Members of Parliament (MP)’s Portfolio Committee on Small Business Development have demanded explanations for the apparent failure to disburse more than R300 million earmarked for the Spaza Shop Support Fund, warning that delays are denying critical support to township businesses and cooperatives during a difficult economic period.
The concerns emerged during the committee’s consideration of its Budgetary Review and Recommendations Report (BRRR), where MPs questioned both the implementation of the Spaza Shop Programme and the broader performance of the Department of Small Business Development.
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Lawmakers expressed alarm that substantial amounts allocated to the fund remained unspent despite significant demand among micro-enterprises, informal traders and spaza shop operators.
“Over R300-million is a big deal,” one MP said during deliberations, arguing that officials should be held accountable when funds approved by Parliament fail to reach intended beneficiaries.
Compliance hurdles under scrutiny
Committee members said the situation raised broader questions about whether government support programmes were providing meaningful assistance to struggling entrepreneurs or simply accumulating administrative backlogs.
MPs criticised what they described as onerous compliance and eligibility requirements imposed on applicants. Several members argued that small businesses and cooperatives were being excluded from funding because they struggled to meet banking, registration and compliance requirements.
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Members questioned whether the programme was creating barriers for the very businesses it was intended to support, particularly in township and rural communities, and called for a review of application procedures.
Another key issue was the use of intermediaries and implementing agents. MPs asked why funding was being channelled through third parties instead of reaching businesses directly and demanded greater transparency around implementation contracts.
Questions over beneficiaries and impact
The committee demanded more information on programme beneficiaries, including names, locations and contact details, saying Parliament needed to verify whether businesses listed as beneficiaries had in fact received support.
Some members questioned who was benefiting from the administration of the fund and whether layers of bureaucracy were slowing disbursements. They also raised concerns about whether the programme was producing measurable economic outcomes.
Members argued that government funding should be assessed according to jobs created, business growth, revenue generation and enterprise sustainability rather than administrative indicators such as applications processed or training sessions conducted.
In a sign that scrutiny of the fund is set to intensify, the committee confirmed that the National Empowerment Fund (NEF), which administers part of the programme, would be invited to appear before Parliament to explain spending patterns, beneficiary selection and disbursement delays.
Wider concerns over department spending
The Spaza Shop Fund debate formed part of broader concerns about the department’s financial management and spending performance.
According to the committee briefing, the Department of Small Business Development achieved 38 of 41 annual targets, representing an achievement rate of about 93%. However, MPs argued that the positive performance indicators were being overshadowed by deteriorating fiscal management and under-spending.
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Committee researchers told MPs that the department recorded a budget variance of 10.4%, missing its own benchmark of less than 5%. Under-expenditure was attributed largely to procurement delays and operational weaknesses affecting business infrastructure support programmes, communications spending and other economic development initiatives.
“The failure to disburse funds in a sector where MSMEs (Micro, Small and Medium Enterprises) and cooperatives are facing extreme economic conditions is unacceptable,” a committee member said, calling for a detailed turnaround plan and stricter consequence management for officials responsible for under-spending.
Vacancies and governance concerns
MPs also raised concerns about staffing challenges within the department. Officials reported that there were 50 vacant positions, representing a vacancy rate of about 15.8%.
Members warned that persistent vacancies and staff turnover could weaken institutional capacity and undermine the department’s ability to implement programmes and support entrepreneurs effectively.
The committee also highlighted what it described as an “audit regression” after the department moved from a clean audit outcome to a qualified audit opinion due to shortcomings in financial reporting and internal review processes.
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Members said the deterioration pointed to weaknesses in governance and financial controls and urged management to institutionalise corrective actions rather than relying on auditors to identify errors. Particular concern was raised about whether unspent funds might have to be returned to the National Revenue Fund, potentially reducing resources available for future small business support initiatives.
Sedfa and the Business Licensing Bill
Lawmakers also scrutinised the performance of the Small Enterprise Development Finance and Agency (Sedfa), now incorporated into the government’s new agency structure.
While MPs acknowledged improvements in some operational indicators and lending activity, they expressed concern about rising non-performing loans, weaknesses in credit assessments and inadequate monitoring of funded projects.
Members criticised poor data quality and the lack of geolocation information for some funded projects, arguing that Parliament and municipalities were being hampered in their ability to conduct oversight and verify outcomes on the ground.
The committee also voiced frustration over delays in finalising the long-awaited Business Licensing Bill, noting that Parliament had yet to receive the legislation despite recommendations made in previous years.
MPs warned that continued delays could postpone reforms intended to improve the operating environment for small businesses, while pressure mounts on government to demonstrate that support programmes are translating into tangible economic outcomes for South Africa’s small-business sector.
- Members of Parliament's Portfolio Committee on Small Business Development criticized the failure to disburse over R300 million from the Spaza Shop Support Fund, citing delays that hinder township businesses and cooperatives.
- MPs highlighted excessive compliance and eligibility requirements as barriers preventing small businesses and cooperatives from accessing funding, especially in township and rural areas.
- Concerns were raised about the use of intermediaries for funding distribution and the lack of transparency regarding beneficiaries and measurable economic impacts.
- The Department of Small Business Development achieved 38 of 41 targets but had a budget variance of 10.4%, with under-spending linked to procurement delays and operational weaknesses.
- Staffing challenges including 50 vacant positions and audit regressions have raised governance concerns, while delays in the Business Licensing Bill threaten reforms for small business support.
