Somali traders

Why are foreign-run spaza shops more successful? The rapidly changing spaza sector in South Africa

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Rory Liedeman, Andrew Charman, Laurence Piper, Leif Petersen on 13 November 2013

This article examines the contrasting business models in the spaza shop sector, and compares foreign-run businesses with South African businesses. We argue that foreign shop keepers are more successful than South Africans because of the strength of their social networks, which provide them with access to labour and capital and enable collective purchasing and market domination. The article argues for a two-pronged policy that would formalise larger shops whilst permitting and encouraging informal micro and survivalist businesses.