Spaza Market Development Project
Wed, 11 November 2009
“This training is valuable; training is not what I only get from the facilitators, but also from other participants by sharing our experiences and knowledge. What I have learn(t) most is: Costing and pricing is vital for any type of business as it is a foundation for its growth and The importance of the indirect cost “hidden costs” we only use the wholesale cost price and add to price only to find out that our businesses are going nowhere”
REPORT 1: Triple Trust providing business support, networking, training and joint buying opportunities to Spaza shop owners
The Triple Trust Organisation (TTO) provides informal sector enterprises in Cape Town with assistance in business and market development. The Spaza Market Development Project was designed to strengthen already existing markets within impoverished areas and to increase Spaza shops’ buying power. There are roughly 14,200 Spaza shops in Cape Town. They are small convenience stores, which operate mostly out of shop-owners’ homes or backyards, provide a vital service to people living in under-resourced communities. By giving Spaza-owners access to supply-chains, networks and business support services, the Triple Trust Organisation aims to improve the lives of both Spaza shop owners and customers.
Funding was specifically granted to provide business skills training for 200 Spaza shop owners over a 12 month period and to build up the Spaza and House-shop Owners Partnership Network (Shop-Net) programme. Established in 2004, Shop-Net empowers shop-owners to act as a collective and provides business support, group buying opportunities, special links to wholesalers and capacity-building training. It specifically targets Spaza shop owners in the historically disadvantaged areas of Khayelitsha, Mitchells Plain, Manenberg, Delft, Langa and Elsies River.
The project timeline is 12 months, from January to December 2009.
Outputs and impact
The first phase of the project was set aside for preparatory activities including purchasing audio visual equipment, finalising training materials, securing venues for training and developing new marketing materials to promote Shop-Net and aid in the recruitment of new members. The project is thus far on-track with the completion of most of these preparatory activities. Upon the completion of this phase, the project will progress to a full-scale business skills training programme.
Planned activities and status
Purchase of visual aid equipment for fieldworkers (4 laptop computers and 1 projector) - A total of 5 laptop computers were purchased. A special discounted rate allowed for the purchase of an additional laptop within the given budget. The data projector was only purchased in July and will thus be reflected in the next report. The laptops and projector will be used by the fieldworkers giving presentations to recruit new Spaza owners for Shop-Net and to facilitate electronic orders. The laptops also allow fieldworkers to assist Shop-owners with account queries during site visits.
Securing of venues for training - A total of 7 Training venues have been secured for the duration of the project.
Finalisation of training materials – This is an ongoing process. The remaining amount will be spent on further improvements to the materials as the need arises.
Shop-Net recruitment strategy and training - The final design for marketing materials is complete. These include a Recruitment Package with Shop-Net brochures, Business Record Keeping Aid and Pricelists. Only one quotation for printing these materials has been received. 17 new members have joined Shop-Net who were recruited through door-to-door visits, advertisements in local newspapers and referrals from existing members. As part of the preparatory activities, 10 Spaza owners have completed the full course on business skills and have received certificates. The training course consists of four modules covering topics such as Costing and Pricing; Business Management; Business Health Check; Customer and Shop-Net Systems.
Promotion of voluntary buying group –The number of transactions by the Voluntary Buying Group through the Shop-Net bulk-buying system has been quite stable. The system co-ordinates the delivery of stock to a Spaza shop owner’s place of business at the best possible price. So far 1180 repeat orders by Spaza shop owners have been recorded through the Shop-Net system
Impact
Spaza shops often face closure due to slow growth. This is usually the result of poor record-keeping and pricing models and is not related to the market demand.
As a result of attending the course, Spaza show owners have changed the way they manage their businesses. They are now able the price their product by considering market influences and cost, and as many as 80% have indicated their readiness to take responsible loans and grow their businesses. To this end the TTO invited representatives of the Umsobomvu Youth Fund and arranged one-on-one discussions were arranged for participants interested in taking such loans. As a result of improved networking, seven participating owners formed a club (the Thyatanga Club) that operates like a stokvel group.
Expenditure
Project implementation was originally scheduled to start in October 2008. However, the first tranche was only paid in April 2009 due to delays with the processing of funding. New dates were agreed to, though the original budget and action plan remained unchanged. Project activities started as planned in January 2009.
The total cost of the project is R 437, 642 of which R 210, 221 has already been paid. The remaining R 227, 421 will be paid in two tranches of R 113, 710.
The table below shows the expenditure based on the first tranche payment only.
| Description | Amount paid (1st tranche payment) | Actual Expenses (1st Tranche) | Under-spent / Over-spent (amount remaining) |
| Preparatory activities | - | - | - |
| Securing of venues | - | - | - |
| Source and purchase notebooks | 40 000 | 39 942 | 58 |
| Source and purchase data projector | 10 000 | - | 10 000 |
| Review marketing materials | 35 000 | 21 390 | 13 610 |
| Finalization of training materials | 20 000 | 16 125 | 3 875 |
| Training activities | - | - | - |
| Prepare for training | - | - | - |
| Conduct training, recruitment, servicing existing members and client follow-up | 68 100 | 3 600 | 64 500 |
| Training materials | 4 500 | - | 4 500 |
| Preparation of training reports | - | - | - |
| Venue hire | 4 800 | - | 4 800 |
| Travel | 11 250 | 2 150 | 9 100 |
| Catering | 3 000 | - | 3 000 |
| Administration | 13 571 | 3 750 | 9 821 |
| TOTAL | 210 221 | 86 957 | 123 264 |
Note: all items under training activities are ongoing throughout the duration of project.
Challenges
Poor time-management by participants negatively effects attendance. Most participants have never taken part in any similar training programmes, and so struggle to organise their daily tasks around the training. Training schedules thus require a great deal of flexibility in order to accommodate the participants. Time-management has been included as a discussion point during the training sessions and is emphasised as one of the ground rules set out at the beginning of each session. Certificates are only issued when the full course (4 modules) is completed and all practical work is done.
The impact of competition from foreign traders is significant as they have better “retail” business skills. The project has adopted a stronger focus on the Voluntary Buying Group and on-site support visits to also improve the levels of skills of the local traders.
Low attendance at information sessions for Shop-Net prompted a review of the recruitment strategy. In order to increase the number of Spaza shop owners attending the information sessions, the recruitment plan was reviewed. Changes include engaging trainers to play an active role in the recruitment (which is already starting to show positive results), employing a freelance recruiter (who is paid R10 per participant recruited), establishing links with local community structures and designing a recruitment package. Fees paid to freelance recruiter will be covered as part of the planned recruitment and training costs.
Monitoring and evaluation
Training Reports are compiled after each workshop. In addition, measurement of growth in the number of orders per shop and the retention of Shop-Net members will be reflected in future reports. The application of the monitoring toolkit will start on 3 August 2009
Conclusions and analysis
All of the preparatory activities have been concluded. The next phase of the project will focus on the delivery of training workshops to a greater number of Spaza shop owners. The initial training has proved useful for the projects’ participants and a further 180 Spaza shop owners will receive training over the course of the project.
