The Federal Government of Nigeria is set to formally unveil the Equipment Leasing Registration Authority (ELRA) on Tuesday, November 7, 2023, in Abuja, the Federal Capital Territory.
According to a press statement signed by ELRA Executive Chairman, Engr. Saidu Njidda, the unveiling ceremony will be performed by Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy.
This is to enable the Authority to play the role of a key driver and Facilitator of two of the 8-point Agenda of President Tinubu’s Administration- ‘Access to Capital and Job Creation”.
It would be recalled that the ELRA Board was inaugurated in May 2023 by Zainab Shamsuna Ahmed, the former Minister of Finance, Budget and National Planning (HMFBNP) following the establishment of the authority which is in accordance with Section 8 of the Equipment Leasing Act, 2015.
The inaugurated board comprises 11 members including Engr. Saidu Njidda, Executive Chairman, Barr. Bassey Imoh, Registrar/Secretary, one representative each from the CBN, SMEDAN, NACCIMA, Federal Ministry of Finance, Federal Ministry of Justice, Federal Ministry of Trade and Investment, and three representatives from the Equipment Leasing Association of Nigeria, the umbrella body of lessors which sponsored the bill.
In the Statement, the Executive Chairman of the Board of ELRA observed that the implementation of the Equipment Leasing Act, a viable alternative to loans heralds a new era of enhanced revenue generation given that the industry is capable of generating an estimated total volume of $1.5trillion globally accounting for 20% of total investment in equipment and contributing about 1.5% of Gross Domestic Product (GDP).
Engr. Njidda also noted 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.
He highlighted that the major players in the Leasing industry in Africa include South Africa, Morocco, and Nigeria which are ranked amongst the top 50 Leasing Countries in the world with Ghana, Rwanda, Egypt, Kenya, Tunisia and Angola, playing significant roles.
The ELRA Boss further observed that in Nigeria, particularly over the last 10 years, Leasing has contributed over ₦14.3 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 currently standing at less than 1 percent 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 explained 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 a raw material of leasing, the leasing broker who sometimes facilitates the lease as an 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, and lessor’s apathy to some categories of leasing among others which he attributed to the absence of Government support through the regulatory environment and financial intervention in order to grow the sector and enhance its contribution to Nigeria (GDP).
Engr. Njidda expressed optimism that with the passage of the ELRA Act and the full take-off of the Authority, the fraudulent and unscrupulous practice of transacting parties including the manufacturer will be identified and handled accordingly, adding that this will fill the gap and bring out a comparative advantage in driving the Equipment leasing sector to a developed status, from the existing scenario of developing status through the introduction of appropriate policies, guidelines and standing orders that will shape up and sanitize the industry.
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