COMMUNIQUE ISSUED AT THE EXECUTIVE BUSINESS FORUM

COMMUNIQUE ISSUED AT THE EXECUTIVE BUSINESS FORUM “2021 FEDERAL AND STATE GOVERNMENTS ECONOMIC AGENDA: IMPACT ANALYSIS AND OPPORTUNITY FOR LEASING” ORGANISED BY THE EQUIPMENT LEASING ASSOCIATION OF NIGERIA (ELAN) HELD VIRTUALLY ON THURSDAY, 11TH FEBRUARY, 2021.

• BACKGROUND

 

In furtherance of its objectives of propagating the ideals of equipment leasing and to provide a platform for cross-pollination of ideas for the development of the leasing industry, the Equipment Leasing Association of Nigeria (ELAN) organised a virtual forum, intended to provide a” face time” to enhance membership engagement and bonding. The focus of this forum, was on the Federal and State Governments policy direction, as contained in their respective budgets and policy pronouncements, discussed under the topic: 2021 Federal and State Governments Economic Agenda: Impact Analysis and Opportunity for Leasing. This topic was necessitated by the need for the leasing industry to analyse Government policies and key into the value driven business opportunities, which would enhance our organisational growth prospect and the industry’s contributions to national economic development, especially at this challenging time.

 

The forum considered among other things, the various opportunities entrenched in the federal and state Governments’ budget for 2021, and how the leasing industry can key into these numerous opportunities.

 

A lead presentation was made on the topic by Professor Akpan Hogan Ekpo FNES, Chairman of the Foundation for Economic Research and Training, followed by a panel discussion. The panelists were drawn from member organisations – Tunde Netufo, Managing Director/CEO Frontline Trust Limited; Adegboyega Adegun, General Manager, Corporate Banking Group, Sterling Bank Plc; Wole Olomojobi, Managing Director/CEO Cypress Leasing & Investment Limited and Kofi Sagoe, Managing Director/CEO, VT Leasing Limited, who shared their thoughts and experience on the various issues raised. The discussion was moderated by Alfred Okugbeni, Managing Director/CEO Nigerian Sinotrucks Limited.

 

• OBSERVATIONS

 

Forum observed that:

 

1. The 2021 agenda of the government – both Federal and states, has been set in the context of the global pandemic that has not only claimed over 2.1 million lives globally, but also caused economic crisis. The global response to the disruption, has seen several countries providing large-scale macroeconomic support to alleviate the economic blow, which has contributed to stabilisation in financial markets.

 

2. In Nigeria, the blazing tsunami has equally hit very hard. Policymakers continue to face formidable challenges as they seek to contain the devastating health, macroeconomic, and social effects of the pandemic. The nation is weighed heavily with structurally weak economy affected by externally-induced shock as the economy slipped into a recession in the third quarter of 2020, following a GDP contraction of -3.62% and the negative growth of -6.1 percent recorded in the second quarter (Q2), contracting by levels not seen since the 1980s.

 

3. The Federal and State Governments supported by the private sector, have taken several palliative measures to reduce the impact of the pandemic on the people and businesses. The Federal Government for instance, developed the Nigeria Economic Sustainability Plan (NESP) involving a stimulus package of N2.3trillion in response to the health and economic emergencies.

 

4. Government focus will continue to be on its economic recovery plans in response to the prevailing challenges. For instance, the 2021 budget tagged ‘Budget of Economic Recovery & Resilience’ is expected to accelerate the pace of Nigeria’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.

 

5. Accelerating the pace of economic recovery requires fiscal and monetary authorities to promote growth-enhancing and confidence-building policies, that would attract private capital to the economy. Essentially, this will involve sustaining and deepening policy reforms and real commitment in implementing these reforms that will boost output and put the nation on a path of macroeconomic stability.

 

6. Rebuilding the economy requires enormous capital and the growing cost of assets generally presents immense opportunity for leasing as an alternative option. The appeal of leasing is underscored in its developmental attributes of enhancing capital formation in the economy, that drives job creation, revenue, better life and economic growth.

 

7. Asides, the emergence of opportunities in health care, ICT, logistics etc as a fallout of the pandemic, the Federal government’s intervention programmes and investment in priority areas – infrastructure, power, food security, works and housing, job creation etc, to drive economic recovery, provide ample business prospects for the leasing industry.

 

8. The Nigeria leasing industry has the potential to be one of the biggest given the sheer size of the sectors which rely on its services.

 

9. In spite of improved liquidity in the financial system, funding to the leasing sector is still an issue.

 

• CONSEQUENTLY, FORUM RESOLVED AS FOLLOWS:

 

1. Government is encouraged to expand its engagement with relevant stakeholders, particularly in the private sector to include more sectors such as leasing, in its recovery and growth plan.

 

2. Government at all levels must seek innovative and proactive ways to achieving it development – oriented initiatives. One of these options is Equipment Leasing – a creative financing alternative utilised globally to stimulate economic development and growth.

 

3. Lease practitioners must position themselves to play actively and cash in on these opportunities as they evolve. It is imperative for the leasing industry to enhance its capacity and remain resilient in the face of growing uncertainty to navigate through the storm, stay afloat and take advantage of opportunities as it continues to contribute to economic development. The realignment of strategies and adoption of innovative approach is required in this regard. This will involve thorough understanding of the impact of the emerging scenario, while maintaining a win – win posture in addressing the challenges. It would for instance, require building strategic alliance within and outside the industry to enhance capacity.

 

4. The leasing industry should leverage on both the federal and state governments’ economic agenda in areas such as agriculture, construction, mining, technology, education and healthcare sectors.

 

5. The industry should carry out feasibility studies to understand the needs of potential customers, changes in business operations and legal obligations, diversification in products should be encouraged to provide potential customers with a wide range of options, sound corporate governance should be adopted, enhance capacity, be strategically positioned and remain resilient in the face of growing uncertainty to navigate through the storm, stay afloat while taking cautious optimism in harnessing these opportunities, as it continues to contribute to economic development.

 

6. Addressing the funding challenge, practitioners should be more creative, develop structures that would attract them to potential investors, and also look at other institutions with huge funds to play with such as pension funds, insurance companies etc. Also, lessors can play in specific sectors that the CBN intends to grow, through the provision of guarantees, rather than seek loans directly from CBN.

 

 

7. There should be enhanced awareness and advocacy in the promotion of leasing as a unique financing option, that will benefit the diverse stakeholders in the economy.

 

 

8. The continued support of all stakeholders is germane to the full realisation of the leasing industry’s potential. Government as a major stakeholder, should facilitate the creation of appropriate funding mechanism for leasing, for instance, through access to intervention funds and inaugurate the Equipment Leasing Registration Authority, to further facilitate its contribution to national economic development.

 

• CONCLUSION

 

ELAN as the umbrella body for the leasing industry, will continue to guide and create the platform that would facilitate the attainment of corporate objectives and the diverse interest of stakeholders.