By Destiny Eseaga
The volume of leasing business in Nigeria crossed a trillion Naira mark.
Equipment Leasing Association of Nigeria, ELAN disclosed this in a report, which showed that the ‘outstanding lease volume’ increased from N189.9 billion in 2006 to N1.26 trillion in 2016. It also showed that finance lease remained the predominant type of leases, accounting for 70 percent of the transactions while operating lease accounted for 30 percent.
The ELAN report further revealed that the sector remained resilient in challenging times, financing assets worth over N6.9 trillion over the 10 year period.
According to ELAN the positive spark witnessed in the sector was a result of impactful visibility of leasing, awareness, high cost of asset acquisition, capital formation in the economy and wealth creation.
ELAN stated: “The industry continued to witness the banks as the lead players, particularly financing big ticket leases and providing funds to lessors for lease transactions. The non-bank lessors however accounted for about 80 percent of customer base, mainly from the Small and Medium Scale Enterprises (SMEs). Some capital market operators and other companies were attracted to the leasing industry to tap into the opportunities and as means of hedging against other non-performing product offerings. Also, vendors and service providers (telecom and oil) increased their participation in leasing industry.”
Corroborating the report, General Manager, Enterprise Asset Leasing Limited, Mr. Isaac Agenyi, said: “In the past, businesses traditionally spoke to the local bank manager and arranged for a business loan to purchase equipment.
“Restricted lending and restrictive lending practices in banks have made leasing the financing method preferred by all types of SMEs these days.
“Purchasing assets for your business can be expensive, but if your business is to grow and succeed, such purchases are a necessity. Whether it’s purchasing new vehicles, trucks, new plant, office equipment, computers or even furniture, purchasing equipment for a business can have a major impact on cash-flow or credit lines.”
Agenyi counselled that: “Leasing rather than outright purchase of equipment for your business offers many advantages. Leasing is a flexible, cost effective method of financing business equipment with the obvious advantage that the assets capital value is not required up front. If you have found that you require assets for your business but your bank simply will not lend you the money you need, then asset leasing could solve your problem.”