Outstanding lease volume for the leasing industry increased from N780 billion in 2013 to N869 billion in 2014, representing a growth rate of 11.3 percent as against 16.8 percent in 2013.
Analysis of various sectors by ELAN, an umbrella body of leasing companies in the country revealed that, the oil and gas sector dominated the industry with 31.6 percent of the lease volume closely followed by transportation with 15.8 percent, Manufacturing sector grew by 11 percent, Government, Agriculture and Telecoms all grew above 5 percent while other sectors recorded 26 percent growth.
A further breakdown of the statistics indicates vehicles as the most leased asset with 50 percent, Plant/Machinery had 29 percent, Office Equipment had 10 percent while Aircraft/Vessels had 2 percent and others (including house hold equipment) 9 percent.
In terms of types of lease transactions, finance leases dominated with 75 percent while operating leases represent 25 percent. Operating lease will continue to deepen its market penetration with the increasing demand for the product especially from corporate customers, who are now redefining their business strategy to focus on their core business activity and outsource other services.
Also, the recent Central Bank of Nigeria (CBN) guidelines on the regulation of finance leases may likely witness increase in operating leasing as some lessors who do not want to be regulated may shift to operating lease.
The major contributors include banks playing at the high end of the market in terms of transaction value and supporting other lessors with funds for their transactions. The non-bank lessors however, have better spread representing 80 percent of lease transactions, with many of them focusing on Small and Medium Scale Enterprises (MSMEs).
Vendors are equally enhancing their visibility in the market place, especially in the consumer market, where they are engaged in the lease of their own products mainly household assets and cars under vendor lease programmes supported by banks in some cases.
The report says that majority of Nigerian lessors are engaged in general leasing, financing different types of asset cutting across various industries, though financial capacity and industry’s knowledge may restrict participation in some specialised cases such as telecommunications, power and agricultural equipment.
The events, which started in the last quarter of 2014, include dwindling oil prices leading to the devaluation of the Naira and the tensed political atmosphere may have considerable negative impact on the volume of leases in 2015.