Keith Hart (quoted in Hansen & Vaa 2004: 19) argues that informal trading is ‘nothing less than the self-organised energies of people, biding their time to escape from the strictures of state rule’. However, the state's attention to the sector has been growing, in contexts of increasing competition for urban space or economic opportunity that call for regulation. Whilst repressive approaches to the informal sector are still dominant throughout the world (Benit-Gbaffou 2018), in tandem with moments of laissez-faire, attempts to find pragmatic modes of regulation are on the rise in the face of the permanence of informal economies in cities faced by chronic unemployment. The governance of markets (with their potential high profits) and street trading (with its high visibility in dense urban centres) has received ample attention in policy as well as in literature. But the regulation of spaza shops (informal convenience stores at the neighbourhood level) remains a relatively new policy and academic terrain. For a long time, arguably, these house-shops did not attract the state's gaze and were left unregulated. However, the issue is rising in contemporary South African public and academic debate, as spaza shops are often at the core of xenophobic violence at the local level (Charman & Piper 2012; Demeestére 2016).

Literature on the governance of informal activities (Bayat 1997; Lindell 2008) generally focuses on the two-way relationship between the state and traders, neglecting the role of the local community in this engagement. Lindell (2008: 1885), however, defines urban governance as ‘encompass[ing] a range of actors, multiple sites, various layers of relations, a broad range of activities or practices aimed at steering [the] economy and society, involving various modes of power, as well as different scales’. In this chapter, we investigate the role of the community in the local governance of spaza shops. After a brief overview of informal trading and its regulation in South African cities, we unpack Yeoville community leaders’ narratives of the development of spaza shops in the neighbourhood – where repressive municipal intervention led to the attempted set-up of community-based governance of spaza shops. We then explore why this governance model did not work in the neighbourhood.