NIGERIAN LEASING INDUSTRY SUSTAINS ITS GROWTH TRAJECTORY, ACHIEVES 28.7 PERCENT IN 2023

The Nigerian leasing industry continued to sustain its growth trajectory, notwithstanding the prevailing headwinds in the economy. Outstanding
leases stood at N4.19 trillion as against N3.25 trillion in 2022, representing a 28.7 percent increase, while new leases peaked at N935.6 billion
against N672 billion in 2022, recording a remarkable 39.2 percent growth. Leasing contribution to the economy over the last decade is estimated
N20.4 trillion.
The statistics indicate that the oil and gas sector held 25percent of the outstanding leases with N1.1trillion; followed by Transportation & Logistics at
23 percent having N977 billion; Manufacturing had 14 percent with N607bn; Telecoms took 8 percent with N374bn; Others (including Consumer
leases, Healthcare and Education) had 14 percent with N504bn. Other notable sectors are Agriculture 9 percent with N300bn and Government
equally making positive growth at N267bn (7 percent).
This growth was driven basically by the attraction of new entrants and more investment into the industry; increasing innovations and strong resilience
by the industry’s players; and increasing level of awareness of the benefits of leasing – which continue to be more compelling given the increasing
cost of assets. These activities were buoyed by the relative stability in the operating environment, following the peaceful general elections, and the
continued recovery from the effect of the Covid-19 pandemic. The astronomical rise in the cost of assets from the second half of the year occasioned
mainly by the floating of the Naira, also impacted the figure as more money was required to finance leases.
Finance leasing remained dominant notwithstanding the increasing market share of operating leasing, which is getting popular beyond the oil and
gas sector. Operating leasing is increasingly being used as a risk-mitigating strategy by many lessors and for large corporate organsiations, a
means to achieving convenience that allows them to focus on their core activities. In recent times, the industry has been witnessing a total shift from
finance leasing to operating leasing by some major lessors to balance their risk appetite and meet the outsourcing needs of customers. Operating
leases remain the main attraction and dominant in the Oil and Gas and Maritime sectors for the financing of large ticket transactions involving
operational assets like vessels, barges, and other heavy-duty equipment.
Vehicles constituted the largest leased asset segment representing about 50% of the leased assets. These vehicles cut across commercial and
corporate applications – staff shuttles, commercial buses and taxis, trucks for haulage, and operational vehicles. Other assets include generators;
construction equipment, agricultural equipment, and facilities, Health care equipment for diagnosis and treatment, as well as office and household
and other heavy-duty and specialised equipment.
Indeed, the Nigerian leasing industry is expected to remain resilient, while growing in the face of the perennial economic challenges and making
significant contributions to capital formation in the economy. No doubt, the wide financing gap in various sectors of the economy presents immense
opportunities for leasing. Also, the economic agenda (Renewed Hope) of the Government if implemented is another major area of interest to watch.
Essentially, equipment leasing is very significant to achieving the various developmental initiatives of the Government. Also, the growing appetite
for asset finance by consumers in the face of tight cash squeeze and rising cost of assets, present immense opportunities for leasing. The point to
stress is the capacity of leasing to fully exploit these opportunities and the willingness of the government and other stakeholders to constantly be
committed to the development of the industry.
Table 1: Equipment Leasing Table by Sector (2014 – 2023) (N’ 000)
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Manufactur
ing
607,750,636.
51
476,771,571.
40
375,965,188 279,725,073 269,254,555 245,432,614 217,167,991 180,569,189 158,871,170 124,712,434
Transport/
Logistics
977,075,892 761,895,999.
32
614,046,637 490,720,981 469,779,945 421,909,188 355,958,400 319,359,598 289,912,286 227,578,528
Agriculture 300,750,531.
93
216,549,704.
36
176,227,151 148,565,322 145,130,992 133,106,584 96,618,887 89,299,126 73,800,541 57,932,758
Oil/Gas 1,127,737,57
7.58
893,846,389.
89
739,276,602 602,120,031 577,828,429 518,160,139 449,853,966 398,615,644 361,419,039 283,710,683
Governmen
t
267,400,734.
48
201,911,201.
92
154,868,223 127,206,394 123,772,064 111,697,656 88,143,803 80,824,042 73,074,750 57,363,019
Telecoms 374,649,989.
66
299,804,809.
60
232,600,554 177,853,183 170,900,759 147,078,818 128,235,736 120,915,976 99,217,957 77,885,200
Others 540,006,880.
63 409,027,815.
52
294,780,581 185,285,839 171,045,935 123,175,178 109,042,866 72,444,064 50,746,048 39,835,190
Total 4,195,372,24
2.79 3,259,807,49
4.01
2,587,764,93
8
2,011,476,83
1
1,927,712,68
0
1,680,560,18
0
1,445,021,65
1
1,262,027,642 1,107,041,794 869,017,815
NB: Others include Education, Healthcare, Construction and Consumers sectors