CBN Plans to Regulate Equipment Leasing Activities

The current  wide  range of  reforms  in the  finance  company’s  sub-sector  of Nigeria by the  Central  Bank of Nigeria   (CBN) will include  regulation  of equipment leasing activities .

Mr. Kehinde  Lawanson , chairman  of Equipment  Leasing  Association  of Nigeria (Elan) who stated  this at the  18th Annual General Meeting (AGM)  of the association in Lagos,  explained  that this followed the rising  profile  of leasing  as  a veritable financing option.

According to Lawanson, under the financial system strategy  (FSS 2020), championed  by CBN , leasing  is being  promoted  as a major  instrument of  growth  especially to the micro, Small and  Medium Enterprises (MSME)

He noted that these initiatives  would  have  considerable  impact on the  leasing  industry as  Elan  has been  working  with the  apex bank to   ensure that her  developmental objectives for the industry  are realized.

Lawanson said  that the future of leasing  industry  remains  bright despite  the  daunting  challenges facing  it, adding that  the association  would  continue  to be  unwavering  in the quest  to ensure  a stable  and robust  industry.

In his  words: ” We shall intensify engagement  with government  and other  relevant  bodies  to  ensure that the necessary  leasing infrastructure  including” appropriate  legal framework and  favorable  tax incentives are put  in place.

On the scorecard  of the present  board, Lawanson stated that Elan’s total membership was  increased from  237 to 248 in 2012  with  eleven  corporate  organizations joining  the association  as  against the previous year.

He said that Elan  has  continued to strengthen  its  capacity building  initiatives , especially its advisory  service  to ensure  that members are well  informed  about  measures and strategies  to protect  themselves  and  grow  their businesses.

According  to him: “ We shall intensify  efforts ensuring  that  appropriate  funding  mechanism is put  in place  for our  members to fund  their  lease” transactions

He enumerated some of the challenges confronting  the development of the industry  including  inadequate  leasing infrastructure  as  fragmented legal  framework , unfavorable  tax  regime  and  inadequate  funding  mechanism.

BusinessWorld  intelligence  recalls  that  in spite  of the  tough operating  environment, outstanding  lease  volume  for the year ended 31th December, 2012 stood  at  N671 billion, depicting  a growth rate of 7.8 per cent  from N628 billion  recorded in 2011.

The oil/gas sector maintained   its dominance with 32.4 per cent of the total transaction, follows closely of the total transactions, followed closely by an impressive performance from    transportation sector with 30.4 per cent

Though  finance  leasing  transactions continued  to denominate  the leasing  market  for years  now , during  the review  period , a gradual shift  to operating  leasing  was  witnessed.

In fact, many lessors now tilt towards  service-oriented  leases  including  fleet management  of  their corporate clients  in response  to market  dictates.

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