Stakeholders highlight the potential of Nigeria’s leasing industry to bridge a ₦13tn MSME funding gap, driving growth and innovation.
At the 2024 National Leasing Conference in Lagos, stakeholders in Nigeria’s leasing sector underscored the industry’s potential to address the ₦13 trillion funding deficit hindering Micro, Small, and Medium Enterprises (MSMEs).
The event, organised by the Equipment Leasing Association of Nigeria (ELAN), carried the theme: “Equipment Leasing: The Creative Financing Alternative in Today’s Reality.”
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The Chief Operating Officer of the Development Bank of Nigeria (DBN), Mr Bonaventure Okhaimo, revealed that existing financial institutions and government initiatives have only managed to provide ₦1.2 trillion in funding for MSMEs, a fraction of the required amount.
“The challenges for MSMEs are many, but access to finance is key. The ₦13tn funding gap is significant, and we must explore creative avenues like leasing to provide MSMEs with equipment that can also serve as collateral for financing,” Okhaimo stated.
Nigeria currently boasts over 100 leasing firms, with total outstanding leases reaching ₦4.19 trillion in 2023, marking a 28.7% growth from the previous year. These firms play a vital role in fostering innovation, entrepreneurship, and infrastructure development.
The Chairman of ELAN’s Board, Mrs Elizabeth Ehigiamusoe, emphasised that leasing has proven globally to be a powerful financing alternative, contributing $1.5 trillion annually to the global economy.
In Nigeria, leasing has enhanced capital formation, generated employment, and supported various sectors, contributing over ₦20.4 trillion to economic growth since its inception.
“Leasing offers businesses, especially MSMEs, the tools they need to thrive despite rising costs. It’s an efficient and flexible solution for addressing today’s economic challenges,” Ehigiamusoe remarked.
The Equipment Leasing Registration Authority (ELRA) echoed the significance of leasing in economic recovery. Its CEO, Mr Donald Wokoma, projected the financial leasing market size to exceed $316.7 million by 2030, up from $209.7 million in 2022.
“We are committed to establishing a robust framework that positions leasing as a cornerstone of Nigeria’s long-term economic growth under the government’s Renewed Hope Agenda,” Wokoma stated.
Industry leaders, including the Managing Director of C&I Leasing, urged ELAN to advocate for tax incentives and regulatory reforms to encourage more leasing firms to enter specialised markets. This, they noted, would amplify the sector’s impact on Nigeria’s economic development.
KPMG’s Associate Director of Infrastructure and Major Project Deal Advisory, Olasunkanmi Odede, stressed the importance of adaptability for businesses operating in Nigeria’s challenging economic environment. He recommended proactive measures to mitigate risks and ensure financial resilience.
The Nigerian Equipment Leasing Act of 2015 continues to provide a legal framework for the sector, ensuring the rights of lessors, lessees, and third parties.
As stakeholders rally to harness the full potential of leasing, the industry stands poised to bridge the MSME funding gap and catalyse economic recovery.
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