Unlocking Nigeria's Leasing Potential: A Tool for Economic Growth and Inclusive Prosperity

Strategic Insights -

As Nigeria navigates economic challenges, leasing has emerged as a powerful yet underused tool to fuel enterprise growth and industrial productivity. Despite its promise, leasing remains out of reach for many Nigerian businesses, not because it lacks relevance but due to limited awareness, uneven access, and underdeveloped support systems. Globally, lease financing has proven to be a reliable driver of financial inclusion and productive investment. In Nigeria, where more than 40 million micro, small, and medium enterprises struggle with limited access to finance and face over N13 trillion in unmet credit demand, leasing offers a scalable and practical solution to one of the country's most persistent development challenges.

Key Takeaways:

  • Leasing provides a practical path to risk mitigation, sustained business operations, and inclusive economic growth in Nigeria.
  • Despite its potential, leasing remains concentrated among large corporations, while MSMEs face barriers to entry, with only 0.185% lease penetration rate in Nigeria compared to 1.10% in Morocco and 0.71% in South Africa.
  • Strengthening the legal and institutional framework, including the enactment of the Equipment Leasing Act (ELA) and the establishment of ELRA in 2023, has introduced structure, enforceability, and transparency to the leasing industry.
  • Commercial banks, insurance providers, and original equipment manufacturers are critical for unlocking the full potential of leasing by providing capital, de-risking transactions, and driving demand.
  • Foreign exchange volatility and tax treatment remain significant barriers to leasing adoption, with the Nigerian framework subjecting equipment leasing to VAT as a supply of service.
  • Addressing these issues through regulatory clarity and guidelines would enhance market confidence and reduce friction, making leasing a mainstream financing option for Nigerian businesses of all sizes.

Statistics:

  • The total value of leases in Nigeria reached N5.16 trillion in 2024, a 23% increase over the previous year.
  • Nigeria has a large unmet credit demand of over N13 trillion, with leasing offering a scalable and practical solution.
  • Capturing even a fraction of this demand could unlock a N3 to N4 trillion market opportunity, catalysing investment in equipment, boosting productivity, and accelerating formalisation across Nigeria's most dynamic sectors.
  • Leasing penetration rates in Africa are low, with Nigeria lagging behind other countries, highlighting the continent's untapped potential for asset financing and enterprise growth.

Sources:

  • The Economist
  • World Bank
  • LECON Finance Company
  • BOI Leasing (LECON)
  • Equipment Leasing Act (ELA)
  • Equipment Leasing Registration Authority (ELRA)
  • Nigerian Stored Products Research Institute (NSPRI)
  • Agusto and Co
  • Nigerian government reports and documents.