WELCOME ADDRESS BY DR. OLUTOYIN OKEOWO, CHAIRMAN, BOARD OF DIRECTORS, EQUIPMENT LEASING ASSOCIATION OF NIGERIA (ELAN), AT THE 19TH ANNUAL NATIONAL LEASE CONFERENCE HELD ON TUESDAY, 16th NOVEMBER 2021 AT SHERATON HOTEL AND TOWERS, IKEJA LAGOS
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Distinguished Guests of Honour and Special Guests
Esteemed Guest Speakers and Panellists
Directors of ELAN
Past Chairmen and other past Directors of ELAN
Members of ELAN
Gentlemen of the Press
Ladies and Gentlemen,
It is my honour to welcome you, on behalf of the Equipment Leasing Association of Nigeria (ELAN), to the 19th Annual National Lease Conference organised by the Association. I am particularly pleased and grateful to God that we have the opportunity to meet again physically this year, after the restrictions due to the covid 19 pandemic.
I am most delighted to welcome the Guests of Honour, Special Guests, esteemed Guest Speakers/Panellists and other dignitaries. We are pleased to have Magan Jugurnauth as one of our Guest Speakers and he shall be joining us from Canada together with other special guests from across the globe. We express our sincere gratitude to you all for creating time to honour our invitation in spite of your very busy schedules.
Every year, stakeholders in the leasing industry gather at the National Lease Conference to discuss pertinent and contemporary issues that affect the development of the leasing industry and the economy. As the biggest gathering of stakeholders, the National Lease conference remains a veritable platform for propagating the ideals of leasing and engagements, to propel the development of the leasing industry and the national economy.
This year’s conference with the theme – Emerging from the Covid 19 pandemic: Leasing and the Nigerian Economy, is coming on the heels of the scourge of the pandemic that ravaged the world and continues to impact the global socio-economic development.
Indeed, the global pandemic has not only claimed over 5 million lives globally, but also caused economic crisis. The lock down of over two- third of the world’ economy stretched the global economy to near total collapse, to the extent that many businesses were pushed into liquidation and countries entered into forced recession, leaving lasting scars through lower investments, erosion of human capital occasioned by job losses, as well as fragmentation of global trade and supply linkages.
The global response to the disruption, has seen several countries providing large-scale macroeconomic support to alleviate the economic blow, which contributed to stabilisation in financial markets. In Nigeria, the Central Bank of Nigeria (CBN) is at the vanguard of Government’s efforts to ameliorate the adverse impact on key economic variables, taking a number of measures to mitigate the long-term effects on the growth prospects of the economy. These include cutting policy rates, supporting households that have been severely affected by the pandemic and targeted interventions to support critical sectors, such as agriculture, manufacturing, energy, and health. Cumulatively, according to the CBN, the bank’s intervention efforts represented about 3.5% of the GDP.
The Federal Government continues to anchor its policies on the recovering of the economy, as the country emerges from the pandemic. The 2022 budget of N16.39tn for instance, funded by debt, is expected to help the economy further its course towards full economic recovery after an escape from recession in the fourth quarter of 2020. Government intends to invest more in infrastructure, human capital development and specific strategic projects. Government expects the proposed spending programme to stimulate the country’s aggregate performance.
Already, with the relaxation of restrictions, the economy has come alive again and there have been dotted gains as Nigeria’s economy wiggled itself out of recession in Q4 2020 and achieving GDP growth of 5.01 percent year-on-year recorded in Q2 2021. Experts predict that Nigeria’s economy will grow by 2.6 percent in 2021 and inch slightly to 2.7 percent in 2022, driven by recovery in non-oil sectors and higher oil prices, though there is high uncertainty about the outlook. Generally, the recovery will depend on the path of the global pandemic and the regional vaccination effort, and is also vulnerable to disruptions in global activity.
However, it is imperative to continue to ensure policy initiatives for economic recovery and take the economy out of the woods. This will require a big push in capital formation to fill the wide financing gaps in various sectors of the economy and this is where equipment leasing is very relevant. Globally, as a creative financing alternative, leasing has been facilitating easy and convenient access to capital equipment, with an estimated total annual lease volume of $1.5 trillion, accounting for 20% of total investment in equipment and contributing about 1.5% to GDP. The whole essence of leasing is to enhance the planning, improvement and development of any economy by building and supporting productive ventures.
Since inception in Nigeria, leasing has 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. The industry remains resilient, maintaining its growth trajectory notwithstanding the prevailing challenging environment. Recent statistics, show that new business volume grew by 4.3 percent at N2.01trillion in 2020, from outstanding lease volume of N1.91trillion in 2019. The industry’s contribution in the past ten years is over of N12trillion and leasing is becoming more relevant in our prevailing economic situation with the incessant rise in prices, which makes outright purchase of productive assets increasingly difficult, especially to the Small and Medium Scale Enterprises (SMEs).
Indeed, leasing can play a major role in driving the developmental agenda of government at all levels. Many countries across the globe have been utilising leasing in this regard, especially in this challenging time. For instance, recently the Indian Government under its National Monetisation Pipeline Approach, is leasing out specific national assets to private investors for four years, projected to generate US$81billion. The fund raised from the project will be channelled to boosting public finances battered by the pandemic and fund new infrastructure. I therefore call on Government both federal and state, to take a cue from this in its quest for more revenue and infrastructure development, in addition to embracing leasing for the overall improvement of the economy.
While the opportunities the economy present for the leasing industry are real, the capacity of the industry to fully exploit and meet the huge demand for capital assets appears limited. Inadequate funding mechanism and tax incentives, defaults as well as difficult operating terrain etc, continue to constrain the faster development of the industry. These challenges have been aggravated by the effect of pandemic on the macroeconomy and the leasing industry. It is therefore of utmost importance, for the leasing industry to redefine its course, developing and adopting appropriate strategies to perform its catalytic role more effectively.
Also, the support of the various stakeholders including the government and development partners, is crucial to the attainment of the full potential of the leasing industry. The role of government for instance, in developing leasing infrastructure, especially in the areas of funding, better regulatory and operating environment, will strengthen the capacity of the leasing industry to make the desired impact. In this regard, we continue to advocate for leasing companies to access the various intervention funds for the development of priority sectors and the pension funds, as part of measures to ease the funding challenge.
On the regulatory front, the enactment of the Equipment Leasing Act 2015, was a major land mark. However, the Act which seeks to create certainty, sanity and promote investment in the industry, is yet to be fully implemented due to the absence of the Equipment Leasing Regulatory Authority. This body established by the Act, is intended to give full effect to the intent and purport of the legislation. We have been engaging the Ministry of Finance, Budget and Economic planning and hopefully the formal inauguration of the Authority and commencement of operation will be done without further delay.
I am indeed excited that these issues on the development of the Nigerian economy and the leasing industry as highlighted, form part of the main discussion at this conference. At the end of the day, it is certain that with the quality of Speakers, discussants and participants, we shall be able to come out with implementable conclusions, that will stimulate appreciable deliverables to the economy, our industry and businesses.
Before I end this address, permit me to use this opportunity to mention the ELAN Secretariat Building project. It has been the intention to have our own building for the Secretariat and over the years successive Boards have been engaging members on this. The present Board has intensified efforts towards its realisation and our expectation is that, it would be achieved before the tenure of the Board ends. Along the line during this conference, the Chairman of the Building Committee shall present a brief on it. This project has become very imperative to enhance our operations and profile given the expected role of the Association, especially with our commitment to host the Equipment Leasing Registration Authority. We therefore crave your indulgence to support this initiative with your generous contribution.
On that note, distinguished ladies and gentlemen, I welcome you once again to the !9th National Lease Conference and wish us a fruitful deliberation and engagement.
Thank you
OLUTOYIN OKEOWO
CHAIRMAN, BOARD OF DIRECTORS, ELAN