EQUIPMENT LEASE FINANCING NIGERIAN: A COMPARATIVE ANALYSIS OF SELECTED MERCHANT BANKS
EQUIPMENT LEASE FINANCING NIGERIAN: A COMPARATIVE ANALYSIS OF SELECTED MERCHANT BANKS
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Date
2014-03-13
Authors
ABBA, SANI YAKUBU
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Abstract
Business not only require resourees (Debt and equity) but the right type of funds to
acquire asset- current and fixed, for its day to day operations. Current assets or business
asset that have useful value of less than one accounting period, usually one year, are
funded with short- term funds- trade credits, current line facilities and overdrafts.
Whereas fixed asset arc founded with long term loans. Thus, a mismatch has to be
avoided here in funding the assets for effective and efficient management of resources.
I Iowever, the high cost of plants, equipment and machineries has denied most economic
sectors and companies the traditional form of financing for acquisition of fixed asset. In
Nigeria, this sector is affected by the unprecedented depreciation the naira as acquisition
of llxed asset become too expensive to finances.
To overcome the problem of funding and shortage of capital, firms have resorted to
EQUIPMENTS LEASING, Which was in the past associated with Real estate- Land and
property. Nowadays, Lease financing encompasses virtually all kinds of fixed assets such
as Gcncrat5orcs, aircraft's, ships, Computers, Trawlers, Specialized Equipment and
furniture.
Leasing therefore provides a methods for financing new investment without the necessity
for an immediate large capital outlay. In this respect, it is superior to other forms of
international credit. At the expiration of the lease period, the asset so financed under the
lease agreement will not pass on to the lessee, but to the lessor who may now exercise
discretion whether to further lease it out or dispose it off completely.
Lease functions are carried out especially by Merchant Banks, Specialized Institutions
and manufacturing companies Leasing therefore is without doubt the creative financing
alternative.
In the light of the above, this paper will attempt to look at Equipment lease Financing in
Nigeria, making a comparative analysis of some selected Merchant Banks
Description
Being a project submitted to the Postgraduate school, Ahmadu Bello University,Zaria in partial
fulfillment of the requirement for the award of the Degree of Master of Business Administration
(MBA) of Ahmadu Bello University, Zaria.
DEPARTMENT OF BUSINESS ADMINSTRATION
FACULTY OF ADMINSTRATION
AHMADU BELLO UNVERSITY ZARIA.
Keywords
EQUIPMENT,, LEASE,, FINANCING,, NIGERIAN,, COMPARATIVE,, ANALYSIS,, selected,, MERCHANT,, BANKS,