Leadership, Tuesday, 15 May, 2018

The leasing industry grew by 14.per cent as leasing firms were able to lend equipment worth N1.44trillion to Nigerians in its last financial year end.

This was an improvement to the outstanding lease volume of N1.26trillionin it recorded in its 2016 financial year end.

The growth in its 2017 financial account according to market observers, was facilitated by the relative stability in the macroeconomic environment, increasing demand, new entrants into the leasing industry
and increased value of assets due to the depreciation of the Naira.

Analysis of the volume by sector reveals that the oil and gas, took the lead with N449billion,
representing 28 percent of the total portfolio, while transportation followed with N355billion,
representing 20 percent. Manufacturing moved to N217billion from N180billion in 2016,
while Agriculture, Government, Telecommunications and other sectors (education,
healthcare, construction and consumer sectors) recorded considerable growth.

Finance lease, according to the Executive Secretary, Equipment Leasing Association of Nigeria (ELAN) Andrew Efurhievwe, remained the predominant type of leases accounting for 65% of the
transactions while operating lease continued to make strong showing at 35%.

In recent times he said, there has been increase in the market share of operating lease due to its growing popularity among lessors as a risk mitigating mechanism against default and response to
current market dictates especially from corporate customers who require service-oriented

In terms of transaction value, he said the banks still takes the lead, particularly financing big ticket
leases, and providing funds to lessors for lease transactions.

The non-bank lessors he pointed out, accounted for about 80% of customer base mainly from the Small and Medium Scale Enterprises (SMEs). The industry continued to attract investors from the financial and
other sectors desiring to tap into the opportunities in leasing and as means of hedging
against other non-performing product offerings.

In terms of assets categorisation, he stressed that, vehicles take the lead with about 52% of the leased
assets including trucks for haulage and buses for inter-state commercial transportation,
which have been major attraction in recent times.

He said that market projections indicates that the leasing industry will 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 and the expected
Government’s commitment to the various initiatives aimed at consolidating growth and
development in the economy.

“For instance, the implementation of the Economic Recovery and Growth Plan (ERGP) 2018
– 2020, will create enormous market for the leasing business, as a whole range of
equipment would be required across the entire value chain of priority sectors including
agriculture, mining, manufacturing among others”, he pointed out.

While calling on Government to continue to support the leasing industry through a
more favourable operating environment, he stated that the capacity of the industry needs to be
strengthened and sustained to enable it perform its developmental role effectively.

The Funding challenge according to thim, is a key area of concern, calling on Government to intervene by allowing leasing companies to access pension and the various intervention funds for development in
specific sectors of the economy.

Leadership, Tuesday, 15 May, 2018