Leasing Industry Records Growth a midst Recession

The Equipment Leasing Association of Nigeria (ELAN) has affirmed that the Nigerian Leasing industry is vibrant and remains a source of succour to many organisations across all sectors in the economy, in spite of the current economic realities. According to a report from ELAN, the industry in 2016, recorded a 14 per cent growth in leasing activities. The outstanding lease volume grew to N1.26 trillion, from N1.1 trillion in 2015. Commenting on this development, Executive Secretary of ELAN, Andrew Efurhievwe stated that: “Leasing continued to be attractive to new investors with massive diversification by existing players in the industry.”

The analysis of the volume by sector revealed that the oil and gas, with its present challenges still out played other sectors with the lead of N398 billion, representing 24 per cent of the total portfolio, while transportation followed with N319 billion, which 19 per cent of the total portfolio. On the other hand, manufacturing recorded N180 billion, with agriculture, government, telecoms sectors and others (education, healthcare, construction and consumer sectors) recording considerable growths.“Categorising the lease transactions according to types, finance leases retained the dominant position accounting for 70 per cent of all lease transactions while operating lease accounted for 30 per cent. This revealed the increasing trend of operating leases in the recent times, due mainly to risk mitigating mechanism and response by industry players to current market dictates, by provision of vehicles (trucks, cars and staff buses) and other assets to support the operations of their corporate customers.

“The industry continued to witness the banks as the lead players, particularly financing big ticket leases, and also providing funds to lessors for lease transactions. The non-bank lessors contributed 70 per cent of lease transactions concentrating majorly on the small and medium scale enterprises (MSMEs). Many financial investment and capital market companies are coming into the industry to tap into the opportunities in leasing, as a way of hedging against other non – performing product offerings. Also, vendors, service providers (telecom and oil) are getting more involved in leasing,” the ELAN report added.