Nigerian Economy ‘ Walking On Its Knees’ Amid Struggles – Leasing Association

 

The Chairman of the Equipment Leasing Association of Nigeria (ELAN), Mrs. Elizabeth Ehigiamusoe, has described the Nigerian economy as “walking on its knees,” attributing the severe economic challenges to the impact of floating the naira and removing the petrol subsidy.

These policies have led to soaring costs for goods and services, worsening economic conditions for many Nigerians.

Ehigiamusoe made this statement at the 22nd Annual National Lease Conference hosted by ELAN, with the theme “Equipment Leasing: The Creative Financing Alternative in Today’s Reality.” The theme was aimed at exploring how equipment leasing could play a significant role in stimulating production and creating wealth.

She noted that the Nigerian economy has been struggling due to various internal and external factors, including global economic uncertainties, geopolitical tensions, and the lingering effects of the COVID-19 pandemic.

Additionally, the government’s twin policies—subsidy removal and the naira floatation—while hailed as bold reforms, have brought significant hardships. This has resulted in inflationary pressures and higher costs for goods and services.

Ehigiamusoe said, “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.

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“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.”

The Central Bank of Nigeria’s (CBN) continuous increase in the Monetary Policy Rate (MPR), now at 27.25%, has led to a rise in borrowing costs, pushing them to around 40%. This will further limit consumer spending and place additional strain on businesses.

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 emphasized the potential of leasing as an effective tool for economic development. She argued that leasing could offer valuable solutions in sectors such as food security, poverty eradication, inclusive growth, and job creation. She highlighted that in 2023, outstanding leases in Nigeria reached N4.19 trillion, up from N3.25 trillion in 2022, marking a 28.7% growth and contributing significantly to capital formation.

She added, “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.”

Leasing remains an attractive financing option for businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), allowing them to access the capital needed to thrive despite rising costs. Ehigiamusoe also recommended that the Nigerian government take inspiration from Kenya, where public sector leasing has proven successful in providing efficient and cost-effective transportation solutions. She called for deeper government involvement in public sector leasing to optimize resources, conserve capital, and ensure value delivery to citizens.

She recommended, “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.”

Mr. Donald Wokoma, the Registrar/CEO of the Equipment Leasing and Registration Authority (ELRA), also spoke at the conference. He reaffirmed ELRA’s commitment to positioning leasing as a key driver of economic growth. Wokoma emphasized the importance of a supportive regulatory environment, digital innovation, and funding partnerships to empower businesses, particularly MSMEs, and promote long-term economic resilience.

He stated, “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 concluded by highlighting leasing’s vital role in driving innovation and infrastructure development, which are critical to advancing Nigeria’s “Renewed Hope Agenda” and ensuring sustainable economic growth. Wokoma 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.”