SME business funding expands as Ozow and Lula partner to support South African businesses
By Larry Claasen
OZOW, a payments provider has partnered with financial services firm Lula to create a business funding offering specifically for SMEs.
The new initiative will enable business loan applications to be assessed by Lula and Ozow through their platform, and enables them to get up to R5 million in funding.
The launch of the new offering came soon after a research report by think tank TIPS found that there was a significant financial gap in SME financing, with both private banks and public lending institutions, including development finance institutions, unable to meet the demand.
The report said bank lending to SMEs was notably lower than lending to large enterprises and consumer bank clients. It also noted that funding from the Industrial Development Corporation has decreased by 61%, from approximately R3 billion (constant rands) in 2016 to around R1 billion (constant rands) in 2023.
For its part, the Small Enterprise Finance Agency (SEFA) has seen a decline in SME funding since reaching its peak in 2022, noted the TIPS report.
The arrangement between Ozow and Lula, however, showed that there were players in the space looking to change this dynamic. Co-branded as the Ozow-Lula digital interface, the collaboration reflects a broader trend in the fintech sector, where payments platforms are increasingly extending their role to support the operational and financial needs of businesses.
Cape Town-based Lula specialises in providing digital business funding and banking solutions to SMEs by leveraging its proprietary credit-scoring algorithms and alternative data sources.
For its part, Ozow provides secure payment solutions and links businesses with 47 million bank account holders in South Africa. Ozow’s deal with Lula now sees it expand its offering beyond providing payment services for merchants, says Ozow interim CEO Rachel Cowan.
“Our focus has always been on empowering businesses and giving them the tools to thrive in the digital economy. Through this partnership with Lula, we are extending that role by improving access to funding for our merchants through a channel they already use and trust.”
Through the partnership, Ozow merchants will be able to access Lula’s funding services directly, without needing to go through multiple platforms or application processes.
The integration is designed to make it easier to access funding, and also to improve the visibility of relevant funding options for businesses already active within Ozow’s ecosystem.
Because the merchants already have a transacting history with Ozow, they will be able to see how much funding they could qualify for on their Ozow Merchant Portal, before even completing their application. This means that Lula will have an existing channel that will be able to deliver qualified businesses to their platform.
David Winter, SVP: business development at Lula, said the partnership aligns with the lender’s approach to expanding access to funding through embedded distribution channels.
“Lula’s approach has always been to meet businesses where they are. “By partnering with Ozow, we are able to extend our reach to a large and active base of SMEs that are already participating in the digital economy.”
He added: “This collaboration enables us to provide funding solutions in a way that is both accessible and aligned with how these businesses operate on a day-to-day basis.”
The announcement comes as fintech partnerships increasingly focus on ecosystem expansion, with companies embedding complementary financial services into existing platforms to create more seamless user experiences and ultimately deliver more value.
For Ozow, the partnership builds on a series of recent collaborations aimed at strengthening its broader merchant value proposition.
