Ndubuisi Francis in Abuja
The federal government has tasked the National Bureau of Statistics (NBS) to report on the activities of equipment leasing segment of the economy throughout the country, as part of its functions.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, made the call while inaugurating the Board of the Equipment Leasing Registration Authority (ELRA) in Abuja.
The minister said the establishment of the authority which was in consonance with Section 8 of the Equipment Leasing Act, 2015 presented a great opportunity for the government to generate more revenue for the nation.
She observed that the establishment of the authority would assist the government to expand the provision of infrastructure and equipment to the critical sectors of the economy for rapid industrialisation and economic development.
Ahmed charged members of the ELRA Board not only to regulate the industry but to also sensitise members of the public on the benefits of equipment leasing, urging the NBS, as part of their functions, to report on the equipment leasing activities throughout the country.
The newly inaugurated board comprises 11 members, including the Executive Chairman, Saidu Njidda; Registrar/Secretary, Bassey Imoh; one representative each from the Central Bank of Nigeria (CBN), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Federal Ministry of Finance, Budget and National Planning, Federal Ministry of Justice, Federal Ministry of Trade and Investment, and three representatives from the Equipment Leasing Association of Nigeria (ELAN), the umbrella body of lessors which sponsored the bill.
Responding on behalf of other members at the inauguration, the Chairman of the Board of ELRA, Njidda, observed that the implementation of the Equipment Leasing Act, was a viable alternative to loan.
He stated that it heralded 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 has been immensely contributing to capital formation in the global Economy with its wide usage in many countries for the acquisition of capital assets.
According to him, the major players in the leasing industry in Africa included South Africa, Morocco and Nigeria which are ranked among the top 50 leasing countries in the world with Ghana, Rwanda, Egypt, Kenya, Tunisia and Angola also playing significant roles.
He further observed that in Nigeria, particularly over the last 10 years, leasing has contributed over N14.3 trillion to the country’s GDP and continues to be more relevant especially under the prevailing situation where access to finance is difficult, especially 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.
Njidda 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 1per 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.
The major players in the leasing industry, he noted, were the lessors, who provide the asset to be leased and sometimes with other auxiliary services; the lessee who is the user of the equipment and has possession of the equipment or asset but not the title, and the supplier who sells and assures the performance and suitability of the asset, among others.
He listed the major challenges of lease penetration as the poor inflow of direct foreign investment (DFI) in the lease industry, lessor’s apathy to some categories 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 GDP.
Njidda expressed optimism that with the passage of the ELRA Act, fraudulent and unscrupulous practices of transacting parties including the manufacturer will be identified and handled accordingly.
He added that this would no doubt fill the gap and bring out a comparative advantage in driving the equipment leasing sector to a developed status, from the existing scenario of developing status through the introduction of appropriate policies, guidelines and standing orders that will shape up and sanitize the industry.