COMMUNIQUE ISSUED AT THE VIRTUAL FORUM “THE NIGERIAN LEASING INDUSTRY IN THE NEW NORMAL” ORGANISED BY THE EQUIPMENT LEASING ASSOCIATION OF NIGERIA (ELAN) HELD ON FRIDAY, 29TH MAY, 2020.
1.0 BACKGROUND
The Equipment Leasing Association of Nigeria (ELAN) organised a virtual forum with the theme “The Nigerian Leasing Industry in the New Normal for its members on Friday, 29th May, 2020. The event was among other things, aimed at initiating the leasing industry’s response to the impact of the dislocation occasioned by the covid 19 pandemic. The forum considered among other things, the impact of the pandemic on the economy and implications for the leasing industry – challenges, survival strategy and opportunities.
Four distinguished panelists drawn from member organisations – Alex Mbakogu, Executive Director/Chief Financial Officer, C&I Leasing Plc; Tunde Netufo, Managing Director/CEO Frontline Trust Limited; Adegboyega Adegun, General Manager, Corporate Banking Group, Sterling Bank Plc and Wole Olomojobi, Managing Director/CEO Cypress Leasing & Investment Limited supported by other members shared their thoughts and experience on the various issues.
2.0 OBSERVATIONS
Forum observed that:
1. The covid -19 pandemic has devastated the global economy – collapse in aggregate demand and supply, loss of revenue and jobs, leading to pressure and depression of the economy.
2. The Nigerian economy with its pre-existing conditions including, high inflation, high unemployment, poor infrastructure and overall economic contraction, may be worst hit by the pandemic. Government’s revenue is reducing as a result of the sharp decline in global oil prices, also loss of revenue for businesses as demand and supply remains at its lowest ebb.
3. The implications of these macroeconomic developments on the leasing industry include – increased in default, arising from instability of cashflow of customers, and consequential cost of repossession; possible business collapse due to incessant credit losses and low liquidity; decline in new business origination, owing to the fear of portfolio risks; difficulty in planning resulting from uncertainties. Also, access to funds for leases is expected to be tighter given the risk appetite and liquidity profile of financiers.
4. At this critical time, it is important for players to put on their thinking caps, it is a time for serious adjustment, make survival strategy their priority.
5. There are emerging opportunities in some sectors and industries amidst the difficult terrain. Some of these areas are Information and Telecommunications (ICT), Healthcare and Pharmaceutical, Food Industry, Waste Management, Transport/Logistics/Haulage, agriculture etc.
6. The Leasing industry has a role to play in Government’s current efforts to cushion the effect of the pandemic.
3.0 CONSEQUENTLY FORUM RESOLVED AS FOLLOWS:
3.1 Members should be more creative and innovative, developing appropriate strategy to stay afloat. Essentially these will include:
1. Staying close to customers at this period, understand their challenges and categorising them into low, medium and high risk for profiling, while adopting a win – win approach in addressing the challenges.
2. Enhancing and encouraging business collaboration and partnership among members to strengthen capacity to participate more effectively in the leasing industry
3. Leveraging more on technology to drive business
4. Giving business survival top priority at this time while exercising deep caution in making new investment in leases, taking into cognisance the risk profile of the industries and customers.
3.2 ELAN should increase its advocacy campaign, engaging with Government and other relevant stakeholders to enhance the developmental attributes of leasing and key in into the various interventions initiatives provided by the Central Bank of Nigeria (CBN) and other Government authorities.
4.0 Conclusion
There is a new normal in the global economy and indeed the Nigerian leasing Industry following the pandemic. The forum recognised this fact and urged members to put this in mind in carrying on with their business as the industry braces up to the challenges to continue to provide the integral support for production and capital formation in the economy. The key is to keep hope alive and journey along.