Nigeria’s Leasing Sector Records 85% Growth In 5 Years, Hits N1.445tr

Data from the Equipment Leasing Association of Nigeria (ELAN) at the weekend shows that the nation’s leasing sector recorded a 14.5% growth in 2017 at N1.445tr, up from N1.255tr in prior year.
Growth over the past five years continues to come from the oil and gas leasing, as well as transportation and manufacturing, two sub-sectors that also helped propel leasing activities by a robust N664.36bn or 85.1% in the five years from N780.661bn in 2013.
According to ELAN, the 2017 growth “was facilitated by the relative stability in the macroeconomic environment, increasing demand, new entrants into the leasing industry and increased value of assets due to the depreciation of the Naira.”
While oil and gas contributed a huge N449bn or 28% to the year’s volume total portfolio; transportation followed with N355bn, or 20%; followed by manufacturing, which rose to N217bn from N180bn in 2016.
In 2017, leasing activities in agriculture, government, telecommunications and other sectors (education, healthcare, construction and consumer sectors) recorded considerable growth, with finance lease remaining the predominant type of leases and accounting for 65% of the transactions.
Operating lease continued to make strong showing at 35%, just as it has increased in market share in recent times, 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, the banks still take the lead, particularly financing big ticket leases, and providing funds to lessors for lease transactions; even as the non-bank lessors however accounted for about 80% of customer base mainly from the Small and Medium Scale Enterprises (SMEs). The industry continued to attract investors from the financial and other sectors desiring to tap into the opportunities in leasing and as means of hedging against other non-performing product offerings.”
By categorisation, vehicles take the lead with about 52% of the leased assets, including trucks for haulage and buses for inter-state commercial transportation, which have been major attraction in recent times.
ELAN projects that Nigeria’s leasing industry will blossom, given the wide financing gaps in all sectors of the economy, the increasing relevance of leasing to capital formation with the challenge of access to finance. This, it noted, is especially in the case of Micro Small and Medium-scale Enterprises (MSMEs) and the expected government commitment to various initiatives aimed at consolidating growth and development in the economy.