The Equipment Leasing Registration Authority (ELRA) is set to be officially launched by the Federal Government of Nigeria on November 7, 2023, in Abuja, the Federal Capital Territory. A press release from Engr. Saidu Njidda, ELRA Executive Chairman, said that the launching ceremony would be led by Mr. Wale Edun, who is the Minister of Finance and Coordinating Minister of the Economy. This would allow the Authority to play a vital part in advancing two of the Tinubu Administration’s eight-point agenda items: “Access to Capital and Job Creation.” The ELRA was established in accordance with Section 8 of the Equipment Leasing Act, 2015, and its board was formed in May 2022 by the then-Minister of Finance, Budget, and National Planning, Zainab Shamsuna Ahmed.
Also, the formed board has 11 members: Engr. Saidu Njidda as Executive Chairman, Barr. Bassey Imoh as Registrar/Secretary, and one representative from the Central Bank of Nigeria, NACCIMA, SMEDAN, the Federal Ministry of Justice, the Federal Ministry of Trade and Investment, the Federal Ministry of Finance, as well as a member from the Equipment Leasing Association of Nigeria. According to the Statement, the Executive Chairman of the Board of ELRA said that the introduction of the Equipment Leasing Act, which is a good alternative to loans, opens up a new way for the industry to make more money. This is because the industry can make up to $1.5 trillion globally, which is 20% of all investments in equipment and 1.5% of GDP.
It has become important for Nigeria because of its current economy.
In addition, Engineer Njidda cites the widespread use of Equipment Leasing in several nations to acquire capital assets as evidence that this form of financing is a significant alternative to loans and has been tremendously beneficial for capital formation in the global economy. He notes that several African countries play important roles in the industry, including South Africa, Morocco, and Nigeria, all of which are among the top 50 Leasing Countries in the world, as well as Ghana, Rwanda, Egypt, Kenya, Tunisia, and Angola. He also noted that it has been increasingly important in Nigeria because of the current state of the country’s economy, where access to finance is particularly challenging for Micro Small and Medium Scale Enterprises (MSME). This is especially true over the past decade.
Leasing primary purpose is to aid in economic growth and development by fostering the creation of profitable businesses, which in turn creates jobs and income for locals. When compared to the potential of the Nigerian economy and to advanced economies like Europe and America, in which the rate of adoption can be as high as 28 percent, he emphasised that despite its significance as a means of financing Nigerian industry sector participants and the economy as a whole, the rate of adoption in Nigeria remains extremely low and presently stands at under 1 percent.
Every player has a significant role in the value chain.
According to the Chairman, the lessor is the primary actor in the industry because they supply the leased asset and, in some cases, additional services. The lessee uses the equipment but does not own it; the supplier makes the sale and guarantees the asset’s performance and suitability. The financier provides the raw material of money for the lease, and the lease broker acts as an intermediary between the manufacturer and the financier. The government plays a crucial role in the industry through policy formulations, legal structures, Tax, accounting, various regulatory policies, and the leasing specialists who design and manage the lease.
Therefore, it is important to note that the Authority is aimed at governing with the help of the government in order to stabilise and support a healthier leasing industry Environment, and the keys to doing so lie in the behaviour and roles of the players described above. To grow that industry and improve its contribution to Nigeria (GDP), he said the government must provide a supportive regulatory environment and financial assistance. He also cited a lack of direct foreign investment (DFI) in the leasing industry and a lack of interest from lessors in certain types of leasing.
Adoption of adequate policies and regulations will transform the sector.
Lastly, he shared the hope that upon the adoption of the ELRA Act and the complete launch of the Authority, fraudulent and unethical practices of transacting players, especially the manufacturer, will be recognised and dealt with appropriately. This will, without a doubt, fill in the void and give out an advantageous position in operating the Equipment leasing sector to a developed position from its current situation of growing status. This will be accomplished through the adoption of adequate policies, guidelines, and regulations that will transform and sanitise the sector.