The leasing enterprise in Nigeria offers opportunities with prospects for the country. Leasing business has to do with giving out a facility or equipment for a price and timed use. Leasing business offers options that are flexible for owners of small businesses who do not have to engage large amounts of capital to buy tools or equipment or to buy machinery. This option lets young enterprises to operate with little capital and have a healthy flow of cash since they only hire for their needs. In this article, I will share with you how to start a leasing business in Nigeria. I will also list the 5 categories of items you can lease.
Ways To Begin A Leasing Business In Nigeria
Why Is Their Rapid Growth Of The Leasing Business In Nigeria?
Instead of spending thousands of dollars of a piece of equipment or machinery, most businesses and entrepreneurs prefer to lease or high as they pay a little amount, annually, monthly or a daily basis.
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Equipment leasing in Nigeria offers opportunities. Equipment financing in Nigeria is still expensive. There is an increasing demand for utility of expensive items in a manner that is flexible enabling the leasing business to be enabled to thrive in Nigeria.
Top 5 Categories Of Items To Lease In Nigeria
1. Machines for agriculture
Poor mechanisation is among the largest challenges in Nigeria. Majority of farmers in Nigeria are still making use of crude tools including the manual method to do their cultivation. However we should not blame the farmers since many of them are not able to afford a tractor or other machinery that are essential.
Nevertheless, with the options offered by leasing, farmers can lease a tractor and other required equipment after which they pay only a small amount of what is required to purchase them. The fact is that a single tractor has the potential to plough more land in a short time and perform better than the use of hand tool. Tractors will affect African agriculture. The population of Africa continues to increase as food demand increases. This enterprise will support African farmers.
2. Construction machinery
There is a need for an infrastructural investment of up to US$100 billion on an annual basis in the continent of Africa. There is a high need for construction equipments and materials to meet their targets. The demand for hiring construction equipments by firms and construction companies who cannot afford them is increasing. The major categories of equipment for construction are:
- Construction vehicles ( tankers, tippers, dumpers) leased by firms like truck leasing companies in Nigeria
- Earth moving machinery ( bulldozers, loaders, excavators)
- Equipments for material handling ( forklifts, cranes and hoists)
- Other machinery ( like stone crushers, concrete mixers and heavy duty pumps
Many multinational construction firms are in possession of heavy duty equipment and significant quantities of light equipment. Due to the volume of construction work, contractors will need to hire equipments from third parties often.
Most local contractors have need to hire machinery because they do not have the capacity of owning them. There is also huge demand of household repair tools and simple construction tools like wheelbarrows, pickaxes and drills.
Majority of firms possess an extensive fleet of vehicles and the maintenance costs the firm thousand of dollars including the responsibilities of operation and maintenance that are attributed with owning vehicles. Companies now prefer to lease or hire instead of spending thousands of dollars.
This is more flexible, more convenient and more healthier for the flow of cash. In almost each sector ranging from manufacturing, banking to oil and gas, many firms prefer to lease vehicles instead of complete ownership. Leasing of vehicles can be done to companies. Clients can be small enterprises, multinational firms and individual entrepreneurs. Clients may hire the equipment on a weekly, daily or monthly basis and this is dependent on the occasion and duration that is needed.
Sometimes hiring vehicles is more valuable than the use of taxis. The funds realised can be used for the maintenance of the vehicles. Both small and large vehicles are in high demand also. Enterprises that trade or produce bulky products, agricultural products, cement etc now make use of tankers and trucks for transporting their goods since this is scalable and cheaper.
5. Real Estate Commerce
Many businesses do not have their own estates. Only major companies can afford offices like retail outlets, warehouses and corporate head office. The most flexible and affordable options for major enterprises is to lease an estate that meets their needs. It is not a surprise that majority of the big cities in Africa like Nairobi, Lagos, Addis Ababa and Johannesburg have an increasing demand for real estate to meet the requirements of businesses scrambling for retail, warehouse and office space. As business activities continue to increase with the growth of the economy, the demand for retail, office space and warehouses also increase.
3 Things To Note Before Beginning A Leasing Business
The following should be noted before venturing into the leasing business.
Take good care of your equipments
Your equipments is what you lease. Ensure that it is in good working condition always. Ensure that they are managed, operated and properly maintained according to the standards that are recommended
It is capital intensive
If everyone can afford their warehouse, tractors or equipment s, they will possess them. Your advantage is the high cost of hiring making customers to come to you for leasing or hiring
Make the terms and conditions clear
Always make the terms and conditions for hiring clear to clients. If not, they will not be aware and cross the line. Their should be answers to questions like:
- Who takes care of the damaged equipment?
- Who does things like fuelling, transporting, operating or servicing?
- This will enable clients to sign their terms and conditions when they are hiring to ensure they know them.
Leasing is a business opportunity in Nigeria and it involves some capital for ownership. If you have any questions on starting a leasing enterprise, you can make use of our comment box.