With shrinking budgets, it can be challenging for businesses to keep up with hardware refresh cycles, which is particularly frustrating at the fast rate that new technology, with important new features, enter the market
This is according to Eric Ekobia, Business Development Manager at InnoVent, who says the old model of investing capital in new business equipment every two to three years is no longer sustainable, particularly as organisations tighten their belts post-COVID.
“Continually buying new technology is not sustainable for the environment or the bottom line,” Ekobia says. “At the same time, moves to enable hybrid and remote workforces can mean that organisations need to equip their staff with the latest devices, with more productivity features and enhanced performance.”
Nigerian businesses are digitising fast, and with broadband penetration rising from less than 20% five years ago to more than 40% since May 2020, Nigeria’s information and communications technology sector is the fastest-growing in the country, rising 6.31% in the first quarter of 2021.
InnoVent which has recently opened offices in Lagos, Nigeria sees large local corporates investing too heavily – or worse, incurring debt – to purchase the equipment outright or via hire purchase when they could lease it instead. However, growing numbers of organisations are now looking to leasing as a viable alternative.
“Now is not a good time for businesses to incur debt or to over-extend themselves when working capital is better deployed to core business activities that can help generate profits. A simple, sustainable, and budget-friendly option is to lease the equipment,” he says.
“Leasing means initial costs are far lower, and payments are fixed, so it becomes much easier to balance budgets. Instead of having equipment becoming obsolete, leasing ensures that organisations always have the latest equipment in their environment. At the end of the contract, they can simply upgrade to the latest models, with the assurance that the leasing partner is taking care of asset disposal responsibly.”
Leasing is a growing market in Nigeria: According to a report released by the Equipment Leasing Association of Nigeria (ELAN), the Nigerian Leasing industry recorded 4.3% growth in the past year, with outstanding leases as of December 2020 standing at N2.01trillion. The oil and gas sector took the lead at 29% with N602 billion lease volume, followed by the transportation & logistics sector, manufacturing, others (including healthcare and education), agriculture, telecommunications, and government recorded considerable growth.
The report said finance lease maintained its position at 60% of total leases, with operating lease increasing its market share. The equipment leasing industry is expected to continue to grow due to the need to re-inflate the economy and the increasing cost of assets, making leasing an increasingly compelling prospect, especially to MSMEs.
Another report, Lease Finance in Nigeria: Current Status, Challenges and Future Prospects, published in the September 2020 Journal of Accounting Research Organization and Economics, finds there is also potential for a growing customer base beyond MSMEs, with the influx of patronage by listed corporate firms who seek to avail themselves of finance opportunities besides those obtainable on the capital market.
Ekobia notes that another benefit of leasing is that organisations incur predictable operational expenses (which include support) rather than capital costs.
InnoVent offers leasing of equipment such as laptops, desktops, servers, networking equipment, printers and multi-function devices and telephony equipment. Unlike conventional financing, InnoVent offers subsidised finance, which means organisations can enjoy full use of up-to-date equipment without having to pay the full purchase price.
Additionally, you can unlock the capital tied up in existing technology assets with their Sale & Leaseback solution. They will buy an organisations existing IT equipment at book value and lease it back to them at a reduced cost, releasing instant cash.
InnoVent also provides decommissioning and secure data sanitisation and refurbishment or disposal of outdated assets from data centres, servers, storage through to PCs, PC components and monitors. All devices unsuitable for re-use are disposed of in a secure, compliant, and environmentally responsible manner. InnoVent’s model is fully aligned with the circular economy model, in which waste is minimised and the lifetime of products is extended.
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