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Spazas give the young a street-smart start

| Economic factors

Spaza shops have in recent times attracted a negative light following xenophobic violence and attacks on foreigners, particularly Pakistanis and Somalis, in townships around the country.

Long considered the backbone of township economies in SA and a mainstay in the community, the spaza shop business model has been adopted — some would even say perfected — by foreigners, much to the chagrin of former and current operators.

But a bottling company is to breathe new life into spaza shops through a development programme in which 22 youngsters will hone their entrepreneurial skills, using the township business model as a springboard.

Amalgamated Beverages Industries (ABI), Africa’s largest bottler of Coca-Cola products, has teamed up with the Free State provincial government on the R8m programme, contributing R5m and R3m respectively.

The project could not have come at a more fortuitous time for its hopefuls, since the Free State provides one of the lowest contributions to gross domestic product and has one of the highest unemployment rates in the country, with more than 40% of its 15-to 34-year-olds out of work, according to Statistics SA figures.

Economist Karen Heese, of Municipal IQ, says the province’s municipal finances are under strain because of declining mining activity in Matjhabeng — whose economy depends heavily on gold — among others.

Matjhabeng, which forms part of the Lejweleputswa district, the most densely populated region in the Free State, has also not escaped presidential attention — owing to its declining economy as a result of mine closures.

In July, ABI sent out a recruitment call to 24-to 30-year-olds interested in taking part in the programme, and 2,000 from Thabong, Kutlwanong and Meloding responded. They were assessed on numeracy, literacy, English and business competence, after which they were cut down to 66 — of whom 34% are women.

That number will eventually be reduced to 22.

The 66 candidates will take part in a week-long boot camp in two weeks’ time, involving exercises in practical selling, business pitching and marketing.

The final 22 will be chosen in the middle of next month.

Those who make the final cut will operate spaza shops stocked with R70,000 worth of goods, said ABI corporate affairs director Tshidi Ramogase.

Through its Bizniz in a Box initiative, ABI will not only become a conduit to the formal economy for the 22 young people, the programme will enable the soft drinks arm of Africa’s largest brewery company — SABMiller — to expand its footprint in the high-growth township market.

"We believe strongly in initiatives that deliver a win-win benefit for both business and communities within the company’s value chain. This ensures business commitment and the sustainability of our initiatives," Ms Ramogase says.

In addition to wholesales, ABI generates up to 40% of its revenue from townships.

Once the spazas begin making a profit, the candidates will be required to pay back the loan, and the proceeds will be used to roll out the project in KwaZulu-Natal and Gauteng townships.

ABI will also give the candidates a 6% discount when restocking their spazas.

The company runs a similar project in Kenya, where it has partnered with Microsoft to create a social hub where young people are trained in ICT and e-commerce.

There are eight such hubs in that country, one of which has created 80 work opportunities.

"Eventually, we will roll out the social hub pilot in SA, although the low levels of computer literacy among our youth will be a challenge," Ms Ramogase said.

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