Liberia Leasing Investment Forum

Transcription

1 Finance Leasing in Liberia: Unlocking Accelerated Market and Business Development. Evolution of Nigerian Leasing Market & Regional Opportunities Kehinde Lawanson, Executive Director First Bank of Nigeria Plc/ Chairman Equipment Leasing Association of Nigeria Monrovia, June 13, 2012

2 Preamble: As opportunity knocks all the time, we have to be ready for it so that when the chance comes we have the equipment to take advantage of it Louis L. Amour

3 Nigeria A Profile Population 160m (World Bank, 2012) 25% of African population -1 in every six African is a Nigerian Capital Abuja Commercial City Lagos Area 923,768sq km (356,669 miles) Major Languages English (official), Yoruba, Hausa, Ibo Religion Christianity Islam & Traditional Life Expectancy 49 years (men), 50years (women) Monetary Unit 1 Nigerian Naira = 100kobo Main Exports Petroleum & its products, cocoa, rubber GNI per Capital US$1,230 (World bank 2010) Internet domain.ng International dialling +234 Currency Naira (NGN) 1 Nigerian Naira = 100kobo Nigera Overview Major Political Parties -People democratic party (PDP);All Nigeria People s Party (ANPP); Action congress (AC) 3

4 Nigeria A Profile Investment potential in Nigeria NW NE SW NC Yet to be fully exploited abundant resources in Oil & Gas, Agriculture & Manufacturing Free Market Economy Robust Private Sector Fast Growing Financial Sector Skilled and Low Cost Labour SS SE Nigeria Overview 4

5 HISTORICAL Nigeria SWOT & PEST & Analysis ECONOMIC FACTS The Nigerian economy remains resilient and maintains its position as the second largest economy in Africa (after South Africa) and fastest growing in the region. Political Economy Social Technology Independence from the United kingdom in October 1960 Republic Declared in 1 October 1963 Political Stability since 1999 Recently concluded and electioneering process (adjudged free and fair) Regional political leader in Africa. Growing international recognition Widening political participation Successful political transition processes Oil producing -Higher Revenue stream Minerals & land endowment Young population Large consumers Economic Reforms -Rising oil price in the world market Global economic recovery Big Human capital resources Cultural & religious diversity Multi ethnicity Large population size (25% of Africa s pop.) Tourism potentials Emerging PPP in infrastructure concessioning, privatisation and deregulation Computerization of Govt & private sector business Launch of Nigeria SAT 1 Telecom revolution -E-commerce -E-learning -E-governance -From Cable to Fibre Optics technology

6 Nigeria SWOT & PEST Analysis HISTORICAL & ECONOMIC FACTS The Nigerian economy remains resilient and maintains its position as the second largest economy in Africa (after South Africa) and fastest growing in the region. GDP (Nominal) 2011 Estimate Total USD bn Per Capital USD 1,490 Annual Population Growth Rate 3.5%

7 7 FINANCIAL INSTITUTION AND MARKETS 80 s and 70 s dominated by the big three banks First Bank, Union Bank, and United Bank for Africa and a few other local banks Industry was deregulated in 1986 The number of Banks currently operating in Nigeria is 21 In terms of size, Nigeria has a robust financial landscape with banking assets of over USD $100bn

8 8 Lease: Definition A lease is a contractual agreement between an owner (the lessor) and another party (the Lessee) which conveys to the lessee the right to use the leased asset for an agreed period of time in return for a consideration, usually periodic payments called rents

9 The Beginning: Started in Nigeria 1960 pioneered by Brentward Finance later NAL Merchant Bank In 1983, ELAN was established by six (6) wholesale (Merchant) Banks to promote leasing business in Nigeria: NAL Merchant Bank Nigerian merchant Bank Continental Merchant bank Nigerian American merchant Bank ICON Merchant Bank International Merchant Bank

10 Objective: To promote the business of leasing in Nigeria Where we are: Common law and other statutes presently regulate leasing industry Companies Income Tax act presently applicable but not sufficient Specific regulatory and legal structure for leasing in progress

11 MARKET OPPORTUNITY 11 Low Per Capita / Wealth formation Equipment cost can be spread over a number of years, thereby allowing for better cash flow management Low penetration rate means good potential for leasing volumes Alternative to bank loan Easily accessible than commercial bank loan Overcomes the collateral constraints associated with Bank loans Vendor Support Leasing exposed to flexible payment term under a vendor support arrangement Balance sheet Management Investment in asset recorded as off balance sheet item as opposed to fixed assets in the balance sheet

12 Nigeria s Equipment leasing volumes by sector ( ) USD $1.5bn $2.2bn $2.8bn $3.4bn $3.9bn % anufacturing 23% 20% 20% 17% 16% Transport 21% 23% 23% 26% 27% Agriculture 2% 10% 10% 8% 7% Oil and Gas 35% 25% 25% 28% 30% Government 1% 8% 10% 9% 8% Telecom Others 16% 1% 12% 2% 12% 2% 11% 2% 10% 2% Liberia 0 Leasing Investment Forum

13 Equipment leasing in Nigeria: Sectoral interplay ( ) Others 2% 13 Government 8% Telecom 11% Manufacturing 18% Oil and Gas 28% Transport 25% Agriculture 8%

14 14 LEASE INFRASTRUCTURE UPDATE LEGAL Enabling legislation (interim). Leasing Law (In process).

15 15 LEASE INFRASTRUCTURE UPDATE ACCOUNTING / TAX Capital Allowance. Accounting Standard (Nigeria presently uses SAS II, a replica of IAS 17.

16 16 LEASING MARKET DYNAMICS Economic Environment: Exchange rate Fiscal issues GDP growth Geo Polity Interest rates Nationalization

17 17 LEASING MARKET DYNAMICS FINANCIAL MARKETS AND ITS SOPHISTICATION: Trade Barriers Product innovation Managing risk Competition

18 LEASING MARKET DYNAMICS 18 PUBLIC POLICY / PRACTICE: Unregulated Non bank lessors Minimum Capital requirements

19 LEASING MARKET DYNAMICS PLAYERS IN THE LEASING ECO-SYSTEM : 19 Lessor/ Financier Vendor Product /Lease Agreement Lease Broker Lessee

20 LEASING MARKET DYNAMICS 20 TECHNOLOGY: Integrated technology platform Technological change

21 21 CROSS BORDER: CHALLENGES Exchange rate Shallow Markets Political Infrastructure supporting leasing Language Barrier Skills gap Statutes Legal Issues

22 CROSS BORDER ACTIVITIES 22 Regional Integration for leasing Development Partners Capital formation Leasing Associations Growth Potential of leasing business Government Policy / Law Regional alliances and mergers

23 23 NEW FRONTIERS Securitization of lease receivables Setting up of a West African Leasing Federation Bilateral and multilateral easing of customs and trade laws and requlations Co-operation

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