Don't Miss


Home   >   Business   >   Industries   >   Nigeria gains N4.2tn from leasing in 10 years

Nigeria gains N4.2tn from leasing in 10 years

By on December 1, 2014

In the last 10 years, the leasing industry has added assets worth over N4.2tn to capital formation in the Nigerian economy.

In 2013, outstanding lease volume was estimated at N780bn, up from N671bn in 2012, representing a growth rate of 16.3 per cent as against 7.8 per cent in 2012, according to a document obtained by our correspondent.

Experts say leasing is a major financing option that can be used to facilitate access to the much needed equipment necessary to address the infrastructure challenges and improve service delivery in the sector.

According to the Equipment Leasing Association of Nigeria, the umbrella body for players in Nigeria, the benefits of leasing include: no collateral requirement; more flexible payment options and occasionally no down payment required; freeing up capital for extra expenditure; 100 per cent or more financing of hardware, software, installation, maintenance, training, all of which can be encompassed in the lease contract.

Leasing is said to have gained significant global recognition as a creative financing alternative for the acquisition of capital assets. And in Nigeria, it has continued to contribute to national development, creating wealth and improving the economy.

Leasing is a financing arrangement for purchase and use of equipment, and is provided by banks, independent finance companies, leasing companies and equipment manufacturing companies, among others.

It is widely used by organisations across sectors such as health, manufacturing, oil and gas, construction, agriculture, transport and information technology.

But ELAN stressed that the Nigerian leasing industry needed adequate support to strengthen its capacity to play its developmental role more effectively.

The body also called for the provision of an appropriate regulatory environment and funding windows, saying such moves would boost the business and its contribution to the economy.

The Chairman, Board of Directors, ELAN, Mr. Chuka Onwuchekwa, in a document, said in this regard, the association would continue to appeal to the government for speedy enactment of the leasing law to enhance investors’ confidence and promote leasing activities in the country.

He said one industry that had suffered neglect as far as leasing was concerned remained the health sector.

According to him, over the years, Nigeria has been faced with the challenges of providing efficient healthcare services to its people, noting that the issue is not so much about shortage of personnel but the provision of necessary equipment and other infrastructure to enhance service delivery.

He said, “The effects of this include avoidable deaths due to wrong diagnosis and treatment as well as huge expenditure on medical treatment abroad. A recent report by the Nigerian Medical Association revealed that Nigeria spends over N78bn annually on medical tourism. This depletes the scarce foreign exchange resources and enriches the economy of other countries.

“Globally, the healthcare industry is now being driven by technology and most efforts are concentrated on capital investment in modern equipment to meet the increasing demand of healthcare services. The overall healthcare industry is influenced by several factors, such as consistent rise in geriatric population, escalating healthcare spending, increased incidence of chronic disorders and the widened horizon of the private health care sector as against public sector.”

The Head, Retail Banking, Diamond Bank Plc, Ms. Aisha Hahmad, at the 12th National Lease Conference in Lagos, said for the health sector alone, 85 per cent of Nigerians had never applied for financing and only 7.5 per cent had received a business loan in the last three years.

 

[Punch]