Soweto 'Spazas Fuel Economic Revolution'

In South Africa's black townships, residents do a brisk business running home-based stores

AS the thick smoke from countless coal fires meets the dusk, Thomas Serumula's tiny grocer shop becomes a focus of activity in Soweto's Mofolo neighborhood.Residents from the surrounding streets don't even glance at the more formal corner store with its cage-like security bars and understocked shelves. They make directly for Bell's Tuck Shop - as Mr. Serumula's store is known. "The spaza shops are part of the community so there is no security problem," says Serumula. His shop is built onto a corner of his house and is run by his sons and daughters and other helpers from the neighborhood. On a good day he takes in up to $400 selling household groceries, fresh fruit and vegetables, milk, and bread. Bell's Tuck Shop is one of about 1,000 so-called spaza shops in Soweto. There are an estimated 20,000 such stores attached to residents' homes in the townships around Johannesburg and Pretoria. They have taken over as the main business form in black townships, in which commercial activity was forbidden for decades by apartheid laws bent on ensuring that blacks would continue to regard the impoverished tribal homelands as their true homes. When black stores were first allowed, they were limited to only a few. In recent years, white capital has built hypermarkets and huge shopping centers on the outskirts of Soweto in hope of attracting black trade. But most black families prefer to supply their daily needs from the spazas and would rather travel to Johannesburg to buy clothing and luxury goods. Spaza is township slang for "camouflaged" because most of the stores are run from a garage or backyard and are not immediately visible. The spaza shops, which have a collective turnover of more than $1 billion nationwide, are one of the most visible manifestations of the "informal sector or black economy - which has sprung up in and around black townships. It has been a silent economic revolution, which has taken place over the past 15 years or so despite a plethora of regulations - mostly linked with racial restrictions - on small-business activity. It had its origins in necessity - black unemployment levels of 35 percent and the growing demand for basic goods and services. Today some 900,000 blacks are involved in the informal sector. Official statistics put the informal sector's contribution to the economy at between 6 and 8 percent. But economists estimate that its contribution is closer to 25 percent of a gross domestic product of about $60 billion. The building momentum - aided by lobby groups like the Get Ahead Foundations, the African Council of Hawkers and Informal Business (Achib), and the state-backed Small Business Development Corporation - has chipped away at the array of protections, privileges, and concessions that once prevented such activity. IN recent years, the government has pursued a policy of deregulation and encouraging small businesses that were once perceived as a threat to the state-controlled economy. Organizations like Achib once promoted a philosophy of black economic empowerment as a more realistic route to political empowerment, but the events of the past 15 months have overtaken that school of thought. The African National Congress once actively countered the economic empowerment philosophy lest it dilute the impact of its political struggle. It has now embraced small-business development as a necessary component of a policy of economic growth. Today the proliferation of small businesses is seen as a potential safeguard against a return to a command economy under a future government. "There is just a chance that there are now enough of them to prevent any future political groupings from destroying them with centralized, command economic controls," says Ian Hetherington, director of Job Creation South Africa, a company promoting small business creation. Other facets of the mushrooming informal sector are the $1 billion a year black taxi business, the $3 billion a year community-based lending plan known as "stokvels," the tens of thousands of black street hawkers, the flourishing hairdressing industry, small construction companies, auto mechanics, and many other enterprises. The outward appearance of Johannesburg has been transformed by the small business revolution. Downtown streets are lined with hawkers, sidewalk hairdressers, and fast-food stalls. Some 130,000 minibus taxis dominate the streets. Inside the townships, spaza shops, backyard hairdressers, and roadside mechanics abound. Gill Stacey, a researcher who first reported the scale of the expanding spaza industry two years ago, now provides a connection between the commercial world and the Soweto spazas with a fleet of vans, which promote new products and special offers, and supply some products. Ms. Stacey says she believes it would be "unfair" for white capital to move into the townships at this stage. "The black traders should be protected for a while at least," she says. Spaza owner Serumula agrees. "If large supermarkets came in now they would cripple us because their buying power is much bigger than ours," he says. "I would be in favor of regulations to keep white capital out at this stage." What is more likely to keep white stores out of the townships for the foreseeable future is the escalating township violence and soaring township crime. But the economic revolution is likely to continue to gather momentum.

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