South Africa’s manufacturing sector contributes close to 11% of the country’s GDP^[1] and was one of only three industries to add jobs in the first quarter of 2026^[2], yet output has contracted for two consecutive quarters^[3]. The small to medium enterprises (SMEs) working to modernise out of the current slump struggle to access the manufacturing finance they need to put smart technology on the factory floor – and for many, that gap is widening, not closing.

Manufacturing finance provider Lula product manager Koreshini Pillay addressed the funding reality of Industry 4.0 at Manufacturing Indaba in July.

“Manufacturing SMEs start conversations about smart manufacturing by focusing on the technology,” she said. “Every system upgrade, sensor and traceability platform carries an upfront cost, with returns months down the line. The question facing the market is what it costs to modernise, and who funds this transition. Most are pointed to [the] IDC [Industrial Development Corporation] for expansion or SEFA [ Small Enterprise Finance Agency] for guarantees, but neither solves it: costs land now, revenue only arrives months later. Manufacturers need manufacturing finance that gets the right technology into production at the right time, underwritten against real transaction data, so working capital can be structured around the production floor.”

Conducted in January 2026, the News24 x Lula Small Business Survey of 1 088 SME owners^[4] found that more than two in three South African businesses use AI daily or are experimenting with it, and more than eight in ten are confident about growth in 2026. Manufacturing SMEs are active participants, prioritising production-line modernisation as clients demand digital compliance and traceability.

Timing compounds the pressure. July is when manufacturers close off H1 and commit capital to H2 production runs and inventory for the final quarter. The production cycle runs ahead of the sales cycle, so the bill for sensors, retrofits, software and skills lands months before the revenue it is meant to generate. Delaying that spend costs contract eligibility, margin and ground to competitors who modernise first.

This is the gap Lula’s Cash Flow Facility closes. Manufacturers can apply online in minutes, access up to R5-million within as little as 24 hours, and draw down and repay repeatedly without reapplying (subject to an affordability assessment), so capital is available exactly when a new order or upgrade demands it. Repayments are fixed and transparent, with no early penalties, and approval is based on real-time trading, not last year’s balance sheet.

“Traditional banks love to look at last year’s spreadsheets and historical financials, but that’s just not how a factory actually runs,” says Lula Chief Credit and Capital Officer Garth Rossiter. “If a business owner is spending cash on raw materials in July but won’t see any revenue until November, they need funding that understands that gap. Modernising your operations isn't optional anymore - it’s survival. The manufacturers who win are the ones finding finance partners that match the real-world rhythm of their trade.”

Lula has funded more than 3 300 manufacturing businesses, disbursing over R3-billion in advances at an average of R203 000 per manufacturer - 18% above the cross-sector average - making manufacturing its second-largest sector by disbursed value. South Africa’s industrial competitiveness depends on SMEs funding that transition on their own terms. Manufacturers ready to close that gap can apply for Lula’s Cash Flow Facility at lula.co.za/manufacturing-finance/.

By Koreshini Pillay, product manager at Lula. She oversees customer engagement and end-to-end product experience across frontend and backend systems.

Garth Rossiter, Chief Credit and Capital Officer at Lula, oversees credit risk and financial analysis, supporting the company's mission to give small businesses accessible funding.

^{[1] https://www.statssa.gov.za/publications/P0441/GDP%202026%20Q1%20(Media%20presentation).pdf}

^{[2] https://www.statssa.gov.za/publications/P0211/Media%20Release%20QLFS%20Q1%202026.pdf}

^{[3] https://www.statssa.gov.za/publications/P0441/P04411stQuarter2026.pdf}

^{[4] https://content.lula.co.za/whitepaper/News24_Lula_Small_Business_Survey_report_April_2026.pdf}