MERCHANT BANKS AND EQUIPMENT LEASE FINANCING IN NIGERIA

(A CASE STUDY OF NAL MERCHANT BANK PLC)

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Author

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Department of Administration

ABSTRACT

Merchant Banking is a recent development in Nigeria. However, the business continues to be attractive to a quite number of industries. This is so, due to rapid economic changes in the country, that results to high cost of machinery and equipment. As a result. Leasing as a form of financing the acquisition of capital assets has become a favourable option to our industries and very popular among the lessors and lessees alike in Nigeria. The paucity of information on leasing in Nigeria and the general lack of awareness on the part of the public as regards the financing of leasing are factors that motivated this research. This study focused on the financing associated with leasing business and the inherent issue pertaining to such financing. For the study. both the primary and secondary sources of collecting data were used. The primary source of data involved personal contact with the lessors, especially some of the merchant banks in the country. While the secondary sources of data was used mainly for the review of the relevant literature on leasing. viii As non - conventional way of creating funds for capital acquisition, equipment lease financing spread across to different sectors of the economy, mainly manufacturing, agricultural, construction, distributive and service industries. More recently, loan syndication is practice by merchant banks in order to meet the growing need of funds by bigger industries to acquire expensive equipment. This loan syndication provides a means whereby banks pooled resources to finance heavily cost machinery. Therefore, equipment lease financing tends to analyse the lessor - lessee relationship in respect to the type of contractual agreement they entered. Tax aspect, economic and accounting procedures of both lessor and lessee are analysed To integrate series of economic reforms under Structural Adjustment Programme (SAP) and to consolidate further, other Federal Government Policies like Small and Medium Enterprises (SME) Scheme, all increase the desire of our industries to be committed to lease - financing as an alternative means to acquire an asset.


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