FG Moves To Swell Revenue, Unveils Equipment Leasing Registration Authority

BY COBHAM NSA – Focused on heralding a new era of enhanced revenue generation in the country, the Federal Government has concluded plans to formally unveil the Equipment Leasing Registration Authority (ELRA).

The Authority is expected to play the role of a key driver and Facilitator of two of the Eight-point Agenda of the Tinubu Administration – ‘Access to Capital and Job Creation”.

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, will perform the official unveiling ceremony on Tuesday, 7th November 2023 in Abuja, the Federal Capital Territory (FCT).

A statement personally signed by the Executive Chairman and Chief Executive Officer of ELRA Board, Engineer Saidu Njidda, described the Equipment Leasing Act as a viable alternative to loan, explaining that its effective implementation would herald a new era of enhanced revenue generation given that the industry is capable of producing an estimated total volume of $1.5 trillion globally.

According to him, this would ultimately account for 20 percent of total investment in equipment and contributing about 1.5 percent of Gross Domestic Product (GDP).

The Executive Chairman further said 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).

Engineer Njidda also noted that Equipment Leasing as an alternative and significant source of finance to loans has been contributing immensely to capital formation in the global Economy with its wide usage in many countries for the acquisition of capital assets.

Listing major players in the Leasing industry in Africa to include South Africa, Morocco and Nigeria, ranked amongst the top 50 Leasing Countries in the world, with Ghana, Rwanda, Egypt, Kenya, Tunisia and Angola also playing significant roles, the ELRA Executive Chairman further said; “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 said 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 which currently stands at less than one percent, 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.

Importantly, Njidda listed major players in the Leasing industry as 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; and the financier, who gives out money as raw material of leasing.

Others are the lease broker, who sometimes facilitates the lease as 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.

For the Executive Chairman; “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”.

However, he said key challenges of lease penetration include the poor inflow of Direct Foreign Investment (DFI) in the lease industry; and lessor’s apathy to some categories of leasing among others, attributing it to the absence of Government support through regulatory environment and financial intervention in order to grow the sector and enhance its contribution to Nigeria (GDP).

Also, Njidda expressed confidence that the ELRA Act passage and full take off of the Authority would ensure fraudulent and unscrupulous practice of transacting parties, including the manufacturer, are identified and handled accordingly.

He said the development would no doubt 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.

The ELRA Board was inaugurated in May 2022 by former Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed, following the establishment of the Authority in line with Section 8 of the Equipment Leasing Act, 2015.

The Board had 11 members including Engineer Saidu Njidda, Executive Chairman; Barrister Bassey Imoh, Registrar/Secretary; one representative each from the CBN, SMEDAN, and NACCIMA.

Also, there are representatives each from Federal Ministry of Finance, Federal Ministry of Justice, Federal Ministry of Trade and Investment, and three representatives from the umbrella body of lessors which sponsored the bill, Equipment Leasing Association of Nigeria (ELAN)