Committee states that funds from the spaza shop support fund did not go to foreign enterprises

The Department of Small Business Development refuted claims that non-compliant spaza shops with foreign participation received R500 million in support from the state fund. The Department stated that its verification process identified discrepancies in ownership data even before applications were approved.

These allegations arose in response to social media reports claiming that spaza shops owned by foreigners gained access to a fund intended for compliant enterprises owned by South African residents in urban and rural areas.

Kinisile Delwa, Deputy CEO of the Small Enterprise Development Agency (SEDFA), informed the Parliamentary Portfolio Committee on Small Business Development that all applications underwent thorough analysis for discrepancies between the applicant, license holder, and actual operator.

Delwa emphasized: 'What we found during the verification process was that some applications had differences between the applicant's data, the license holders, and the actual owner or operator of the spaza shop.'

She clarified that SEDFA identified these discrepancies during the vetting process and previously reported them to the committee in March 2026.

Furthermore, the agency discovered instances where the business address did not match the business listed in the application, as well as applications related to non-existent spaza shops. Delwa stated that such applications were halted during the due diligence procedure, and 'all non-compliant applications were rejected before approval and disbursement of funds.'

She also revealed that SEDFA forwarded these discrepancies to the Ombudsman during his investigation.

This clarification followed the Ombudsman's investigation into the regulation of spaza shops and informal food businesses, which uncovered signs of using businesses as fronts in Gauteng. The report noted cases where South African citizens registered as business owners while foreign nationals were the actual operators.

The report states: 'Evidence before me reveals specific identified and verified cases of businesses being used as fronts by foreign nationals.' It also pointed to potential instances of corruption, fraud, and false declarations, in which South African citizens allegedly assisted unregistered foreigners in conducting business.

According to the report, approximately 56% of operating spaza shops identified in Johannesburg, Ekurhuleni, and Tshwane were run by foreigners. Foreigners accounted for 67% of applications in Ekurhuleni, 64% in Johannesburg, and 41% in Tshwane during the government's spaza shop registration campaign. The issues raised in the report concerned fronting activities, illegal employment, regulatory compliance, and weak law enforcement.

Nevertheless, these findings raised questions about whether foreigners benefited from the R500 million support fund.

Minister of Small Business Stella Ndabeni-Abrahamse also denied accusations that she facilitated foreign-owned spaza shops receiving state funding or personally benefited from the program. She stated: 'I noticed a fake and malicious post on social media spreading false accusations that I helped foreign-owned spaza shops receive state funding and personally benefited from these funds.'

Ndabeni-Abrahamse added: 'These accusations are completely false and have no factual basis.' She explained that the fund is administered through designated executive agencies and is subject to compliance, verification, and approval processes.

'I never personally approved applications or benefited in any way from the funds allocated under the program,' she stressed.

The Ombudsman's report also highlighted broader deficiencies in the regulation of the informal food sector. It was found that only 5% of spaza shops in Ekurhuleni, 14% in Johannesburg, and 30% in Tshwane held a license or permit. The report highlighted inadequate application of licensing and food safety requirements as part of broader challenges facing the sector.

While the Ombudsman identified confirmed cases of fronting activities involving foreigners in the broader spaza shop sector, SEDFA insists that applications where discrepancies in ownership or operator data were found were rejected before funding approval or disbursement.

A new collaboration between the African Development Bank (AfDB) and Standard Bank will provide billions in additional funding for small and medium enterprises (SMEs), while also supporting women entrepreneurs through technical assistance and digital financial tools.

South African SMEs will benefit from a R5.4 billion financing package after the African Development Bank and Standard Bank Group concluded a significant deal aimed at expanding access to business finance and promoting inclusive economic growth.

The African Development Bank invested $332 million, equivalent to approximately R5.4 billion, in a capital market security issued by Standard Bank Group. These funds will be directed towards financing SMEs across South Africa, including women-led businesses that continue to face significant hurdles in securing finance.

This deal also marks the first social Flac instrument in Africa supported by a development finance institution that has been listed on the Johannesburg Stock Exchange. In addition to these investments, the African Development Bank's Affirmative Finance Action for Women in Africa program will provide a $1 million technical assistance grant through the WeFi window to help women entrepreneurs overcome financial difficulties.

The support will include digital payment tools to help businesses build verifiable credit histories, as well as enterprise and supplier development programs. Kennedy Mbekeani, CEO of the African Development Bank for South Africa and Country Manager in South Africa, stated that this transaction will strengthen both the country's financial sector and the small business ecosystem.

Mbekeani noted: 'These investments reflect the African Development Bank's commitment to strengthening Africa's financial architecture while directing long-term capital where it is needed most—to small businesses and entrepreneurs in South Africa.' He added: 'Our partnership with Standard Bank Group helps us simultaneously build a more resilient banking system and support SMEs that drive employment and inclusive growth.'

The instrument is structured as Flac, a new debt category introduced by the South African Reserve Bank in January of this year as part of the phased implementation of the bank resolution framework. Standard Bank committed to allocating the full R5.4 billion to SMEs, including women-owned businesses, recognizing the persistent gender financing gap in South Africa's small business sector.

Luvuyo Masinda, Chief Executive Officer for Corporate and Investment Banking at Standard Bank Group, called the agreement another important step in the bank's partnership with the African Development Bank. Bill Blake, Chief Executive Officer for Commercial and Business Banking at Standard Bank Group, participated in closing the deal alongside Kennedy Mbekeani and Luvuyo Masinda.

Masinda stated: 'We are pleased to close another landmark agreement with AfDB following successful deals in 2024. This issuance of social Flac allows the group to realize its mission: Africa is our home, we contribute to its growth.' He emphasized that SMEs are a vital engine for economic growth and job creation, forming the backbone of the South African economy, where about 3.2 million SMEs provide 60% of jobs, making support and access to finance for these businesses paramount to overall growth objectives.

Bill Blake, CEO for Commercial and Business Banking at Standard Bank, said the additional funding will enhance the bank's ability to support entrepreneurs and create new opportunities for women-owned businesses. He noted: 'We see firsthand the critical role that SMEs play in driving prosperity and job creation. This deal, along with our partnership with AfDB, strengthens our capacity to support the businesses underpinning inclusive economic growth.' Blake also expressed enthusiasm for the technical assistance grant, which will fund key initiatives providing direct, tangible benefits to women's SMEs, supporting their drive to start, manage, and develop sustainable businesses.

Ahmed Attout, Director of Financial Sector Development at the African Development Bank, suggested that this transaction will promote the wider adoption of best international banking practices across Africa. Attout stated: 'This transaction is designed as a catalyst encouraging broader adoption of international best practices in the banking sector across the African continent.'

The latest agreement continues the long-standing partnership between the African Development Bank and Standard Bank, which began in 2008. It follows the Bank's approval of a R3.6 billion subordinated debt facility for Standard Bank Group in November 2024, as well as a $200 million risk-sharing agreement to support trade finance across Africa. By the end of 2025, Standard Bank had fully utilized the previously provided credit, supporting 5,425 SMEs and exceeding the initial target of 4,000 enterprises, with financing directed towards businesses operating in agriculture, retail, wholesale, and manufacturing.