Foreign-owned spaza shops linked to R6.3 billion, illicit financial flow in South Africa

Ask AI 5 min The report exposes how informal businesses are being used for hidden financial flows.

Image: Oupa Mokoena / Independent Newspapers

Foreign-owned spaza shops are allegedly being used as channels for illicit financial activities in South Africa.

This is according to the report titled “The Nature of Stealthy Remittance in South Africa” (Insights from SADC immigrants operating in Tshwane’s informal economy), which revealed that an estimated R6.3 billion generated by these spaza shops was illegally moved out of the country.

The money is being transferred through unregistered SIM cards and informal cash networks.

These unmonitored money flows contributed to South Africa’s grey listing due to poor systems for tracking money laundering and terrorist financing.

The funds reportedly reached terrorist cells, including Islamic State (IS) affiliates, operating across Kenya, Somalia, Nigeria and Mozambique.