Acta Universitatis Danubius. Œconomica, Vol 13, No 4 (2017)

Abstract

Faced with enormous unemployment, the South African government enacted pro-SMME policies. It was assumed that such policies would ignite broad-based growth within the SMMEs cluster, regardless of the sector. However, the current evidence suggests that these laudable efforts have not benefited the poorest of the poor nor have they aroused and sustained entrepreneurship in certain quarters. Aim: Using the spaza shop as the focus and two prominent townships as the locus, this paper sought to understand the factors that under mind the effective startup of businesses by natives. Furthermore, it identified the support structures that can foster and sustain new firm births.  Method: Leaning on the exploratory and descriptive research design, the quantitative research approach was enforced through self-administered questionnaires. The data collected was captured and analysed using the Statistical Package for the Social Sciences (SPSS) software, and was based on 121 fully completed questionnaires. Results: A number of challenges unique to native spaza shops were conceded. These included a restricted access to seed capital, inability to benefit from bulk purchases, competition from non-South African shops, lack of business information, unsuitable business location, and the lack of collateral. The customarily challenges included a high level of crime, high cost of security and limited management skills. Recommendations: To encourage and sustain, new firm births, firstly, spaza shop-owners must have a clear vision of what they want to achieve before they embark on the venture.  Secondly, crime must be dealt with collectively. Thirdly, government agencies and the private sector must come on board to address the skills gap. Lastly, technology should be adopted, to mitigate the issues around bulk purchases and transport costs.