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Nigeria’s leasing transactions record N4.8trn in 10 years

By BusinessNews Staff on December 4, 2015

The leasing industry added assets worth over N4.8 trillion to capital formation in the Nigerian economy in the last 10 years, the Equipment Leasing Association of Nigeria (ELAN) has revealed.
In 2014, outstanding lease volume was estimated at N869 billion, up from N780 billion in 2013, representing a growth rate of 11.3 percent.

The Chairman, Board of Directors, ELAN, Mr. Chuka Onwuchekwa, disclosed this in his welcome address at the 13th annual lease conference organised by the association in Lagos recently. He noted that leasing had gained significant global recognition as a creative financing alternative for the acquisition of capital assets, saying that in Nigeria, the sector had continued to contribute to the nation’s development, improving the economic landscape and wealth creation.

Onwuchekwa, pointed out that key challenge to the Nigerian leasing industry over the years was the absence of appropriate legal framework. This, he argued affected the faster development and growth of the industry.

“For instance, there were the issues of ambiguities in the legal nature of leasing, cumbersome repossession process and inadequate protection of rights of contracting parties. The combined effects of all these, exposed lessors to more risk and quite often loss of investment. The prevailing legal framework before the Act was no doubt insufficient to promote and sustain the continuous growth of the leasing industry given the level of sophistication the industry has attained over the years.

“It was in the bid to address the inadequacies in the legal framework, that ELAN embarked on the pursuit of a specific legislation on leasing, engaging the government and other stakeholders. The tortuous journey which started over two decades ago finally came to an end in May 2015, when the Equipment Leasing Bill was assented to by the then President,Goodluck Jonathan,” he added.
Essentially, the Equipment Leasing Act is part of government’s support framework to further stimulate development of the leasing industry to contribute more effectively to the national economic development.
Onwuchekwa said the impactful visibility of leasing was increasing in various sectors of the Nigerian economy and had a significant role to play in driving the diversification policy of government following the slump in global crude oil prices. He listed other challenges equally facing the sector include the dominance of high cost short term funding sources.

[ThisDay]

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