LESSORS RENEW ADVOCACY FOR NIGERIA LEASING BANK

Recent monetary measures introduced by the Central Bank of Nigeria (CBN) to fix the dwindling economy may hobble equipment leasing growth in the country unless a well- capitalised leasing bank is established in Nigeria.
Leasing experts who shared the view in an exclusive interview, expressed worries over the unintended consequences of the policies on the cost of goods and services but insisted that leasing remains the best option to acquire assets for business operations.
In response to the unstable exchange rate, high interest rate and inflationary trend, the CBN reviewed upwards the Monetary Policy Rate (MPR) by 400 basis points to 22.75 per cent, Cash Reserves Ratio(CRR) and Liquidity Reserve Ratio(LRR) to 45 per cent and 30 per cent respectively to stabilise the wobbly economy
The ensuing economic hardship, according to the Executive Secretary of Equipment Leasing Association of Nigeria (ELAN), Mr Andrew Emonuwa, pushed up the prices of assets for leasing especially the imported ones due to the volatility in the exchange rate.
The ugly development, he stated , inevitably raised the risk of managing assets on lease as the Lessors now contend with the additional challenges of Lessees with reduced profit margins and higher chances of repayment default.
Mr Isaac Agenyi, Chief Operating Officer, Moto Business Service Nigeria (a subsidiary of Yamaha Motor Company), is perturbed that the current macro- economic challenges which have tripled costs of equipment and reduced the purchasing power of prospective Lessors constitute a threat to leasing business development in the country.
According to him, lower profit margins of companies would definitely endanger prompt repayment on leased assets and that throws up the trouble of repossession of leased assets to the Lessees.
According to Mr Bode Dinyo, Managing Director/Chief Executive ,Mint Seal Services Limited ,a Lagos – based Leasing Firm, the harsh operating environment has urgently called for the setting up of a Leasing Bank in the country to provide the sub-sector with cheaper funds for its operations rather than the current practice of obtaining high priced loans from commercial banks.
He said the proposed bank should be spearheaded by ELAN and subscribed to by over 300 of it’s membership with a broad-based Governing board including the Federal Government for effective and affective operation.Though Agenyi agreed with the desirability of a well capitalized leasing bank in Nigeria ,he cautioned on a board that would involve the government to avoid undue political interference in its operations
He stated that such a bank should be essentially a privately run financial institutions with a capital base of N25 billion.
We recall that the Nigerian economy has been walking on its knees for a while now against the backdrop of global economic uncertainties, geo- political tensions and increased domestic macro economic vulnerability.
The scenario did not spared the global leasing let alone Nigeria, with a projected growth rate of 26 per cent for the country.Nigeria’s latest outstanding lease amounted to N3.18 trillion in 2022, according to ELAN, with Oil/Gas sector leading .
Given the economic turn of events, experts said that Logistics/Transport and Health appear set to emerge preferred sub-sectors.