The price increases have fuelled heated debate on social media, where videos of foreign shopkeepers leaving township businesses have gone viral. While some South Africans have welcomed the return of locally owned businesses, others question whether township consumers can afford the higher prices that have followed. The issue has also dominated radio phone-ins. East Coast Radio reported sharp divisions among listeners over whether supporting local ownership should come at the expense of affordability.

Those frustrations spilled into a KZN Spaza Shop Roundtable on Tuesday, where local shop owners appealed to the government for urgent support. Many said that although they welcomed efforts to grow South African-owned businesses, they struggled to match the buying power, supplier networks and operating efficiencies that had helped many foreign-owned retailers keep prices low.

Yet beneath the political debate lies a much larger business story.

The next battle for South Africa’s estimated R900 billion ($53.6 billion) township economy may not be over nationality at all. Government officials and fintech companies have shared with TechCabal that digital payments, merchant data, embedded finance and smarter supply chains, not ownership alone, will determine whether local spaza shops can remain competitive while keeping prices affordable.

Building a digital spaza economy

That belief lies at the heart of the Department of Small Business Development’s strategy to modernise township retail.

For Minister Stella Ndabeni-Abrahams, the recent disruptions have reinforced the need to help South African-owned spaza shops overcome structural barriers that have long undermined their competitiveness.

“Spaza shops are vital contributors to township and rural economies,” Ndabeni-Abrahams told TechCabal in an interview on Monday. “They provide communities with access to essential goods, create employment opportunities and support local economic activity.” 

Despite their importance, many South African-owned spaza shops continue to face limited access to finance, high operating costs, weak bulk-buying power, low levels of digital adoption and intense competition, she said. 

To tackle those challenges, the government launched the R500 million ($29.80 million) Spaza Shop Support Fund in March 2025. Unlike earlier support programmes, the initiative combines funding with digital infrastructure, including point-of-sale (POS) systems, inventory management software, digital payments, compliance support and business development services.

“The Department has approved the Small Business Portfolio Digital Transformation Strategy,” said Ndabeni-Abrahams. “The strategy sets out a range of digital interventions aimed at addressing the structural barriers faced by spaza shops and other micro, small and medium enterprises.”

Among its flagship initiatives is a National Micro, Small and Medium Enterprise (MSME) Service Portal, designed to give entrepreneurs access to funding opportunities, business support programmes and government services through a single platform.

The government also plans to roll out an Integrated Payment Gateway for electronic payments and a national Application Programming Interface (API) Gateway linking banks, fintech and public systems to improve access to finance and digital services. 

“Through these initiatives, government seeks to build a more competitive, inclusive, digitally enabled and sustainable spaza shop sector by improving access to finance, supporting the adoption of digital payments, strengthening integration into broader business ecosystems and value chains, and contributing to township economic growth, job creation and broader economic transformation,” she stated.

For retailers that have historically operated almost entirely in cash, those changes could reshape how they do business.

The Small Enterprise Development Finance Agency (SEDFA), the government’s small business funding agency, has already begun equipping qualifying spaza shops with modern PoS devices that do far more than process card payments. They enable barcode inventory tracking, real-time stock management, automated sales reporting, digital ordering and business analytics that help owners understand which products generate profits and which quietly erode margins.

“Technology is expected to play a transformative role in the future of South Africa’s spaza economy by improving competitiveness, operational efficiency, financial inclusion and long-term sustainability,” noted Ndabeni-Abrahams.

The digital records generated by those systems also create something many informal retailers have never had before: a verifiable transaction history. Rather than relying solely on collateral, fintech lenders can use merchant sales data and cash-flow analytics to assess creditworthiness, giving small retailers better access to working capital.

“Digital tools can improve stock control, reduce losses, support better purchasing decisions and create transaction histories that strengthen credit assessments, making it easier for businesses to access finance,” said Ndabeni-Abrahams. 

From policy to the shop floor

While the government sees digital infrastructure as a way to modernise township businesses, some spaza shop owners are already seeing the benefits of adopting tech.

Terry Gatsheni, who owns two convenience stores and a tavern in Thokoza, says technology has transformed the way he runs his business. His stores use touchscreen POS terminals to process sales, manage inventory, conduct stock-taking and curb theft.

“Before, you had to count everything by hand, and sometimes you’d only realise stock was missing when it was too late,” Gatsheni told TechCabal on Wednesday. “Now the system shows us what’s coming in, what’s going out, and what we need to reorder. It makes running the shop much easier.”

The technology has also made it easier to oversee multiple outlets without being physically present at each one. “When you have more than one shop, you can’t be everywhere at the same time,” he said. “The POS system helps me keep an eye on the business even when I’m not standing behind the counter. It gives me confidence that things are being managed properly.”

Data, not nationality, is the competitive edge

That view is shared by fintech company Lesaka Technologies, which argues that the public conversation has focused too heavily on ownership and not enough on what actually makes retailers commercially successful.

“I have spent my career serving the underserved, and what our data across more than 100,000 merchants shows and what I lived myself growing up in (rural) KwaZakhele, is that the most successful spaza is the one closest to its customer, priced for what the household can spend that day, open when people need it, and run by someone who knows their name,” Lesaka CEO Lincoln Mali told TechCabal in an interview on Monday. “That pattern holds regardless of size, location or who owns the shop.”

According to Mali, the competitive advantage enjoyed by many foreign-owned spaza shops had less to do with nationality than with operational efficiency, access to working capital and better use of data.

“Bulk-buying power isn’t magic,” he said. “It’s access to capital, supply and data, and that’s exactly the gap fintech should close for any operator, regardless of nationality or background.”

As foreign-owned businesses exit or suspend operations, many South African retailers are sourcing stock independently rather than through coordinated buying networks. Without the purchasing power that comes from bulk procurement, wholesalers offer fewer discounts, increasing costs that are ultimately passed on to consumers.

“The fastest fix for spazas is digitising payments and stock first, because that data is what unlocks credit and better supplier terms,” Mali said. “Technology gives any retailer better visibility, lower transaction costs and a path to credit, but it can’t fix a broken supply chain or replace affordable wholesale access on its own.”

Across Lesaka’s merchant network, he said, the strongest-performing retailers have one thing in common: they have moved beyond cash-only operations.

“Cash-only trading and manual stock records are the two biggest constraints we see. If you can’t see your margins, you can’t negotiate or borrow.”

Dr Nsununguli Mbonglwane, a Johannesburg-based entrepreneur, told TechCabal in an interview on Wednesday that the recent disruptions have also exposed how dependent township retail has become on coordinated informal supply chains.

Foreign-owned retailers often pooled their purchasing power to negotiate better wholesale prices, an advantage many independent shop owners struggle to replicate.

“They normally worked together to negotiate prices with wholesalers,” Mbonglwane said. “As a result, wholesalers usually gave them massive discounts, which allowed them to pass those lower prices on to their customers.”

With those buying networks disrupted, many local retailers are purchasing smaller volumes at higher prices, making it harder to keep goods affordable. “The low-income groups who normally benefited from those lower prices are the ones who are now feeling the impact,” he said.

For consumers, that impact is already being felt. In Cosmo City, Johannesburg, resident Lelo Mathe said her household budget has come under increasing pressure.

“The prices in some of these spaza shops have been steadily rising since the unrest,” she said. “I hope things stabilise because we’re not going to get any salary increases to match these prices.”

In Alexandra, resident Andrew Matjila said higher prices are only part of the problem. He said many shop owners are keeping less stock for fear of further unrest and looting, leaving shelves less well stocked than before.

“Prices have gone up, but the bigger problem is that many shops are no longer keeping as much stock because they’re worried about what might happen next,” Matjila told TechCabal. “People are scared of looting. Before, you could walk into the shop and find everything you needed. That’s no longer the case.”

As anti-immigrant tensions continue to reshape township retail, the future of South Africa’s spaza economy is unlikely to be determined solely by who stands behind the counter. It will depend on who has access to affordable finance, efficient supply chains and the digital tools needed to keep prices low, shelves stocked and small businesses competitive.

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