New opportunity for leasing as service quality in telecoms worsens
Despite about N979 billion investment ploughed into network expansion projects by telecommunications operators this year, Nigerians are yet to feel the impact in terms of improvements in network quality.
The most obvious quality issues are drop calls and incoherent voice transmission which are still very prevalent in the industry. This situation presents a unique opportunity for companies in the equipment leasing industry, according to Keyinde Lawanson, chairman of Equipment Leasing Association of Nigeria (ÉLAN).
He made these disclosures at the 11th National Lease Conference held in Lagos, recently. According to him, telecoms firms can take advantage of equipment leasing initiatives to cut down costs associated with network rollout.
The contribution of leasing is quite glaring in all sectors of the economy with the volume of leased assets reaching N671 billion in 2012, Lawanson said, further adding that even with the significant strides recorded in Nigeria’s vibrant telecoms market, the sector accounts for a meagre 9.8 percent of total portfolio of leased assets.
According to him, telecoms is critical to the growth of any economy, adding that the sector contributes about 8.53 percent to GDP, and has become the largest generator of Foreign Direct investment (FDI) after the oil and gas industry. Lawanson said the penetration of leasing in sector appears low compared to the size of the sector in terms of the huge demand for equipment for telecom and value added services.
“The current involvement of Nigerian lessors in telecommunications is restricted mainly to the provision of vehicles and other general equipment to support operations,” he stated. The reason for this, Lawanson noted, apart from funding constraint on the part of lessors is the specialised nature of telecom assets.
“It is however obvious that the telecom market offers clear and exciting opportunity beyond the financing of general assets; there are other specialised equipment such as switches, base stations and private network services, even handsets that can be financed,” he stated. According to him, lessors have been able to create niche in telecom leasing in other climes.
“We should take a cue from this by developing telecom leasing products in line with market dictates and deepen leasing penetration in the sector.” In a bid to create desirable value in the emerging market, The ELAN chairman, stressed the need for lessors to have clear knowledge of the sector’s peculiarities and the transaction dynamics of telecom leasing.
“Looking at the topics for this conference, I am optimistic that these and other related issues will form part of our discussions today,” he said. Lawanson also pointed out that it was equally important for the leasing industry to have the institutional infrastructure to strengthen its capacity to address the capital needs of the economy.
He emphasised the need for enabling environment especially in the areas of appropriate legal and regulatory frame work to enhance investors’ confidence and promote leasing activities in the country.
“In this regard, we have initiated and pursued various advocacy programmes including the enactment of a specific legislation on leasing.
“Though, we witnessed some setbacks recently on the leasing law at the Senate, we are assessing the situation and shall continue to sustain efforts towards the eventual realisation of the long awaited law,” he concluded.
By: Ben Uzor Jr