Government has been urged to ensure that multilateral funds from some development agencies are channelled into the leasing sector to serve as a backup for investment in the industry.
The Chief Executive Officer, C&I Leasing Plc, Andrew Otike-Odibi, said this in an interview with The Guardian on the sideline of its Investors’ Forum, in Lagos, at the weekend.
According to him, if structured funds were tailored towards certain parts of the industry like telecoms, oil and gas, it would help reduce the cost of borrowing and ultimately grow the sector.
Specifically, he listed cost of financing and the non-availability of long-term funds as major challenges currently facing the sector, noting that one of the areas government need to work on to boost the industry is taxation.
He said: “Currently, tax levied on the leasing industry is heavy, and it affects profitability. The structure of capital gains, as such, capital allowances, and withholding tax need to be looked at because in a leasing company, you only benefit from your margin. You may have a high turnover volume and your net margin is low, so if your tax is high, your profit after tax is totally eroded.”
He continued: “Sometimes some development agencies come into the country and want to put some funds into some sectors, like you have with the Netherlands, and United States; you have those funds coming in, if they pass through the leasing industry, it would create more value for the sector.
“There will be guarantee of returns, and value creation for the client and the leasing company. Rather than just gathering some people and giving funds to them, leasing companies should be brought in to manage most of the multilateral funds to create wealth and growth for the industry.”
Otike-Odibi also assured investors of good returns on investment in the current financial year, adding that C&I Leasing would continue to pursue a clear and consistent strategy to deliver a strong performance for its shareholders.
He revealed: “The company recorded an increase of about 15.6 per cent in revenue from N17.2 billion in the corresponding period of 2017 to N19.9 billion in 2018, and a stronger improvement in our profit after tax (up by 25 per cent from N0.95 billion in 2017 to N1.2 billion in 2018).”
Source: G Business