By Itohan Abara-Laserian
Stakeholders in the equipment leasing ecosystem, have said leasing subsector is capable of making huge contributions to the growth of the country’s economy .
They said this at the 21st National Lease Conference on Thursday in Lagos.
The News Agency of Nigeria (NAN) reports that the conference had the theme:” Propelling Economic Recovery and Growth: the Leasing Initiative”.
Mrs Ngozi Ehigiamusoe, Chairman of Equipment Leasing Association of Nigeria (ELAN), said that in spite of the obvious challenges around leasing, the sector contributed about N3.1 trillion to the economy.
“No doubt, equipment leasing is very key to achieving the government’s economic agenda with direct bearing on all the eight priority areas.
“As a financing alternative, leasing is unique as it facilitates easy and convenient access to equipment needed for productive purposes, contributing to capital formation in the economy.
“Leasing reaches out and meets the diverse equipment needs of various categories of customers, be it large corporate organisations or small venture owners, providing them with affordable and quality services tailored to their needs.
“The overall essence of leasing is to enhance the planning, improvement and development of any economy by building and supporting productive ventures”, she said.
She added that globally, equipment leasing had over the years served as creative financing alternative, generating a new business volume of over 1.5 trillion annually dollars in new leases and accounting for 20 per cent of total investment in equipment, contributing about 1.5 per cent to global GDP.
“The beauty of leasing lies in the fact that it delivers a multiplicity of benefits to those who choose to lease.
“It helps all types and sizes of businesses to conveniently acquire the much-needed equipment to conduct their business operations and make profit.
“Governments are also utilising leasing in their developmental initiatives. The leasing industry supports investments in key sectors of the economy in many developing countries including, Egypt, South Africa, Morocco, Algeria, Ghana and Zambia.”she said.
She noted that since inception in Nigeria, leasing had been supporting economic development.
“Today, the impact of leasing is pronounced in all sectors of the economy, enhancing capital formation, generating employment and creating wealth.
“Outstanding leases in Nigeria in 2022 amounted to N3.18 trillion as against N2.58 trillion in 2021 representing 23.2 per cent growth.
“In the last decade, leasing contribution to capital formation in the economy is in excess of N16.3 trillion.
“Leasing is becoming more relevant in our prevailing economic situation, especially to MSMEs given the high cost of assets,” she said.
Ehigiamusoe ,while saying equipment leasing is cheaper and more flexible than hire purchase,urged government at all levels to utilise leasing in their various development initiatives.
Also speaking at the conference, Engr. Saidu Njidda, Chairman/Chief Executive Officer, Equipment Leasing Registration Authority (ELRA) said that the conference was timely as it was looking at ways to propel economic growth and recovery through leasing .
According to him,equipment leasing is an option to loan being used by countries to address some of their development problems .
He said: “We have to educate people to use leasing as an option. You know, part of the eight-point agenda of President Bola Tinubu administration is to enable Nigerians have access to capital ,and leasing is a very good way of accessing capital
“The legal process of leasing is the offer and acceptance and consideration.It is like any other contract, only that in leasing you have an opportunity of tenure like a loan.
“Basically, the legal consideration is offer, acceptance and consideration, like in all contract.”
Mr Taiye Emagha, Managing Director/Chief Executive Officer, Lecon Financial Services Ltd., identified default as a major challenge in the sub sector.
Emagha listed the others as high operating expenses, high cost of spare parts , high insurance cost.
He said equipment leasing was a better option than consumer loans and outright purchase of needed equipment .
Present at the event were representatives from IFC, Nigeria Sinotrucks, Coscharis Mobility Ltd. and others in the leasing space. (NAN)
Edited by Bolaji Buhari