Officials administering South Africa’s R500 million Spaza Shop Support Fund identified suspicious applications before any money was paid out.
Deputy Director-General Qiniso Delwa told Parliament’s Portfolio Committee on Small Business Development that verification checks uncovered several discrepancies.
In some cases, the person applying for funding, the holder of the business licence and the person actually operating the shop were different individuals.
Other businesses could not be located at the addresses provided in applications.
Officials also found cases where businesses listed as spaza shops were not operating as such.
Delwa said all non-compliant applications were rejected before approval or payment.
Sixteen cases previously reported
The department had already informed the committee in March about 16 applications that raised concerns.
Delwa said the discrepancies were identified through the fund’s due diligence process.
The latest briefing formed part of Parliament’s examination of a Public Protector report concerning allegations that money from the Spaza Shop Support Fund had been paid to foreign nationals.
Parliament previously confirmed that the committee was scrutinising these allegations and the administration of the R500 million programme.
Possible fronting referred for investigation
The department has agreed to provide records involving suspected business fronting to the Broad-Based Black Economic Empowerment Commission.
The commission will determine whether any of the flagged arrangements meet the legal definition of fronting.
Delwa stressed that the broader spaza shop registration process is open to both South African and foreign-owned businesses.
However, financial assistance through the Spaza Shop Support Fund is reserved for qualifying South African citizens.
Government has previously described the initiative as a programme aimed at strengthening South African-owned spaza shops through financial and business support.
Fund remains under parliamentary scrutiny
The Spaza Shop Support Fund is implemented through the Small Enterprise Development and Finance Agency and the National Empowerment Fund.
Government says verification forms a key part of ensuring that money reaches its intended beneficiaries.
The parliamentary investigation is continuing as MPs examine whether the programme’s controls were strong enough to prevent abuse.
For now, officials maintain that the suspicious applications identified during verification were stopped before any funds were disbursed.