RESOLUTION AT THE EXECUTIVE BUSINESS FORUM “2023: MAINTAINING BALANCE AND GROWTH STRATEGY” ORGANISED BY THE EQUIPMENT LEASING ASSOCIATION OF NIGERIA (ELAN) HELD VIRTUALLY ON TUESDAY, 7TH FEBRUARY, 2023.
BACKGROUND
The Equipment Leasing Association of Nigeria (ELAN) organised a virtual forum with the theme “2023: Maintaining Balance and Growth Strategy” on Tuesday 7th February, 2023. The event was designed to have a robust conversation on impacting macroeconomic developments including industry – specific conditions and exploring appropriate strategy to stay afloat for enhanced organisational performance.
The forum considered among other things, the impact of the current macroeconomic indices on the economy and implications for the leasing industry – challenges, survival strategy and opportunities.
A lead presentation was made on the topic by Christian Chigbundu, Managing Director/CEO Coscharis Mobility Limited/Director ELAN, followed by a panel discussion. The panelists are: Adegboyega Adegun, Group Head, Investment Banking; Sterling Bank Plc; Ugoji Lenin Ugoji, Managing Director/CEO C&I Leasing Plc and Tayo Adekoya, Managing Director/CEO Adept Lessor Limited, who shared their thoughts and experience on the various issues. The discussion was moderated by Andrew Emonuwa, Executive Secretary ELAN.
OBSERVATIONS
Forum observed that:
- The various macroeconomic developments – the political, the social, the monetary and fiscal policies etc, as well as the Federal government of Nigeria’s 2023 Appropriation Bill, will likely have a negative impact on businesses generally in 2023, especially till the end of 2nd quarter after which we can have some stability for the rest of the year.
2. The commencement of operations of Dangote Refinery expected around 2nd quarter, is likely to reduce pressure on foreign exchange demand on importation of fuel, which may likely create an impact on exchange rate reduction and stability.
3. The success of the upcoming election notwithstanding the winner, is likely to make a slight impact on foreign investment and diaspora remittance.
4. The expected removal of subsidy later in the year, is likely to free up cash for further investment in capital projects by government and lead to positive impact on the Naira exchange with foreign currency.
5. The prevailing economic conditions will have huge impacts on the leasing business. For instance, increasing cost of assets means more money will be needed for financing an asset.
6. Amidst all the challenges posed by the macroeconomic environment and industry specific issues, opportunities still abound for the leasing industry.
CONSEQUENTLY, FORUM RESOLVED AS FOLLOWS:
- Government as a matter of urgency should sustainably implement policies that will drive investment and overall growth of the economy.
- To maintain balance and grow, leasing companies should be more creative and innovative, developing appropriate strategy to maintain balance and grow. Essentially these will include:
Reducing the cost component on all existing portfolios
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.
Marketing aggressively for new business that will create a balance between existing and new leases
Concentrating more on asset leasing, which is less affected by inflation and exchange rates.
Enhancing and encouraging business collaboration and partnership among members, to strengthen capacity to participate more effectively in the leasing industry.
3. Lease practitioners must position themselves to play actively and cash in on 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.
4. To address the funding challenge, practitioners should be more creative, develop structures that would attract them to potential investors, and also look at other funding institutions. Vendor financing is also a major way out.
CONCLUSION
Leasing industry remains significant in driving economic development and this presents opportunities for leasing lessors. All these add up to making leasing, a profitable venture for lessors, notwithstanding the obvious challenges.
(Kindly download the Paper presentation – “2023: MAINTAINING BALANCE AND GROWTH STRATEGY” below.)