Dear Members,
I am very delighted to welcome you to the 24thAnnual General Meeting of our Association and to present to you the Financial Statements and Reports for the year ended 31stDecember 2018.
Business Environment
Generally, the Nigerian economy recorded improvements in the area of growth, price and exchange rate stability as well as fiscal stability. Macroeconomic conditions recorded modest improvement as real growth in GDP rose to 1.93% in 2018 from 0.82% in 2017.
The exchange rate remained relatively stable throughout the year despite pressures emanating from capital outflows by foreign portfolio investors. The Central Bank of Nigeria (CBN) intensified intervention in the foreign exchange market to ensure liquidity leading to the convergence of the multiple exchange rates that was prevalent in the economy. The stability witnessed on the exchange rate front as well as the steady improvement in food production contributed to the decline in average inflation from 16.5% in 2017 to 12.2% in 2018.
Fiscal policy was maintained in an accommodative mode as spending in the 2018 budget rose by 5.9% to ₦9.12trillion as against the ₦8.61trillion projected for 2017. The government continued its Eurobond programme which is aimed at reducing debt service cost and successfully executed two Eurobond issuances of $2.5billion in February and another $2.786billion in November. In addition to raising the low-priced dollar debt to bolster its finances, the enforcement of the Voluntary Asset and Income Declaration Scheme (VAIDS) yielded positive results. The Federal Government recovered about ₦30billion from individuals and corporate bodies through VAIDS while the database of registered taxpayers increased to more than 19million in 2018 from 14million in 2016. The aggressiveness of the government in tax collection resulted in the highest annual revenue of ₦5.32trillion in 2018 and a growth in tax revenue-to-GDP from 6% in 2017 to 7% in 2018.
The Leasing Industry
The Nigerian leasing industry recorded impressive growth at 16.3 percent in 2018. Outstanding lease volume stood at N1.68trillion as against N1.44trillion in 2017. This growth was significantly facilitated by new entrants into the leasing industry, increased awareness on the ideals of leasing as a unique financing instrument, the relative stability in the macroeconomic environment and increasing demand necessitated by the rising cost of assets in general.
Analysis of lease volume by sector reveals that Oil & Gas, maintained its lead with N518billion, representing 29 percent of the total lease portfolio, transportation followed with N421billion, representing 28 percent, Manufacturing 12 percent with N245billion, while Agriculture, Government, Telecommunications and other sectors (education, healthcare, construction and consumer sectors) recorded considerable growth.
On type of leases, Finance lease took the lead with 60% leaving operating leases with 40% – a trend which has continued in recent times as a result of the emerging opportunities arising from the demand of many organisations to specifically focus on their core businesses by outsourcing support services to third parties. In terms of transaction value, the banks still take the lead, particularly financing big ticket leases, and providing funds to lessors for lease transactions. The non-bank lessors however made a play within the Small and Medium Scale Enterprises (SMEs) sector.
In terms of asset categorisation, vehicles constituted about 48% of the leased assets including trucks for haulage and buses for inter-state commercial transportation, which have been major attraction in recent times. Market projections indicate that the leasing industry will continue to blossom, given the wide financing gaps in all sectors of the economy, the increasing relevance of leasing to capital formation with the challenge of access to finance especially to MSMEs.
Our activities
During the year, we were able to sustain our activities in pursuit of our objectives notwithstanding the challenging economic environment.
Lease Awareness
We continued to increase the visibility and essence of leasing through engagement with the media and other stakeholders supported by organised programmes. Regular lease features where made in all major newspapers, some television and radio stations. Also, we successfully organised in November, the 16th National Lease Conference which has become a major platform for spreading the essence of leasing and engagement on various issues affecting the development of leasing. Similarly, we took the leasing message to higher institutions with the donation of our publications including the second edition of Lease Financing in Nigeria. These activities have further added impetus to our lease awareness campaign.
Capacity Building
We continued to be innovative in our training programme, identifying and exploring new opportunities, reviewing current modules and approach to sustain our reputation as the citadel of lease education and authority in Nigeria.12 regular programmes were held during the year supported by advisory sessions for our members to strengthen their capacity in key areas of their operations. Part of the advisory sessions, was the forum on IFRS 16 held for members to further acquaint themselves with the new Standard and its effect on their business.
Advocacy
Efforts were sustained towards achieving better regulatory environment for the industry. We engaged the Ministry of Finance and other stakeholders for the implementation of the Equipment Leasing Act 2015. Steps taken in this regard include the development of the IT infrastructure template and the provision of office space for the smooth take off of the operation of the Equipment Leasing Registration Authority. The operation of the body, expected to among other things, register leases and practitioners, is a key to give full effect to the intent and purport of the Act. As it is, investors are waiting in the wings to take advantage of the benefits of the Act and therefore it is imperative to get the Authority inaugurated and running as soon as possible.
Membership
10 new members joined the Association under the three categories during the year as against 21 in 2017. The challenge of retaining and attracting new members remains obvious. Consequently, measures were taken to ensure that the Association continues to be more responsive and proactive in delivering value added services to members. Business references, networking opportunities, market intelligence and advisory services etc. were provided as part of efforts to enhance our value propositions.
Publications and Research
Research was conducted into the trends and developments in the leasing industry and the outcome was published in the Lease Market Review. The publication indicates the level of lease penetration in various sectors of the economy. Also, our quarterly magazine “Leasing Today” was improved upon including changing the name to “Leasing Focus” and aligning the contents with the objective of providing succinct information. The magazine continued to be important source of leasing information and is increasingly being utilised by members and other corporate organisations to reach out to their target markets through advert placements.
External Relations
We continued to build on our relations with other stakeholders in the pursuit of our objectives. The Association remained a reference point in leasing in Africa working with the International Finance Corporation (IFC) in promoting leasing in Africa which includes the resuscitation of the African Leasing Association (AFROLEASE) and capacity building. We leveragedon our experience in the continent to seek partnership with other global leasing associations such as LeaseEuropeand some African countries.
Also, we strengthened our engagement with the Ministry of Finance and other members of the Equipment Leasing Registration Authority as well as sustaining a cordial relationship with the Central Bank of Nigeria (CBN).
Re-Branding
We engaged in rebranding process to give the Association new outlook in carrying out its objectives. The process involves corporate logo change and development of robust website with improved contents. The website is very interactive and has driven high traffic, creating further awareness for leasing and visibility for our activities.
ELAN Secretariat Building Project
Overthe years, we have nursed the ambition of acquiring our own building for the Secretariat. Successive Boards have set in motion plans in this regard and in furtherance of this initiative, the Board decided to raise the budgeted amount of N120million for the project, through support of members and partners by way of levies and good will donations. The proposed levies based on categories of membership, shall be presented to you for your kind consideration.
Indeed, this project is our own. I therefore urge us to key into this initiative by our commitment towards achieving a befitting Secretariat that would boost our ranking among the league of elite associations.
Finance
Our audited accounts as at 31st December 2018show that earnings for the period amounted to N34.7 million as against N30.8 million for the corresponding period in 2017, while expenditure amounted to N33.6 million as against N29.4 million in 2017 with a surplus income of N1.08 million as against N1.23million in 2017.The surplus was affected bysome bad debts amounting to N995,176.00 carried over the years, written off to give a true and fair representation of the financials.
The Board
During the year, a Board member, Ibrahim Betso resigned from the Board having retired from LECON Financial Services Ltd, the company he represented at the Board. In line with our Articles and Memorandum of Association and the Companies and Allied Matters Act, the Board appointed Ibrahim Bisallah, the Managing Director/CEO LECON Financial Services Ltd to fill the casual vacancy. His appointment shall be brought before you for ratification during this meeting.
The Board continued to be active providing policy guidelines and support for its implementation. The Directors remained committed to the discharge of their responsibilities, despite the high demand on their schedules by other commitments.
Finally, I appreciate your continued support for the Association and urge you to remain steadfast as we continue to aim higher in our collective resolve to build a healthier leasing industry.
Thank you.
OLUTOYIN OKEOWO
Chairman, Board of Directors