By Aondowase Agabi
The Chairman of the Board of Board of Equipment Leasing Registration Authority (ELRA) Engineer Saidu Njidda, has said leasing has contributed over N14.3trn to Nigeria’s GDP in 10 years.
He stated this during the inauguration of the board by the Minister of Finance, Budget and National Planning, Zainab Shamsuna Ahmed.
The Chairman also notes 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.
Engr. 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 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 1percent when compared to the potential of the Nigeria economy, and in other developed economies like Europe and America where the penetration is as high as 28 percent.
The Chairman further explains that the major players in the Leasing industry are the lessor, who provides 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, the supplier who sells and assures the performance and suitability of the asset, the financier, who gives out money as raw material of leasing, the lease broker who sometimes facilitates the lease as intermediary with manufacturer and financier, the lease professionals who structure and manage the lease, and the Government who plays a vital role in the industry in terms of policy formulations, the legal framework, Tax, accounting and other regulatory policies.
“It is pertinent to point out that the conduct and roles of the players mentioned above are the keys in stabilizing and supporting a healthier leasing industry Ecosystem which the Authority seeks to regulate with support from Government”.
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 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).
he Minister of Finance, Budget and National Planning Mrs. Zainab at the event said the establishment of the authority which is in accordance with Section 8 of the Equipment Leasing Act, 2015 presents a great opportunity for Government to make more revenue for the nation.
The Minister observed that the establishment of the authority would assist Government to expand the provision of infrastructure and equipment to the critical sectors of the economy for rapid industrialization and economic development.
She charged members of the Board of ELRA not only to regulate the industry but to also sensitize members of the public on the benefits of equipment leasing adding that the National Bureau of Statistics (NBS), should as part of their activities, report on the equipment leasing activities throughout the country.