Leasing industry growth traced to macroeconomic indices, demand, new entrants—ELAN
The leadership of the Equipment Leasing Association of Nigeria (ELAN), has traced the observed growth trend in 2017 to the relative stability in the macroeconomic environment, increasing demand, new entrants in the industry and increased value of assets due to the depreciation of the Naira.
Business Hilights recalls that in the year under review, upon the recession, the industry grew lease volume to N1.44 trillion, against N1.26 trillion in 2016, representing a growth of 14.5 per cent.
A review of the volume performance by sector shows that oil and gas took the lead with N449 billion, representing 28 per cent of the total portfolio, while transportation followed with N355 billion, representing 20 per cent.
Whereas the manufacturing sector, on the other hand, moved to N217 billion from N180 billion in 2016, while agriculture, government, telecommunications, education, healthcare, construction and consumer sectors recorded considerable growth, finance lease, according to the Executive Secretary/Chief Executive Officer of ELAN, Andrew Efurhievwe, remained the predominant type of leasing, accounting for 65 per cent of the transactions, while operating lease continued to make strong showing at 35 per cent.
According to him, there has been increase in the market share of operating lease due to its growing popularity among lessors, as a risk mitigating mechanism against default and response to current market dictates, especially from corporate customers who require service-oriented lease. In terms of transaction value, he said the banks still takes the lead, particularly financing big ticket leases, and providing funds to lessors for lease transactions.
However, he observed that the non-bank lessors, accounted for about 80 per cent of customer base, mainly from the Small and Medium Scale Enterprises (SMEs), even as the leasing industry continued to attract investors from the financial and other sectors desiring to tap into the opportunities in leasing and as a means of hedging against other non-performing product offerings.
Efurhievwe noted that on the assets categorisation, vehicles take the lead with about 52 per cent of the leased assets, including trucks for haulage and buses for inter-state commercial transportation, which have been major attraction in recent times.
In general, he disclosed that with the ongoing economic recovery, market projections are upbeat that the leasing industry will grow better going forward.
Continuing, ELAN boss averred that “The implementation of the Economic Recovery and Growth Plan (ERGP) 2018 – 2020, will create enormous market for the leasing business, as a whole range of equipment would be required across the entire value chain of priority sectors including agriculture, mining, manufacturing, among others”.
