Ndubuisi Francis in Abuja
The federal government would today, formally unveil the Equipment Leasing Registration Authority (ELRA) in Abuja, the Federal Capital Territory (FCT), as part of overall measures to bolster the equipment leasing sector into a developed status
In a statement personally signed by the ELRA Executive Chairman, Saidu Njidda, the unveiling ceremony which is to be performed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, would enable the Authority to play the role of a key driver and facilitator of two of the eight-point agenda of the Tinubu administration– ‘Access to Capital and Job Creation.”
The ELRA Board was inaugurated in May 2022 by the last Minister of Finance, Budget and National Planning, Zainab Shamsuna Ahmed, following the establishment of the authority which is in accordance with Section 8 of the Equipment Leasing Act, 2015.
The inaugurated board comprises 11 members, including Saidu Njidda, Executive Chairman; Bassey Imoh, Registrar/Secretary; one representative each from the Central Bankof Nigeria (CBN), SMEDAN, NACCIMA, Federal Ministry of Finance, Federal Ministry of Justice, Federal Ministry of Trade and Investment, and three representatives from the Equipment Leasing Association of Nigeria, the umbrella body of lessors which sponsored the bill.
In the statement, the Executive Chairman of the Board of ELRA observed that the implementation of the Equipment Leasing Act, was a viable alternative to heralds a new era of enhanced revenue generation given that the industry was capable of generating an estimated total volume of $1.5 trillion globally accounting for 20 per cent of total investment in equipment and contributing about 1.5 per cent of Gross Domestic Product (GDP).
Njidda, also noted that equipment leasing as an alternative and significant source of finance to loans had been immensely contributing to capital formation in the global economy with its wide usage in many countries for the acquisition of capital assets.
He explained that the major players in the leasing industry in Africa include South Africa, Morocco and Nigeria who are ranked among the top 50 leasing countries in the world with Ghana, Rwanda, Egypt, Kenya, Tunisia and Angola, playing significant roles.
The ELRA boss further observed that in Nigeria, particularly over the last ten years, leasing had contributed over ₦14.3 trillion to the country’s GDP and continues to be more relevant especially under the prevailing situation where access to finance is difficult, particularly for Micro Small and Medium Scale Enterprise (MSMES).
“The whole essence of leasing is to enhance the planning, improvement and development of any economy, by building and supporting productive ventures, through capital formation, generating employment and creating wealth,” he said.
He stressed that despite the importance of leasing as a financing option to Nigeria’s industry sector players and the economy, the penetration rate in Nigeria is still very low which currently stands at less than 1 per cent when compared to the potential of the Nigerian economy, and in other developed economies like Europe and America where the penetration is as high as 28 per cent.
Njidda, further explained that the major players in the leasing industry were the lessors, who provide the asset to be leased and sometimes with other ancillary services.
He listed the major challenges of lease penetration as the poor inflow of Direct Foreign Investment (DFI) in the lease industry, lessors’ apathy to some category of leasing among others which he attributed to the absence of government support through regulatory environment and financial intervention in order to grow the sector and enhance its contribution to Nigeria (GDP).
