Stakeholders in the Nigerian leasing industry have called on the federal government to take immediate steps to implement the Equipment Leasing Act 2015, to enable the industry get the much needed foreign direct investments.
Speaking on behalf of his colleagues in a chat with newsmen in Lagos, Chairman of Equipment Leasing Association of Nigeria (ELAN), Chuka Onwuchekwa said the industry cannot contribute to the nation’s gross domestic product (GDP) if it continues to rely on short term funding from the banks.
The federal government had in recognition of the developmental role of leasing, provided a specific law on leasing tagged ‘The Equipment Leasing Act 2015’ as part of the support framework that will stimulate development in the industry to enable it contribute more effectively to the national economic development.
Onwuchekwa who praised the federal government for putting the law in place admitted that the legal framework for leasing in the country was weak before enactment of the equipment leasing act.
According to him, “There was no specific legislation on the subject, we relied basically on the common law and other provisions scattered in other laws. This structure was inadequate to cater for the level of sophistication the industry has attained over the years and achieve its full potential. The new law is expected to strengthen the existing legal structure that would promote sustained development in the industry. It provides minimum legal framework for leasing that would enhance confidence, encourage leasing investment from foreign and local investors and most importantly, provide sanity, certainty and protection to leasing stakeholders including lessors, lessees, equipment suppliers and other investors.”
Like other countries with leasing laws, the ELAN boss said he is confident that effective implementation of the leasing act will bring enormous benefits to Nigeria by enhancing access to productive equipment, increased investment, employment generation and economic growth.
“We are currently engaging the Ministry of Finance, which is supervisory ministry and other stakeholders on the full implementation of the law which includes inauguration of the Equipment Leasing Registration Authority (ELRA).
This body is made up of stakeholder representatives from the public and private sectors including ELAN and saddled with the basic responsibilities of regulating leasing, including the registration of leasing companies and lease transactions. The Act when fully implemented will change the face of the Nigerian leasing industry. Strengthening its capacity to finance more leases and facilitate the attainment of economic initiatives,” he said.
He stated that while opportunities for the leasing industry are real, it is imperative for the industry to position itself to play actively in these times. The capacity of the industry, he stated, needs to be strengthened to enable it play its developmental role effectively.
He added, “The major challenges facing the industry centre on the regulatory and operating environments. The industry is still plagued with issues such as inadequate funding mechanism, defaults and unfavourable tax regime, which remain major concern for the industry. The funding challenge is critical as most practitioners rely on short term sources, mainly local banks for funding.”