UCT study challenges ‘foreign takeover’ claims, shows trust drives spaza shop success in Soweto
Study shows Somali traders thrive through cooperative trust systems while South African owners face fragmentation and insecurity.
A doctoral study by the University of Cape Town’s (UCT) Lwazi Ncoliwe has reframed the long-running public debate on township spaza shops.
Rather than treating the sector as a story of foreign takeover or state failure, the study argues that what distinguishes business survival is not the owner’s nationality, but the presence or absence of trust among owners, between owners and customers, and between traders and institutions meant to support them.
The study is titled “The experiences of South African and Somali Spaza shop owners operating in Orlando West, Soweto: Lessons for local entrepreneurship in economically deprived areas”.
Over seven months, Ncoliwe immersed himself in Orlando West through observations and semi-structured interviews with 10 spaza owners – five South African, five Somali – plus six local customers and four wholesalers. Stock-purchasing trips to suppliers revealed ethnically divergent procurement logics which surveys often miss: Somalis buying in bulk through networks, South African owners arriving solo at smaller margins.
Ncoliwe, who will graduate with a PhD in Management Studies on Wednesday, 9 September 2026, found that insecurity in spaza shops is rooted in a broader crisis of state failure affecting both South African and migrant owners.
“The question many South Africans have been asking about township spaza shops – why foreigners are taking over – is built on the wrong premise,” said Ncoliwe.
“My research is more nuanced than a story of displacement: it shows how trust becomes a business’s operating system, and how its absence, particularly among many South African-owned shops, results in a far more fragile form of survival.”
Previous research has attributed Somali shop owners’ success to ethnic-based social capital, including bulk purchasing and informal lending among fellow traders. Ncoliwe’s study confirms these practices but argues their success extends beyond existing scholarship.
As one Somali shop owner explained: “We do not see each other as competitors, but as partners. When one of us wants to open a new shop, the group offers advice and, in some cases, even stock.” However, the study found that this culture of trust extends beyond business relationships and does not stop at the shop counter. During periods of unrest, residents in Orlando West physically defended Somali-owned shops, viewing the owners as neighbours first and foreigners second. Ncoliwe described this outward-facing trust as “ubuntu solidarity under shared precarity” – a form of community protection emerging without effective state protection.
His study argues the Somali shop owners’ success is rooted in strong ethnic networks and broader relationships of trust built within the communities they serve. The most uncomfortable finding in the study concerns South African owners. Where Somalis operate as partners, calling one another when prices change and pooling stock through trips to wholesalers, South African owners were found to operate in a fragmented landscape marked by jealousy, secrecy and what the thesis termed a “culture of suspicion”.
The thesis identified a paradox in this finding: rather than fostering solidarity, South African owners’ shared identity as Black South Africans with the local community fostered jealousy and distrust.
This was one of the study's counterintuitive results: identity alone does not guarantee cooperation. Ncoliwe argues that policy calling on South African owners to work together is insufficient, because it does not address the systemic and social barriers incentivising individualistic survival strategies.
The thesis documented structural failures that shape every shop in Orlando West: licensing delays, food-safety absence, unreadable labels, missing expiry dates, and poor storage; and loadshedding of 6–8 hours a day, forcing closure or halts to refrigerated sales because alternative power was unaffordable.
The thesis states these failures are one layer of balanced marginalisation, not the whole phenomenon. South African owners are pushed to the margins by financial exclusion, fragmented practice and the absence of state-built cooperative infrastructure. Somali owners are pushed to the margins through exclusion from financial protection despite living and working in South Africa for many years, and elevated physical risk. Xenophobia intensifies this asymmetry, but the thesis argues it is a symptom of deeper structural absence – not its cause.
Ncoliwe’s policy message is not to absolve the government – only to understand its absence as one component of the picture, not the whole diagnosis. “Policymakers must move beyond economic analyses that treat spaza shops as homogenous survivalist units.”
He said owners operate within three logics: collectivist ethnic-cooperative, individualistic survivalist and embedded community-care; and any policy anchored to one model will underserve others.
“Importantly, government is not neutral in this sector: its absence is producing the insecurity its presence could prevent. The findings require a shift in policy design.”
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