Equipment Leasing Act underpins Nigeria’s stellar market

GlobalData

Thu, May 8, 2025, 4:00 AM 5 min read

Nigeria offers immense marketplace imaginable with its ample economy, digitalisation, and rapidly increasing population, a information already demonstrated successful presumption of axenic concern volume.

Outstanding leases successful the state totalled N4.19 trillion successful 2023 (£5.3 billion), compared to N3.25 trillion (£4.11 billion) successful 2022, a emergence of 28.7%. New leases accrued to N935.6 cardinal (£1.18 billion) from N672 cardinal (£850 million), oregon 39.2%.

These figures are provided by the Equipment Leasing Association of Nigeria (ELAN). It was established successful the state successful the 1980s to beforehand and support instrumentality lessors and is hosting its 23^rd National Lease Conference connected November 20th.

Double-digit maturation persisted into 2024, according to ELAN, and the portents are favourable fixed what it refers to arsenic the “wide financing gap” successful assorted sectors of the economy. Coupled with this is the increasing appetite for plus concern acceptable against a choky currency compression and the rising outgo of assets, notwithstanding, of people myriad challenges posed by the peculiarities of Nigeria’s analyzable macroeconomic climate.

Soon aft the predetermination of Bola Tinubu arsenic President successful 2023, the authorities allowed the currency, the naira, to interval freely, a determination that led to it instantly losing one-third successful value, and eliminating the request for aggregate speech rates. The naira has since fallen sharply, from its fixed worth of N460/$ to much than N1,600/$. Given this, and the spike successful ostentation the state has shouldered, borrowing rates person continued to climb.

The rising outgo of assets people means that much wealth is required to concern lease agreements. However, the constricted sources and precocious outgo of funds person constrained the capableness of astir lessors to concern much leases and prosecute successful larger transactions, frankincense limiting their scope to smaller enterprises.

Supporting the market’s maturation is the Equipment Leasing Act (ELA), which is based connected British communal instrumentality and has enactment Nigeria connected a par with different countries with circumstantial leasing legislation. It was passed successful 2015, arsenic portion of the government’s efforts to heighten the publication of leasing to the economy, aiming to bring unneurotic the assorted nationalist and backstage stakeholders nether the auspices of the Ministry of Finance.

The Act fundamentally sets retired the model for instrumentality leasing agreements successful the country, including registration requirements, security responsibilities betwixt the lessor and lessee, and the taxation implications. The ELA provides 2 routes by which a lessor whitethorn privation to terminate an instrumentality lease statement pursuing a lessee’s insolvency, successful 1 lawsuit without requiring a court.