IFC has agreed to provide a 170 million rand local currency ($10 million) loan to South African digital lender Lula Lend to support the country’s smaller businesses. The new financing aims to unlock working capital for thousands of micro, small, and medium-sized enterprises that struggle to access traditional credit. By backing Lula’s technology-driven model, IFC is reinforcing its strategy to promote inclusive private sector growth in South Africa.
Expanding Finance for South Africa’s MSMEs
MSMEs generate around 34 percent of South Africa’s GDP and about 60 percent of its jobs, yet only a small fraction of these businesses have access to formal credit. IFC’s loan to Lula is intended to address this gap by channeling much-needed working capital to firms that are typically underserved. At least 80 percent of the new funding is earmarked for micro and small businesses, which are often the most constrained.
Local Currency Structure Reduces Risk
The transaction is structured as a local currency loan in rand, equivalent to about $10 million. This approach helps reduce the currency mismatch risk many small businesses face when their revenues are in local currency but their obligations are in foreign currency. Greater access to rand-denominated funding is expected to support more stable and sustainable growth for domestic firms.
Lula’s Digital Model Targets Underserved Firms
Lula specializes in providing unsecured, fully digital loans to businesses that traditional banks frequently overlook. Many of these firms lack collateral or a formal credit history, which limits their ability to secure bank financing despite viable operations. Around 90 percent of Lula’s clients are first-time business borrowers, highlighting the lender’s role in expanding financial inclusion.
Fast Working Capital for Growing Businesses
The fintech uses proprietary credit-scoring algorithms and alternative data sources to assess risk and approve loans quickly. Lula can offer unsecured working capital loans of up to 5 million rand, often disbursing funds within 24 hours. This speed and flexibility are designed to help MSMEs manage cash flow, seize growth opportunities, and weather short-term shocks.
Leadership Emphasizes SME Empowerment
Lula’s CEO, Trevor Gosling, said the company’s mission is to empower every SME in South Africa to succeed and drive wider economic progress. He noted that the IFC partnership will allow Lula to extend more working capital to more SMEs, supporting their long-term resilience. Gosling emphasized that when small businesses thrive, both the economy and society advance.
IFC’s Perspective on Inclusive Growth
From IFC’s side, the transaction is seen as a way to leverage Lula’s digital model to widen financial access for small businesses. Ethiopis Tafara, IFC’s Vice President for Africa, said the partnership empowers entrepreneurs to create jobs and build a more resilient and inclusive economy. The deal fits within IFC’s broader effort to use innovative financial solutions to support private sector-led development.
Partnership Builds on Existing Relationship
IFC and Lula have been working together since 2019, reflecting a longstanding commitment to MSME-focused finance. The new loan deepens that relationship and aligns with IFC’s strategy to back digital lenders that can scale outreach efficiently. It also complements IFC’s wider support for South African financial institutions serving smaller enterprises.
IFC’s Wider Footprint in South Africa
Since 2018, IFC has invested and mobilized about $1.4 billion, nearly 25 billion rand, to support MSMEs in South Africa through local financial intermediaries. Over the past five years, IFC has committed more than $5.2 billion in the country, making South Africa its largest exposure in Africa and fifth largest globally. These flows underscore the importance IFC places on South Africa as a hub for regional growth.
Profiles of IFC and Lula
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. In fiscal year 2025, it committed a record $71.7 billion to private companies and financial institutions, mobilizing capital to help create a world free of poverty on a livable planet. Lula, founded in 2014 and headquartered in Cape Town, is a privately held, venture-backed fintech focused on digital business funding and banking solutions for MSMEs.
The 170 million rand loan to Lula marks a significant addition to South Africa’s MSME financing landscape. By combining local currency funding with a digital-first lending model, IFC and Lula aim to reach entrepreneurs who have historically been excluded from formal credit channels. If successful, the partnership could help strengthen small business growth, employment, and economic resilience across the country.