Township, Gauteng

Abstract

This research explored the various challenges linked to establishing and formalising spaza shop businesses in Kagiso Township, Gauteng. Township economies are a crucial but underdeveloped component of South Africa's economic landscape, and spaza shops are essential in stimulating entrepreneurship, creating employment, and providing low-cost commodities to communities. Although important, many local spaza shops still face challenges with sustainability and scalability. Specifically, the study aims to identify the critical constraints to their growth in order to encourage measures to expand their competitiveness and integration into the broader formal economy. The problem statement underlines that spaza shop owners are confronted by numerous challenges, which range from financial and regulatory exclusion and farreaching competition coming from foreign-owned stores and formal retail chains; notably, the lack of business capacities, fragile collaborative structures, as well as limited uptake of digital applications. These constraints collectively suppress growth prospects, limit profitability and generate social exclusion in township contexts. The study is qualitative and exploratory within the interpretivist paradigm. Twelve spaza shop owners in Kagiso Township were interviewed using semi-structured interviews. Entrepreneurs had to have experience in starting, owning or managing entrepreneurial ventures and purposive sampling was employed. A thematic analysis was used to identify recurring patterns, and evidence of triangulation and member checking ensured the credibility and trustworthiness of the findings. Six major themes emerged from the analysis that included financial constraints, regulatory requirements, competitive environment, digital capability disparities, lack of business knowledge and limited networking and cooperation. Respondents mentioned restricted access to formal funding, licensing concerns, and greater competition as significant obstacles to business growth. While some respondents had employed digital means such as mobile wallets to facilitate e-commerce, broad based integration of technology was hindered by costs, infrastructure gaps and digital illiteracy. Scale was also inhibited by a general lack of leadership training and by a lack of cooperative participation. The results imply that these factors are interwoven, and together form a systemic barrier to sustainability. The study revealed that the long-term development and growth of Spaza Shops require a holistic policy and support framework to expand, bearing in mind financial inclusion, simplified regulatory processes, business skills training, digitalisation, and cooperative networking. This research offered evidence-based inputs for policy makers, local development agencies and creditors based on the discussion of township economic development. The study suggests a move away from survivalist entrepreneurship to innovative and technologically enabled inclusive township-based enterprises that could make substantial contributions to economic resilience and social equity in South Africa.