Despite the economic down caused by the coronavirus pandemic last year, the Nigerian Leasing industry recorded 4.3% growth during this period, bolstered by the oil and gas sector.
A report released by the Equipment Leasing Association of Nigeria (ELAN), the outstanding leases as of December 2020 stood at N2.01trillion as against N1.91trillion in 2019. The oil and gas sector took the lead at 29% with N602 billion lease volume, followed by the transportation & logistics sector taking N490billion (25%), manufacturing N279billion (12.5%), others (including healthcare and education accounted for N185billion (17%), while Agriculture, telecommunications, and government recorded considerable growth.
The decline in lease volume in 2020 was mainly because of the lockdown and other restrictions imposed by the government to contain the pandemic, which adversely affected economic activities. The delayed rental payment, slow business activities; increased cost of assets and operations, etc. impacted new lease origination during the year.
Finance lease maintained its position at 60% of total leases with operating lease increasing its market share in recent times due to market dictates arising from the preference of corporate bodies to focus more on their core activities while outsourcing other operational functions such as transportation and other logistics services. Operating lease is equally increasingly becoming a risk mitigant and niche market for several lessors in the industry.
In terms of assets categorisation, vehicle constitutes about 55% of the leased assets including trucks for haulage; buses for inter-state commercial transportation and staff shuttle, which have been a major attraction in recent times.
The report stated that It is expected that the equipment leasing industry will continue to grow due majorly to the need to re-inflate the economy, which requires enormous capital. Also, the increasing cost of assets further makes leasing more relevant as an alternative option, especially to the MSMEs.
“However, it is imperative for stakeholders in the leasing industry to contribute their quota towards building a sustainable industry, that will contribute more to the national economy,” it added.
It called on the government as a major stakeholder in the leasing industry to consider doing more for the industry including creating a more favourable operating environment for the players. “Essentially, the inauguration of the Equipment Leasing Registration Authority, to further give purport to the Equipment Leasing Act 2015, and the channelling of some of its intervention funds through leasing, to address the funding challenge. These will further position the industry, to continue to contribute more to the development of our economy.”