A spaza shop in Mzimhlophe, Soweto. Picture: SOWETAN
A spaza shop in Mzimhlophe, Soweto. Picture: SOWETAN

Recent research on foreign spaza shopkeepers in SA shows how intensely the market is misunderstood — not just by people on the street, but by academics studying the topic. This is illustrated by Prof Andries du Toit’s article (Informal workers are sometimes tantamount to bonded labour, February 29).

Based on research carried out by the Sustainable Livelihoods Foundation (SLF), Du Toit’s article is underscored by poor reasoning and scarce data, and casts foreign retailers in a damning light. It comprises a missed opportunity to understand alternative modes of work and economic upliftment in SA’s townships.

Du Toit states that his findings are based on “business censuses and interviews with 1,100 township grocery retailers” carried out by the SLF and the Institute for Poverty, Land and Agrarian Studies (PLAAS). Yet many of his findings are unsubstantiated. His assertion that “virtually all spazas we encountered were unregistered” does not seem supported by his data.

The research questionnaire in his report does not ask respondents if they are registered, or with whom. This is important to clarify as a 2011 study conducted in Motherwell in the Eastern Cape found that 74.5% of foreign traders surveyed were registered with Sars. Du Toit casts shops as operating outside the confines of the law, without asking them about it in the first place.

He believes that employers’ absence indicates that shops are not owned by small business owners, but by ‘larger, upstream wholesale business’

Du Toit argues that, unlike most SA spaza shopkeepers who have no option but to operate informally, foreign spaza shops tend to be in a position to formalise, but actively avoid regulation. He believes this is because foreign shops are usually larger in size, employ people, have “ties” to wholesalers (without explaining what that means), and supply credit to consumers. Although these findings may reflect a degree of business know-how, they do not clearly indicate that a business is in a position to formalise.

Between 2010 and 2013 I conducted interviews with 66 Somali shopkeepers and 65 township consumers about crime, access to justice, and shop practices. Respondents described credit offered as small allowances to enable close regular consumers to purchase food. They were not significant loans. A resident in Kraaifontein remarked that foreign traders offered such services “because they know what struggling is about”. 

Larger shop sizes also do not immediately equate to wealth. Shops may be larger in size, but the maintenance of broad product ranges often eats into profits. This is compounded by the overhead of paying high rent to SA landlords, and frequent criminal attacks.

While making broad assumptions on foreign traders’ financial positions and ability to formalise, Du Toit leaves out key information that directly relates to their ability to enter formal economies. This includes lack of access to bank accounts, language barriers, low levels of formal education, frequent relocations due to crime, and xenophobia from property letting agents.

Asylum seekers have it even harder. When I researched barriers to employment for this group, respondents described having to renew their permits every three months, and that their permits — printed on A4 sheets of paper — were often not recognised by institutions. One asylum seeker referred disparagingly to his permit as “the newspaper”. In light of these circumstances, many foreign spaza shopkeepers’ live under conditions of legal precarity and state-imposed informality.

Du Toit’s report also states that “where possible, the researchers sought to interview business owners”. It found that 45% of foreign traders stated that they were not shop owners but employees, with the “boss” or employer being absent. This sounded familiar to me. In 2013 I reported that Somali shop owners described that they often “pretended to be employees in order to avoid unwanted attention and claimed that the shop owner was in Bellville”.

Some shop owners that I encountered did report hiring an employee. In these instances, shop owners were more likely to fetch and procure stock, while employees would man the store. So, it is also possible that shop owners were away when researchers arrived, having left the shop under the charge of an employee.

But Du Toit gives traders’ responses a completely different and bizarre interpretation. He believes that employers’ absence indicates that shops are not owned by small business owners, but by “larger, upstream wholesale business”. There is no explanation in the report how the researchers came to this conclusion.

Lack of observation

Apart from the sometimes-absent employer, the only other evidence mentioned in the report was visiting wholesale outlets “to observe the business linkages first-hand”. Shop ownership arrangements cannot be gleaned from simply watching individuals transact at a wholesaler (especially non-English speakers), without any additional in-depth and corroborative interviews. As a result, Du Toit’s claims about ownership is just a hypothesis — one based on common stereotypes of migrant entrepreneurs as monopolistic and deceptive.

Du Toit also alleges that foreign spaza shops tend to exploit their workers. He states that employees worked long hours for meagre wages and slept in shops. He states that “More than half of those we interviewed reported working more than 15 hours per day, seven-days-a week”. But once again, the statement lacks any clear supportive evidence, as the study’s research questionnaire only asks “What time do you open and close?”.

Shop operating hours are not the same as working hours, as traders could be working in shift. The Somali Retailers Association stated as much in their response to an SLF article published in 2012.

Foreign spaza employees are, in many ways, distinct from typical SA retail workers, in that their condition is usually temporary, and they enjoy a significant degree of upward economic mobility

Du Toit does not discuss average shop incomes in his opinion piece, he only lists the very lowest income levels his researchers encountered. Furthermore, he ignores that “middleman minority” traders have, for centuries, frequently resided on shop premises — including Indian traders in SA at the turn of the 20th century. Such customs should be addressed with greater cultural awareness rather than crassly equated to exploitation.

In Du Toit’s piece he states that “In Cape Town, over half the Ethiopian respondents claimed to be repaying financial debts to their bosses for travel expenses to SA. In almost all cases, employers retained foreign employees’ passports.”

Du Toit concludes that the working conditions they encountered amount to “warning flags that people might be working as bonded labour” — a form of slavery. But he makes no effort to clarify that his sample of Ethiopian traders in Cape Town was 16 individuals out of a total of 498 foreign traders interviewed.

Thus, one could estimate that only nine out of 498 foreign respondents reported paying back financial debts to their bosses for travel expenses, and approximately eight individuals out of 498 reported that their boss had their passport.

This comprises a small minority of foreign shopkeepers interviewed, but no effort is made to put these encounters in perspective. Instead, Du Toit leaves impression that these are general practices among all foreign spaza shops nationally. He also does not consider the possibility that traders may have told researchers that their absent “boss” had their passports to evade being probed.

By offering only the worst and most alarming interpretations of his data, Du Toit misses out on the opportunity to learn from these businesses. Foreign spaza employees are, in many ways, distinct from typical SA retail workers, in that their condition is usually temporary, and they enjoy a significant degree of upward economic mobility.

Hassan’s recent study of 10 formal Somali business owners in Cape Town found that their businesses collectively employed more than 200 people. Interestingly, nine out of the 10 respondents began their careers in SA as hawkers in the informal sector. This illustrates not only the potential contributions of foreign informal enterprises, but also lessons that could be learnt from these businesses if researchers are prepared to approach them with an open mind and study them objectively.

• Dr Gastrow is a post-doctoral research fellow in the department of public law at the University of Cape Town.