Leasing Association: Nigerian Economy ‘Walking on its Knees’

*Says 27.25% MPR implies borrowing cost will rise to 40%

Dike Onwuamaeze

Chairman of Equipment Leasing Association of Nigeria (ELAN), Mrs. Elizabeth Ehigiamusoe, says the Nigerian economy has been walking on its knees, as the consequences of floating the naira and removing petrol subsidy brought hardship, with astronomical increase in the cost of goods and services.

Ehigiamusoe made the declaration yesterday during the 22nd Annual National Lease Conference organised by ELAN, with the theme, “Equipment Leasing: The Creative Financing Alternative in Today’s Reality.”
She said the theme was intended to highlight the developmental attributes and imperatives of equipment leasing in efforts to stimulate production and create wealth.  

Ehigiamusoe stated, “The Nigerian economy has been walking on its knees for some time now, as major indicators showed adverse performance, against the background of global economic uncertainties, geopolitical tensions, and the continued impact of the COVID-19 pandemic as well as increasing domestic macroeconomic vulnerability.
“The twin cardinal policies of the federal government: the subsidy removal and floating of the Naira, hailed as bold reforms in taking the economy out of the woods, have equally brought considerable hardship in the land, with astronomical increases in the cost of goods and services.”

She explained, “In the financial space, the Central Bank of Nigeria’s (CBN) continued increase in the Monetary Policy Rate (MPR), which aims to curb inflation, seems to be achieving limited positive results as the price indices remain high.

“The recent increase of the MPR to 27.25 per cent implies that the cost of borrowing will increase to around 40 per cent thus, further constraining businesses and consumer spending.”
Ehigiamusoe advised the government to be proactive and adopt value-added initiatives.
She said, “Essentially, leasing can play a major role in facilitating the various developmental initiatives, ranging from access to capital for individuals and businesses, food security; poverty eradication, inclusive growth, and job creation to supporting initiatives in transportation including that of the CNG vehicles.

“In Nigeria, since its inception leasing has been supporting economic development.
“Outstanding leases in Nigeria in 2023 amounted to N4.19 trillion as against N3.25 trillion in 2022 representing 28.7 per cent growth and contributed more than N20.4 trillion to capital formation in the economy.
“Leasing remains a compelling alternative as we navigate the complexities of our challenging economy, offering efficient and flexible financing solutions to meet the diverse needs of the user.

“This is a very important tool for businesses, especially the Micro Small, and Medium Scale Enterprises (MSMEs), empowering them to acquire the assets they need to grow and thrive amid increasing costs.”
Ehigiamusoe also advocated that Nigeria should borrow a leaf from Kenya, where the government had been using leasing for official government transportation to deliver efficient and economically viable transport solutions across various governmental departments.

According to her, “In today’s reality in Nigeria, where there is a need for resource optimisation, all tiers of government should deepen their participation in public sector leasing.

“This model conserves capital and provides flexibility, enabling public entities to access essential equipment, technology, and infrastructure without significant upfront investment, leading to cost savings and avoidance of waste.

“By reallocating capital from asset acquisition to more strategic endeavour, governments can maximise their impact and deliver greater value to the citizenry.”  

In his address, Registrar/CEO of Equipment Leasing and Registration Authority (ELRA), Mr. Donald Wokoma, said ELRA was committed to building a long-term framework that would position leasing as a key driver of economic growth across Nigeria.

Wokoma said, “We will work to foster a supportive regulatory environment, promote digital innovation in leasing, and secure funding partnerships that empower businesses, particularly MSMEs, to access the tools they need for sustainable expansion.

“Together, we can fully harness leasing as a creative, accessible financing alternative that supports Nigeria’s ‘Renewed Hope Agenda,’ advancing our nation’s resilience and prosperity.”

He stated that ELRA recognised leasing’s critical role in driving economic growth and innovation in Nigeria, particularly in today’s challenging financial climate.

He said, “Our priority is to enhance the leasing sector’s capacity to provide alternative financing solutions that support infrastructure development, business expansion, and economic resilience.”