Leasing volume in Nigeria hits N869 billion in 2014
OUTSTANDING lease volume in the country went up by 11.3 per cent from N780 billion in 2013 to N869 billion in 2014.
Analysis of the various sectors revealed that, the oil and gas sector dominated with 31.6 per cent of the lease volume closely followed by transportation with 15.8 per cent, manufacturing sector grew by 11 per cent, government, agriculture and telecoms grew above five per cent while other sectors recorded 26 per cent growth.
A further breakdown of the statistics indicates Vehicles as the most leased asset with 50 per cent, Plant/Machinery 29 per cent, Office Equipment 10 per cent while Aircraft/Vessels had two per cent, and others (including house hold equipment) nine per cent.
The chairman, Board of Directors, Equipment Leasing Association of Nigeria (ELAN) Chuka Onwuchekwa explained that in terms of types of lease transactions, finance leases dominated with 75 per cent while operating leases represented 25 per cent.
His words: “Operating lease will continue to deepen its market penetration with the increasing demand for the product especially from corporate customers, who are now redefining their business strategy to focus on their core business activity and the outsourcing of non-core services.
Also, the recent Central Bank of Nigeria (CBN) guidelines on the regulation of finance leases may likely witness increase in operating leasing as some lessors who do not want to be regulated may shift to operating lease.
‘’The major contributors include banks playing at the high end of the market in terms of transaction value and supporting other lessors with funds for their transactions.
The non-bank lessors however, have better spread representing 80 per cent of lease transactions, with many of them focusing on Small and Medium Scale Enterprises (MSMEs).
Vendors are equally enhancing their visibility in the market place, especially in the consumer market, where they are engaged in the lease of their own products mainly household assets and cars under vendor lease programs supported by banks in some cases.
‘’Majority of Nigerian lessors are engaged in general leasing, financing different types of asset cutting across various industries, though financial capacity and industry’s knowledge may restrict participation in some specialised cases such as telecommunications, power and agricultural equipment.
‘’The events which started in the last quarter of 2014, which include dwindling oil prices leading to the devaluation of the Naira and the tense political atmosphere may have considerable negative impact on the volume of leases in 2015.
The industry is however expected to rebound subsequently especially as the stability in the polity improves.The fact that leasing facilitates convenient and easy access to capital equipment goes to show the unique role of leasing in building and supporting productive ventures.
This will be very relevant to achieving the developmental initiatives of Government and supporting private sector investment.
‘’However, he continued “the desired performance and continuous growth of the leasing industry in Nigeria, is predicated on the capacity of the industry to overcome the various challenges affecting its growth and development. Appropriate funding for instance, is critical to the success of the leasing industry.
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