Amid the global economic uncertainties, geopolitical tensions, shadows of the COVID-19 pandemic, and increasing domestic macroeconomic vulnerability,

Indications are that Nigeria’s leasing industry continues to thrive.

The most telling indicator of this, according to industry experts, is the 23.2% growth recorded by the industry, with outstanding leases worth N5.16tr, as against N4.19tr in 2023, just as new leases peaked at N973.3bn.

Also, the contribution of leasing volume to the Nigerian economy over the last decade is estimated at N24.6tr.

The oil and gas sector represented 26 % of the outstanding leases with N1.3tr, followed by the Transportation & Logistics sector with N1.1tr, 21%. Manufacturing had N734bn, representing 13%; Telecoms – N462bn, representing 9%. Agriculture N378bn or 8.5%; ahead of government’s N345bn (7.5 %); while others (including Healthcare and Education) generated N686bn, accounting for 15% of the volume.

The growth in lease volume, according to a statement, was driven by the astronomical rise in the cost of assets, occasioned by two of the cardinal reforms of government -the removal of petrol subsidies and the floating of the Naira, as more money was required to finance leases. Other factors include more new entrants and investment into the industry; increasing innovations and strong resilience by the industry’s players; increasing level of awareness of the benefits of leasing, which continues to be more compelling given the increasing cost of assets.

Finance Lease maintained its lead position with 52% of the total transactions, with operating lease increasing its market share in recent times, due to its continued preference and patronage by corporate bodies. Operating lease allows these companies to focus on their core activities, while outsourcing other operational functions such as transportation and other logistics services. Also, many lessors have been shifting to operating leases in recent years as a risk-mitigating product and to create a niche market for themselves. Essentially, some major lessors have stopped finance lease completely, focusing on operating lease to balance their risk appetite and meet the outsourcing needs of clients. In a bid to create a further niche, some of these lessors have set up workshops of their own, providing services to outside customers as well.

Vehicle leasing remained dominant as the largest leased asset segment, constituting about 53% of the leased assets. Vehicle leasing, including staff shuttles, commercial buses, trucks for haulage, and operational vehicles, continued to be a major attraction in recent times.

Indeed, the industry is expected to maintain its resilience, given the growth potential of the industry – the wide financing gap in various sectors of the economy and increasing demand for creative financing options to meet asset needs by the investing public, the economic agenda of the Governments across all levels especially, increasing spending in critical infrastructure in key sectors such as transportation – the CNG initiatives for instance, power, health care, construction, agriculture, manufacturing, and technology present rich menu of leasing opportunities, notwithstanding the continued challenges posed by macroeconomic environment.

Also, it is expected that with the kickoff of operations of the Equipment Leasing Registration Authority (ELRA), the industry will witness enhanced growth, as the Authority is expected to provide the integral booster for the faster development of the leasing industry as it gives effects to the full implementation of the Equipment Leasing Act 2015.