R57m Spaza Shop Fund: Committee says no payments went to foreign-owned shops

The R57 million Spaza Shop Support Fund has reached its intended beneficiaries, said the Portfolio Committee on Small Business Development on Friday. 

According to the Department of Small Business Development, a total of 930 disbursements had been made as of July 31, 2026. The department further assured the committee that no single disbursement had been made to a spaza shop owned by a foreign national.

Committee Chairperson Masefako Dikgale praised the stringent internal controls and due diligence measures implemented by the department and the Small Enterprise Development Finance Agency (SEDFA). Dikgale said the money went to qualifying South African citizens operating legitimate spaza shop businesses.

“The committee engaged with the department and the agency on allegations that the fund had been disbursed to spaza shops operated by foreign nationals through South African fronts. We were assured that applications are subjected to stringent verification processes before any funds are disbursed,” Dikgale said. 

She said if an application reveals an operator mismatch or other indicators of fraud, it must not proceed to disbursement.  

“The committee’s engagement with the department and the agency follows the Public Protector’s announcement on 17 July 2026 that her office had issued a Section 7(9) notice to the City of Johannesburg, City of Ekurhuleni and City of Tshwane,” he said. 

Dikgale said the notice arose from a systemic investigation into food-safety regulation and enforcement at spaza shops and other informal food businesses in Gauteng.

She said the investigation identified verified cases of business fronting, beneficiary mismatches, fraud and misrepresentation, including instances where South Africans were registered as licence holders or beneficiaries while foreign nationals operated the businesses. 

“These findings formed the basis for allegations by members of the public that some funding from the fund may have reached spaza shops operated by foreign nationals. The committee regarded the allegations seriously, particularly because the fund is intended to support qualifying South African-owned and operated businesses,” Dikgale said 

The department informed the committee that its internal due diligence processes had successfully identified and flagged operator mismatches and other fraudulent applications before payment. As a result, Dikgale said, no financial disbursements were made in respect of the fraudulent applications identified through the verification process.

Dikgale said the committee would continue exercising parliamentary oversight to ensure that the fund achieves its intended objectives.

“We will ensure that every rand intended for qualifying South African entrepreneurs is protected and accounted for. Support must reach genuine beneficiaries, not fraudulent fronts. The committee will remain vigilant against any attempt to circumvent the rules or defraud the state,” she said.

The committee encourages members of the public and small-business stakeholders to report suspected fraud, fronting or misrepresentation through the appropriate channels. The committee calls on all beneficiaries and applicants to comply fully with the Fund’s requirements and to provide truthful information during the application and verification processes.

zainul.dawood@iol.co.za

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