At a Glance
- IFC lends $10 million to Lula Lend to boost SME access to credit.
- Funding targets micro and small firms lacking steady credit.
- Digital loans expand financial access, driving jobs and growth.
South Africa’s economy is set for a fresh boost as the International Finance Corporation (IFC), part of the World Bank Group, provides a R170 million ($10 million) local-currency loan to Lula Lend, one of the country’s leading fintech lenders for small and medium-sized enterprises.
The new funding aims to widen access to working capital for thousands of small businesses that make up the core of South Africa’s private sector. According to the IFC, about 80% of the financing will go to micro and small firms, the segment most affected by limited credit access.
Small and medium-sized enterprises contribute roughly one-third of South Africa’s gross domestic product and employ about 60% of its workforce. Yet only about 5% of registered small firms have steady access to credit.
Digital loans open new opportunities
“Supporting small businesses isn’t just about funding, it’s about enabling growth,” said Trevor Gosling, co-founder and chief executive of Lula. “This partnership allows us to reach entrepreneurs who are often turned away by traditional lenders.”
Founded in 2014, the Cape Town–based company, formerly known as Lulalend offers unsecured digital loans to businesses without formal credit records. Nearly 90% of Lula’s customers are first-time borrowers, reflecting its growing role in financial inclusion.
Ethiopis Tafara, IFC vice president for Africa, said the collaboration would help small firms recover and hire more workers. “When entrepreneurs gain reliable access to capital, they build stronger businesses that support families and local economies,” Tafara said.
Global support for South Africa’s private sector
The new investment builds on a partnership that began in 2019 and forms part of IFC’s broader effort to strengthen South Africa’s private sector and reduce poverty through small-business financing.
Since 2018, IFC has invested and mobilized nearly 25 billion rand ($1.4 billion) through local financial institutions to support small firms.
Over the past five years, IFC’s total commitments in South Africa have exceeded $5.2 billion, making it the organization’s largest portfolio in Africa and its fifth-largest globally.
As international lenders step up efforts to bolster African economies, partnerships like the one between IFC and Lula Lend highlight how digital finance is helping small businesses grow from the ground up one loan at a time.
