Leasing Regulatory Framework Analysis and
Intervention Options for the PRIME Project
September 2014
Helen Tedla Teshome
Finance Consultant
E-mail: HelenTTeshome@yahoo.com
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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TABLE OF CONTENTS
1.
1.1
1.2
EXECUTIVE SUMMARY……………………….……………………………………..4
Scope of Work
Methodology
2
2.1
2.2
2.3
2.4
LEASING REGULATORY AND LEGAL FRAMEWORK..……………………..…6
Leasing Overview
Existing Proclamations and Directives
Identified Gaps: Regulatory, Legal, and Other Gaps
Planned Initiatives
3
3.1
3.2
3.3
LEASING SECTOR INITIATIVES…….……………………………………………..15
Government Initiated Regional Leasing Companies
Private Sector Initiated Leasing Companies
Outlook for Capital Goods Leasing
4
4.1
4.1.1
4.1.2
4.1.3
POSSIBLE PRIME INTERVENTION AREAS………………………..…………....18
Overview of PRIME Intervention Areas
Oromia
Afar
Somali
5
CONCLUSION………………………………………………………………………....24
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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ABBREVIATIONS
AMFI
Association of Micro-finance Institutions
CBE
Commercial Bank of Ethiopia
FeMSEDA
Federal Micro and Small Enterprises Development Agency
GoE
Government of Ethiopia
GTP
Growth and Transformation Plan
IFC
International Finance Corporation
MFI
Micro-finance Institution
MoFED
Ministry of Finance and Economic Development
MoT
Ministry of Trade
NBE
The National Bank of Ethiopia
OCGFC
Oromia Capital Goods Finance Business Share Company
PRIME
Pastoralist Areas Resilience Improvement through Market Expansion
SNNPR
Southern Nations, Nationalities and People Region
TVETs
Technical and Vocational Educational Training Centers
USAID
United States Agency for International Development
Annex
Annex 1 Meetings Held: Contact Details
Annex 2 Capital Goods Leasing Business Proclamation (No. 103/ 1998)
Annex 3 Capital Goods Leasing Business (Amended) Proclamation (No. 807/2013)
Annex 4 Minimum Paid up Capital Requirement Directives No. CGFB/01/2013
Annex 5 Requirements for Licensing of Capital Goods Finance Business Directives
No.CGFB / 02 / 2013
Annex 6 Registration and Supervision of Capital Goods and Capital Leasing Agreements Council of
Ministers Regulation (Regulation 309/2014)
Annex 7 A Proclamation of Investment (No. 769/2012)
Annex 8 A Proclamation to Amend the Investment Proclamation (No. 849/ 2014)
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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1.
EXECUTIVE SUMMARY
The potential for the development of leasing as an alternative to lending is highin
Ethiopia. Access to credit from financial institutions is challenging for many potential borrowers
given limited capital and collateral, thus, leasing as an alternative financial product is attractive.
There are overall 3 main types of leasing: “operational lease”, finance lease”, and “hire
purchase” lease. They generally vary in ownership rights and control of asset rights as well as
responsibility for maintenance, damage and insurance. Leasing serves generally all sectors and
can be applied for differentsize equipments.
The leasing sector is undeveloped; however, increasing concerted effort and
commitment are demonstrated bythe National Bank of Ethiopia (NBE) and the
government for the development of the leasing sector. This is evidenced by the different
actions taken over the last year, and the numerous initiatives that are underway. The regulatory
framework for leasing was initially established in 1998, defining the three main types of leases:
Operating, finance, and hire-purchase. But there was no leasing operation in the country other
than few microfinance institutions conducting micro-leasing usually limited to small equipments
to informal businesses. Various proclamations and directives necessary for the leasing sector
have either been issued or are planned to be issued. In 2013, a proclamation and directives
were issued that covered key elements of leasing operations – licensing and capital
requirements. However, these directives by themselves were not adequate to provide the
necessary framework and serve as guidance to leasing companies nor were they adequate for
supervising and regulating the sector by NBE.
In mid-2014 NBE signed an agreement with the IFC for assistance in the development of
Ethiopia’s leasing sector. IFC’s support to NBE focuses on improving the regulatory framework,
which includes the development of various directives required to have a robust leasing sector,
the development of operational manual (for NBE and leasing companies), and supervisory
manual (for NBE). As part of the support to NBE, IFC identified the key gaps that exist in the
leasing sector, and has planned some activities to close or minimize these gaps. Among the key
gaps to be addressed are lack of capacity to supervise and regulate the leasing sector by NBE,
and the lack of know-how in leasing at the leasing companies that have been recently formed by
government support. Other legal and regulatory gaps identified (i.e., taxation, investment,
accounting etc.) are being referred to the appropriate government agencies by NBE. A number
of other gaps are discussed in this report including, lack of appropriate management information
systems (MIS), lack of funding, and lack of leasing awareness by the players in the leasing ecosystem that includes the potential lessor, lessee, and the supplier.
Five government initiated regional leasing companies have been established to begin
leasing operations for the first time in Ethiopia. Driven by its commitment to meet the targets
for industrial manufacturing sector, which includes agro-processing sub-sector, the GoE
mandated the 5 largest regional administrations to co- invest in a leasing company with the
largest MFIs in their respective regions. The 5MFI-affiliated and government supported leasing
companies have received their licenses, and are setting up their operations with various
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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capacity building workshops and trainings being provided through NBE and others.Among the
PRIME project regions, only OROMIA is served by one of these leasing companies, that is,
Oromia Capital Goods Finance Business Share Company (OCGFC).
More recently, there has been an increasing interest from the private sector to establish
leasing companies. This was revealed in most discussionsconducted during this study.
Evidently, growing number of inquiries are coming to NBE from both domestic and foreign
investors pertaining to establishing a leasing company. There are two groups of investors who
may be considered to be serious potential investors. At least one group or both may involve
foreign co-investors. While the financial sector is closed for foreign investment, the leasing
sector has opened recently through a Proclamation to Amend the Investment Proclamation (No.
849/2014). Specific legislation concerning foreign investment in leasing is being drafted by the
legislation, and isexpected to be enacted soon. Both groups of investors are looking for more
clarity in this area as well as in taxation and accounting. Further, these groups of potential
investors are subscribing demand-driven leasing business model, unlike the five MFI-affiliated
leasing companies whose focus is primarily the industrial manufacturing sector.
In the context of the current regulatory framework, there are possible options for Mercy
Corps’ intervention to support the development of leasing in the PRIME operation areas.
In all the PRIME project regions – Oromia, Afar and Somali, access to credit is limited with
somewhat better in Somali. As pastoralists are becoming more settled access to credit, both
loans and lease/Ijarah (equivalent to finance lease under the Islamic finance), become more
critical. Leasing in particular would be more attractive since it does not tie-up capital and it is
overall cost effective for the potential lessee.
Based on the current regulatory framework, the institutional options are limited through
which PRIME may support the development of leasing or Ijarah in the PRIME
regions.PRIME could establish partnerships with: OCFGC, one of the five MFI-affiliated new
regional leasing companies, in Oromia; Afar MFI, in Afar; and, Somali MFI and Rays MFI in
Somalia. In addition, the private leasing companies that are still at early stages of formation may
be potential institutions for Mercy Corp’s partnership for the development of leasing in the
PRIME project regions. As mentioned above, these private leasing companies are waiting for a
pending legislationon further clarity on foreign investors’ participation in the leasing sector and
on other issues (e.g., taxation). Thus, it is recommended that Mercy Corps closely monitor the
development of private leasing companies. PRIME could also consider facilitating the formation
of a leasing company, including the involvement of a foreign co-investor (e.g., private equity
firm) in the PRIME project regions.
Based on the current regulatory framework, it isnot an option for PRIME to assist the
development of leasing or Ijarah contract activity through a commercial bank. Presently,
commercial banks can not engage in leasing activity, but may invest up to 20% of their capital in
a leasing company. In line with NBE’slicensing requirements, a leasing company has to be a
“stand alone” entity, formed as a share company in accordance with Ethiopia’s commercial code
(i.e. requiring at least 7 investors).
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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In partnership with institutions above-mentioned, PRIME could provide supportin
addressing and closing the leasing sector gaps that currently exist in the PRIME project
areas. This would entail the development and support of the leasing eco-system as a whole, to
include the “lessor” (the leasing company), the potential “lessees” and the “suppliers”, with the
aim to create leasing awareness in the community, identify the demand and supply for leasable
assets, and build leasing expertise at the leasing companies. Once leasing operating manual is
developed by NBE, it would be necessary to tailor the manual to local context. Technical-on
site support, including appropriate MIS development, directly to the institutions would be crucial.
Also critical, would be the availability of funding for leasing operations, which Mercy Corps could
consider to support in facilitating funds from other sources (e.g., private equity).
Finally, as the PRIME project has already established partnerships with private sector
enterprises (e.g., Addis Kidan) and has done much work in the dairy value chain, it would make
sense to consider strengthening this value chain through introducing leasing. It is also evident
that milk production is important in all the PRIME regions. Further, Mercy Corps could explore
forming partnerships with select multi-purpose cooperatives in the PRIME project areas for the
purpose of creating lease awareness among potential lessees.
1.1
Scope of Work
Scope of work was mainly based on terms of reference; however, analysis was extended to
include the wider regulatory and legal framework for leasing such as investment, taxation and
accounting policy, as well as the general business environment. To make appropriate
recommendations of possible intervention areas for the PRIME project, it was also necessary to
synthesis current trend and development in the leasing sector given that the sector is rapidly
changing.
1.2
Methodology
In preparing this analysis, a desk review was conducted of proclamations and directives
pertinent to leasing and investments, as well as studies relevant to leasing sector development
in Ethiopia. In addition interviews and phone discussions were held with a number of wide
variety of stakeholders (NBE, IFC, leasing companies and others), and key staff members of the
PRIME project (for details, see Appendix 1). Options of possible intervention areas for the
PRIME project are considered in the context of the existing legal and regulatory framework;
however, in-depth analysis and design of the possibilities were outside the scope of this
analysis.
2
LEASING REGULATORY AND LEGAL FRAMEWORK
Ethiopia’s leasing sector is at an infant stage, currently characterized by inadequate regulatory
and legal framework and little know-how of leasing operation by potential key players and
byNBE, the regulator. To-date,renting of equipments is more common, typically in the
construction sector. Leasing was limited to a few larger microfinance institutions that leased for
example, small irrigation equipments and beehives, typically to farmers, with co-operatives coLeasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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signing. The slow development of the leasing sector to-date may be due to the uncertainty and
lack of clarity surrounding permissible leasing modalities and the authority that mandates the
activity in general.
Leasing sector is recently experiencing positive developments. There is a growing interest by
the government and NBE, as well as by private sector players, to integrate leasing as a crucial
instrument to address the gap in access to finance and meet economic growth targets.
An enabling environment for leasing typically requires appropriate laws and regulations, in terms
of taxation, operation and ownership, as well as demand and supply of leasable assets, leasing
operation knowledge by leasing companies, suppliers and potential lessees.
The present state of Ethiopia’s leasing regulatory framework is not adequate. The sector is
provided with two directives issued recently by NBE, following the issuance of an amended
proclamation on leasing. These directives addressminimum capital requirements and licensing
requirements, respectively. In addition,Asset Registration policy for leasable assets has been
added recently to support the regulatory framework. More directives and operational guidelines,
without being cumbersome and bureaucratic, are required. More guidance, primarily in the form
of directives, operational and supervisory manuals arein process of being delivered by NBE,
with the support of IFC.
Leasing companies are either being formed or in process of formation. Both government and
private initiatives are underway, with the former being well ahead. Five regional leasing
companies that are MFI-affiliated and supported by the government have been established
within the past year. There is also a lot of interest from different private sector groups to
establish leasing companies both foreign and domestic. There are taxation, registration and
ownership questions among others that remain unanswered. However, NBE is committed to
address all key gaps identified to develop a vibrant leasing sector.
2.1
Leasing Overview
While one way of accessing equipment needed for production is through purchase the other is
through leasing. Typically, in a lease eco-system, there are three key players: a “Lessee”, a
“Lessor” and a “Supplier” (refer to Figure 1).
In Ethiopia, the focus is to develop enabling and vibrant environment for finance lease, in
particular for hire-purchase lease, as this form of leasing leads to final ownership of the asset.
The key characteristics of finance lease (including hire-purchase) are as follows:
o The LESSEE selects the asset.
o The procurement of asset is conducted by the LESSOR and not the LESSEE.
o The LESSOR remains the owner of the asset throughout the lease period, while the
LESSEE has control over the use of the asset.
o The LESSOR is fully secured in the event of destruction or damage.
o The LESSEE has the obligation to pay the lease fee.
o The LESSEE has the obligation to maintain the asset in line with the lease agreement.
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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o The lease agreement, among other items is non cancellable.The agreement
details,among other things, the actions to be taken in the event there is a
default.
Figure 1: Leasing Eco-system
Supplier
Bank
==========
=====
Lessor
Lessee
Lease of Object
Lease Payments
Negotiate Lease terms
2
There are numerous advantages to leasing (finance and hire-purchase), and the major financial
advantages include:

From the perspective of the LESSEE:
o It is a cost effective instrument that conserves liquidity and does not tie in
business capital.
o Access to equipment, which would have been out of reach, becomes possible.

From the perspective of the LESSOR:
o Leasing is a profitable business. Total Lease payments by the end of lease
period can cover all costs and profit margin.
Thus, in absence of assets that can be collateralized, or cash that have to be given up front,
finance lease would be a practical alternative option for small and microenterprises.
Under operating lease, the user of the machinery makes payment for a short-term use of the
asset. Essentially, operating lease is similar to renting with no ownership rights and control of
asset rights transferred to the Lessee.
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Finance lease involves long-term leasing contracts. An owner of an asset (the LESSOR)
allows another party (the LESSEE) the use of the asset for a predetermined period (lease
period) against regular payments (lease payments). At the end of lease period, the LESSEE has
Table 1: Main Types of Leasing
Operating Lease
Finance Lease
Hire Purchase Lease
Ownership
LESSEE does NOT own
the equipment;
Equipment is returned
at the end of rental
period.
Ownership remains at
LESSOR until the end of
Lease period, when
LESSEE has an option to
buy.
LESSEE ownership increases
through the lease period
with eventual ownership;
similar to a mortgage
system.
Payment
LESSEE makes regular
rental payment; Does
not pay the full value
of the equipment over
the rental period
LESSEE makes regular fixed
payment over an agreed
period, paying nearly the
full cost of the asset Plus
charges over the period of
the lease
LESSEE makes payments that
increase ownership rights
until the payments are
complete
Service, Repair
maintenance ,
damage, and
Insurance
Responsibility of
LESSOR.
Responsibility of LESSEE –
all risks usually associated
with ownership, although
LESSEE does NOT own.
Responsibility of LESSEE – all
risks usually associated with
ownership although LESSEE
does NOT own.
Key Benefits
- Enhanced cash flow
with lower payments
-Same as operating lease;
with option to own at end
of lease period.
Same as operating lease;
Gradual ownership.
1
an option to purchase the asset with some additional payment, or can forfeit the option to
purchase and return the asset to the owner. Typically, the LESSEE isresponsible for
maintenance and all risks usually associated with ownership without actually owning the asset.
Hire-purchase is a variation of finance lease, and one currently promoted in Ethiopia. A
LESSEE agrees to pay for an asset in parts or a percentage over a number of months or years
towards eventual ownership of the asset. The ownership of the asset remains with the
LESSOR until the last payment is made. In effect, hire-purchase is similar to a mortgage
system, whereby with each regular payment, the user’s ownership rights increase until the
payments are complete (for more details on types of leasing, see Table 1, above).
2.2
Existing Proclamations, Directives and Regulations
The regulatory framework for leasing was first established in March1998 by the Capital Goods
Leasing Business Proclamation (No. 103/1998). This proclamation was revised by July 2013
proclamation, Capital Goods Leasing Business (Amendment) Proclamation (No. 807/2013)
Proclamations
Below are the key points of the proclamations (for more details on the proclamations, see
Annex2 and 3):

The first proclamation defined lease operation and associated terms, provided basic
guidelines, with all powers and duties regard to leasing operation assigned to
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Ministry of Trade (MoT). The three types of lease operations: “Finance Lease”,
“Operating lease”, and “Hire –purchase” are defined and described by this proclamation.
Key lease operation terms are defined, such as “Capital goods”, “Lessee”, and “Lessor”,
and features of “Lease Agreements”. In addition, basic guidelines are provided in the
event of lease payment defaults, bankruptcy, and damages. Transfer of ownership rights
at the end of lease term, and general termination of lease agreement are described in a
general manner. Further, the proclamation briefly mentions basic accounting and tax
treatment for depreciation allowance for capital goods, and for regular lease payments
under the different lease operations. Finally, the proclamations mandated the MoT to
license and supervise all equipment leasing businesses.

The amended proclamation nearly 15 years later, clearly differentiated and redefined
‘operating lease’, from ‘hire purchase’ and ‘financial lease’. With the new
proclamation, operating lease still remains under the mandate of MOT. Amendments were
made definitions of “capital goods finance” to include only financial lease and hirepurchase. As a result, the mandate to license and control “financial lease” and “hirepurchase”isassigned to NBE, with risk management and safety and soundness of leasing
companies engaged in these types of leasing being viewed from the financial sector
perspective. As financial transactions, financial lease and hire purchase lease are likely to
be given increasing attention by the NBE. Further, under this proclamation, an enterprise
may only be licensed to engage ineither “operating lease”or “finance lease” but not
both. The rationale for this provision is not readily apparent.

The issue of “double taxation” is addressed in the amended proclamation. Important
taxation issue that the amended proclamation addressed is the lease payments made to
the lessor under capital goods finance to be exempted from Value Added Tax. Thus, the
proclamation eliminates the risk of double taxation, given that the lessor would pay the
VAT when purchasing the equipment.

There is an assumption that the “supplier” is also the “importer” who is exempted
from import duties on capital goods. However, this is not necessarily always the case –
The importer could be different than the supplier. If the supplier is not accorded import tax
exemption for a leasable asset, the supplier is likely to pass the high price to the lessee,
potentially distorting the residual value of the asset.
Directives
In accordance with the new amended proclamation, the NBE issued two directives in October
2013, cited as “Requirements for Licensing of Capital Goods Finance Business
Directives” and “Minimum Paid-up Capital Requirement Directives”. These were the first
directives that detailed capital and licensing requirements.
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The key highlights of the directives are:
o The minimum initial paid-up capital required to obtain a capital goods finance business
license is 200 million Birr paid in cash and deposited in a bank in the name of the capital
goods finance company under formation.
o A finance lease company must be established as a “stand alone” share company as
defined under the commercial code of Ethiopia.
o Application must be submitted to NBE in line with the requirements. Much of the
requirements are consistent with application for bank formation.
o To commence operation, a licensed capital goods finance company is expected, among
other items, to put in place at a minimum comprehensive policies, procedure manuals,
programs and guidelines for main function areas of the business e.g., procurement,
human resource management, corporate governance etc. It is also expected to hire and
train appropriate staff.
The permissibility of foreign national investment in the leasing sector is not addressed.
Although these two directives are crucial, the two directives alone do NOT provide adequate
regulatory framework for a leasing operation. With no operation manual (for both NBE and
leasing companies) on leasing business management and no supervisory manual (for NBE) on
how to supervise and regulate leasing companies,it would be unrealistic to expect a leasing
sector to be properly functional.
The NBE requested support from the IFC with the recognition that much more guidance has to
be provided for the development of the leasing sector in Ethiopia.
Regulations:
In July 2014, an important regulation was issued supporting the leasing regulatory and legal
framework -“Registration and Supervision of Capital Goods and Capital Goods Leasing
Agreements Council of Ministers Regulation (Regulation 309/2014)”. The major highlights of this
regulation are:
o
o
o
o
Responsibility of registering the capital goods supplied to lessees rests on the leasing
company (the lessor).
Procedures are outlined to register capital goods including documents required.
Registration of capital good is renewed every year.
MoT has the overall oversight.
This is a fundamental regulation for leasing activity. More regulations are soon expected
including one concerning foreign investor participation in leasing.
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2.3
Identified Gaps: Regulatory and Other Gaps
The present regulatory framework is clearly not adequate for the development of a vibrant
leasing sector. One amended proclamation, two directives, and one regulation, discussed
above, form the basis of the regulatory framework. There is no operation manual developed for
leasing companies, providing guidance on operating a leasing company.
Despite the issuance of the first leasing proclamation in 1998, there was no leasing activity
other than rudimentary micro-leasing by some MFIs. Further, renting and not leasing of
equipment has been a common practice particularly in the construction sector.
The leasing environment is now changing. The NBE is committed to create a vibrant leasing
sector, with primary focus on the industrial manufacturing sector and micro and small
enterprises. NBE is also committed to develop a leasing sector that would includethe private
sector as an important player.However, it is unlikely that level playing field will be accorded for
all players to compete, given that the government maintains a strong role in the leasing sector at
present with its full support of the 5 MFI-owned regional leasing companies that are formed to
focus on mandated areas.
In mid-2014, NBE signed an agreement with the IFC for assistance in the development of
Ethiopia’s leasing sector in a cost sharing arrangement (between NBE and the IFC).Assistance
required from IFC is primarily in the areas ofdirectives, operational and supervisory manuals
development as well as in various technical capacity building trainings and workshops.
A number of important gaps hinder the development of leasing in Ethiopia, and many of these
gaps havebeen identified by IFC. Some of these gaps had also been pointed out by potential
investors in the past. During discussion for this report, NBE indicated that it will continue to
direct to the relevant government authorities those gaps that do not fall under its direct
responsibilities.
The critical gap is in theregulatory environment specifically in accounting, legal and taxation
policies, as these areas need to improve and be conducive to leasing operation environment.
Leasing requires specialized accounting, and there is no policy that provides accounting
guidance. There is no policy that defines the legal roles and responsibilities of the different
players, particularly third party players in leasing arrangements. Clarity is required surrounding
service/maintenance provision, for example, the use of factory warrantyand the role of
insurance providers. It is unclear how Import tax privileges will be accorded to suppliers and
leasing companies, and how tax benefits would finally transfer to the lessee at the end of lease
term when ownership is transferred.
In connection with taxation, the high import duties and restrictions on imports, complicates the
pricing on leasable assets. The value of leased assets can actually rise during the lease term
distorting the value of the asset at the end of the term. The residual value of an asset may be
higher than the purchase price. It would be challenging to conduct leasing in such pricing
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environment, affected by high import duties and restrictions on imports.In addition, tax benefits
available for the key players in a leasing activity have not yet been clarified. Currently, the
assumption is that the lessor is the machinery importer, and thus, import duty exemption is
provided to the leasing company. However, this would only apply if the leasing company is also
the importer. The tax law also does not mention the transferability of the tax benefit provided
from the importer to the lessee at the end of the lease period (Ethiopia’s investment law of
Import duty applies to goods imported for up to 10 years.)
Lack of leasingoperations knowledge and expertise is a key gap that needs to be
addressed. There is a lack of leasing operations knowledge in the sector as a whole, including
at the NBE, where there is knowledge gap on how to supervise and regulate leasing companies.
Expertise in areas such as overall leasing business management, developing leasing business
plan, pricing of an asset, lease accounting and developing partnership and forming agreements
with suppliers in a mutually beneficial manner, are among the specialized expertise required. As
a result, it is challenging to hire leasing professionals in this environment.
Currently, there is very little or no public awareness on leasing. It is not only the leasing
companies that need to gain knowledge on leasing, but also the key players in the leasing ecosystem including the potential lessee, the supplier and the public at large. Basic public
awareness on leasing would be needed to create demand and supply for leasable assets.
Leasing requires an appropriate management information systems; Excel software is not
adequate. The new government initiated, MFI –owned leasing companies (refer to Section 3.1)
are currently using Excel as a tool for management information. This will not be a suitable
management information tool for future growth. The leasing companies will need to develop an
appropriate MIS platform for leasing business.
Lack of funding is a serious challenge in developing the leasing sector in Ethiopia. In
establishing a leasing company, pipeline of funding must be available for purchase of
equipments. The MFI-owned leasing companies have fulfilled the minimum 200 million Birr
(USD 10M) capital required to form a leasing company; however, additional capital is required to
grow the leasing companies. While Line of Credit of 400 million Birr (USD 20 M) has been
established with the CBE for future funding for each of the 5 MFI-owned leasing companies, a
strategy has to be established to address ongoing funding.The private leasing companies that
are in process of being organized(refer to Section 3.2) also need to address their funding
sources so that their growth and profitability will not be limited.
Potential poor up-keep of machinery by a lessee because of lack of technical knowledge
or lack of ownership interest on the machinery is a potential concern in the development
of Ethiopia’s leasing sector at this time. Lack of technical knowledge about machinery
maintenance and up-keep by a potential lessee is of concern, unless the lessee is strongly
supported by the supplier in terms of handling and operating the equipment. It is crucial that the
machinery is in good condition and operating as expected at least throughout the lease period,
so that lease payments are met. For instance, a lessee of agricultural equipment would require
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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proper training to operate and maintain equipment to ensure that the equipment is operational
throughout harvest without interruption.
Finally, the leasing sector would not be insulated from the bureaucracy and lack of transparency
that are key challenges in the Ethiopian business environment. As evidenced by the World
Bank’s Doing Business Report, Ethiopia received unfavorable ranking due to business
environment challenges for private players in wide range of areas including in receiving permits
and various approvals.
2.4
Planned Initiatives
IFC is supporting NBE not only in identifying gaps in the development of a leasing sector, but
also in closing some of the gaps identified. Significant amount of work is either in progress or
planned in these regards. IFC’s support focus is on:
I.
Developing Directives: A number of key directives are needed to provide guidance for
lease operations, some of which will address the gaps identified by IFC. Currently, other
than the two existing directivesthat address the requirements for licensing and minimum
capital, and one regulation that addresses asset registration, there are no other lease
operations guidelines. At NBE’s request, IFC is now formulating a number of key directives
that would enable the proper operation of leasing business in Ethiopia. IFC has already
provided a number of draft directives for NBE’s review and approval. These directives will be
shared for comments with NBE’s stakeholders (MoT, MOFED and FMSEDA) before
approval.The directives are expected to be finalized and issued by the end of 2014.
The key areas to be addressed by the directives include:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
Single Borrower Limit
Repossession and Enforcement
Reporting (to NBE) including formats for reports. similar to credit, leasing
companies would be required to provide credit information of Leases to NBE
Credit Bureau
Annual Audit by an independent auditor
Lease accounting e.g., depreciation of assets, residual value at end of lease term
Liquidity requirements, weighted capital reserve requirements and lease loss
provision
Organizational structure and corporate governance, including roles and
responsibilities of directors and senior management.
Limitation of Investment in a Leasing company
Opening branch requirements
Penalty and compliance with directives
II. Developing Operational Manual for NBE and for the leasing companies to provide
guidance on how leasing businesses operate. This is expected to include detail
requirements for leasing operation e.g. leasing business management, lease terms, lease
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payments, procurement, budget, selection of suppliers, agreements with suppliers etc. The
manual will emphasis that the lessee should select the leasable asset. The operational
manual will also be used when providing training to leasing companies.Priority is now
given to the development of operational manual, which is expected to be completed
before the year-end 2014.
III. Developing Supervisory Manual for NBEto provide guidelines in supervision and
regulation of leasing companies, including assessing compliance of activities by leasing
companies.The development of Supervisory Manual is the next priority after the
Operational manual; nonetheless, it is expected to be completed by year-end 2014.
IV. Provision of technical capacity building trainings and workshops. IFC is in process of
providing or facilitating the provision of capacity building workshops, trainings and peer to
peer exposure visits to regulators and senior management of the MFI-owned leasing
companies.
V. Development of training curriculum: Once the regulations and directives are completed
and key leasing company staff is supported through trainings and workshops, the IFC
recommends training curriculum be developed. IFC will soon begin supporting the
development of training materials, which will be adapted to local context. The training will be
provided by what IFC referred as the “local champions” (i.e. possibly through NBE, AEMFI,
or FeMSEDA).
VI. Long term comprehensive training:In addition, the IFC has highlighted a longer-term and
inclusive training and skills development intervention that would include not only the leasing
companies but also all potential participants in the leasing eco-system (including support
structures) to develop in a sustainable way. Such comprehensive training would not be done
by IFC directly.
3
LEASING SECTOR INITIATIVES
At the time of writing there are a number of initiativesbeing developed pertaining to leasing.
Leasing licenses have been issued by NBE to 5 regional MFI-owned leasing companies that are
at various stages of operations, but all are at initial stages of operations. Private leasing
companies have also submitted applications to form leasing companies. Evidently, there are a
number ofinquiries at NBE from foreign leasing companies about the permissibility of foreign
participation/ownership in the leasing sector, given that foreign ownership in the Ethiopian
financial sector is not permitted. Further igniting the interest in this sector from investors is a
proclamation issued on July 2014, “A Proclamation to Amend the Investment Proclamation”
No.849/2014, which authorized the leasing sector as “open” for foreign investors, and no longer
exclusively reserved for domestic investors. One of the private leasing companies that has
applied to NBE for leasing license is a joint venture with a foreign investor. Due to
confidentiality of the application process, company names and investors are not disclosed.
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The ongoing support provided by IFC to NBE is another important development. Undoubtedly,
the regulatory framework for leasing would significantly improve with the completion of the
directives and operation manuals by year-end 2014, even though there is still much remaining
to be done.
3.1
Government-Initiated Regional Leasing Companies
The GoE took some positive steps toward the development of the leasing sector once the
Capital Goods Leasing Business Proclamation was amended and the necessary directives were
issued by NBE in 2013. The GoE took a lead in initiating the establishment of 5 regional leasing
companies. The leasing companies are established by the regional governments in joint
ownership with their respective largest regional MFIs in Amhara, Oromia, SNNPR and Tigray
Regions, as well as Addis Ababa Administration. In most cases the ownership is 50/50. All the
leasing companies have received their licenses from NBE, and are at early stage of operations.
The government initiative wasprimarily driven by the goal to stimulate the industrial
manufacturing sector (i.e. including agro-processing sub-sector) and meet the targets under
GoE’s GTP by the end of 2015. The GoE’s goal is also to create employment as the micro-small
enterprises are facilitated with leased equipments through the MFI-owned leasing companies.
The establishment of the leasing companies is to support the various government affiliated turn
key projects that are being built in the country to solve technology limitations and substitute
imports. The leasing companies are therefore mandated to serve this specific niche of industrial
manufacturing sector that includes micro-small enterprises engaged in textiles, metal, leather
and agro-processing.
Of all the MFI-owned leasing companies, Oromia Capital Goods Finance Business Share
Company (OCGFC) would be of interest to the PRIME project, since that would be the only
leasing company engaged in the PRIME project intervention areas. OCGFC is owned equally
by the regional government and Oromia Credit and Savings Share Company (OCSSCO: an
MFI).
Funding for operation is for now coming from the government. The five leasing companies
received a line of credit for a total of 2billion Birr (400 million Birr each) from the state-owned
CBE.
Customers for the leasing company are being drawn from the MFI, and therefore, the leasing
companies already have large number of clients in the pipeline. Hire Purchase lease is their
priority for now. Similarly, the knowledge base of the leasing company is coming from the MFI,
where the institution has engaged in basic micro-leasing without much regulatory framework
present.
The leasing companies are encouraged to form partnerships particularly with domestic
manufacturers such as Metec, to gain leasable equipments. Technical and Vocational
Educational Training Centers (TVETs) are also expected to play a pivotal role in training and
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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supplying technicians that would provide technical support in maintaining machineries and
equipments.The leasing companies are encouraged to have agreements with TVETs for after
sale services and maintenance.
The government selection of industrial equipment for all the new MFI-owned leasing companies
has been raised as a concern by the IFC, as this requires complex leasing underwriting given
the low leasing skills present in the companies. There could be a risk of default in absence of
appropriate research conducted in industrial equipment leasing by the leasing companies. It
would be more appropriate if the leasing activity was driven by local demand rather than certain
otheragenda.
There is still much to be done by the MFI-owned regional leasing companies, confronted by
numerous gaps and challenges that have been above-noted in Section 2.3, including regulatory
gaps (e.g., taxation and accounting), lack of know-how and capacity with regard to managing
leasing operations. Many of these important gaps as mentioned above are being addressed by
NBE, with the IFC’s support.
3.2
Private Sector-Initiated Leasing companies
In addition to the government initiative of establishing MFI-owned regional leasing companies,
there has been a lot of interest during the past year from different groups both foreign and
domestic investorsin establishing a leasing business in Ethiopia. Two groups of investors may
be considered to be serious potential investors, and at least one may have submitted licensing
applications to the NBE. Both leasing companies plan to be fundamentally demand driven in
terms of sector focus, unlike the MFI-owned leasing companies. One of the private leasing
companies sees the potential in agricultural sector, and the other is considering the
transportation sector.
While the financial sector is closed for foreign investment, the leasing sector has opened
recently through an amended proclamation of Ethiopia’s Investment Law. Specific legislation
concerning foreign investment in leasing is in process of being reviewed and enacted. One of
the private leasing companies that has applied to NEB for leasing license is a joint venture with
a foreign investor, and is, among other things, awaiting the details of the specific legislation on
foreign investment in the leasing sector. Due to confidentiality of the application process,
company names and investors are not publicly available.
3.3
Outlook for Leasing
Leasing in Ethiopia has enormous potential. Provided an enabling environment for leasing is
present, Ethiopia has good economic growth prospects and is a large market, with its population
of nearly 90 million, and approximately 80% engaged in agriculture. IFC’s leasing support
analysis points to agricultural equipments such as tractors, irrigation equipments, basic food
processing and drying equipments having the greatest potential for entry in leasing.
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Currently, access to finance is one of the biggest challenges in the country. Thus, leasing as an
alternative to lending would be an attractive optionprimarily due to the leasable asset serving as
collateral, and equipment that would have been out of reach, becoming possible to obtain.
As mentioned above, work is ongoing by NBE and IFC to address and close the gaps and
challenges in the leasing sector.Even the current scarcity of leasing professionals/skill sets
could improve in the medium-to long-term, as concerted efforts are made to make available
extensive and widely available training and capacity building by NBE. The private leasing
companies also plan to address the skills set gaps in the sector by drawing expatriates to train
their local staff.
4
POSSIBLE PRIME INTERVENTION AREAS
4.1
Overview of PRIME Intervention Areas
Background:As the PRIME project works in 3 regions with pastoralists and with those
transitioning out of pastoralism (TOPs), it would be critical to look at both groups in all 3
regionswhen considering the development of leasing. It is evident from the project baseline
report that milk production is important in all regions, particularly near urban centers where there
is access to markets. It is also evident that access to credit in the Afar and Oromia regions are
limited with somewhat better access in the Somali region. As pastoralists are becoming more
settled, access to finance both via loans and leasing become ever more critical. Leasing in
particular is far more attractive since it does not tie-up capital, which is scarce in these regions.
Thus, PRIME intervention in the development of leasing or Ijarah contract (finance lease
equivalent in Islamic finance) in these regionswould be innovative.
The development of Ijarah contracts is important especially in Afar and Somalia, where the
population is predominantly Moslem. Ijarah is equivalent to lease-purchase mode of financing
and has Sharia component. The lease contract is typically used to finance equipment. Similar
to lease financing, Ijarah requires that the lease term and lease payments are determined in
advance, and that ownership of the asset, responsibility for its maintenance remain with the
financier (or lessor). As in traditional lease finance, Ijarah contract may be followed by a sale
contract, at which time the ownership of the asset is transferred to the lessee. Ijarah contract
works with individuals as well as with an organized group such as associations and
cooperatives.
Leasing development requires market research to determine sector focus and ensure that the
leasing products are ultimately demand driven. Leasing could be developed to strengthen the
dairy value chain, as milk production is important in all the PRIME project regions. In addition,
different capital equipments are needed throughout milk production and processing.
Based on the current legal framework, leasing and Ijarah contract products can be offered in the
PRIME regions through OCGFC, the new MFI-owned leasing company in Oromia, Afar MFI in
Afar, and Somali MFI and RAYS MFI in Somali Region (see Table 2). However, Afar MFI and
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RAYS MFI are new and are likely to focus on setting up their core banking operations prior to
engaging in leasing or Ijarah contracts. Another option for PRIMEcould be to form a partnership
with a private leasing company (once established) or facilitate partnerships (both domestic and
foreign) between investors and the MFIs, with the aim to serve the PRIME project regions.
Currently, the legal framework does not allow commercial banks to engage in leasing, but they
can invest in leasing companies up to 20% of their capital.
Table 2: The PRIME project operating regions
Potential Leassors
Economic
Dependency/Characteristics
Oromia Capital
Goods Finance
Business Share
Company (OCGFC)
- Milk Production
- Little dependency on
Livestock
- Alternative Source of
Income available
- Milk Production
- Poor households remain
with Livestock
- Formal employment
PRIME
Regions
Oromia
Afar
o Afar MFI
o Somalia MFI
Somalia
ALL
REGIONS
- Livestock dominant
- Milk Production
o Rays MFI
Private Leasing
companies under
formation –
market demand
driven focus
The institutional gaps and challenges that exist in the leasing sector, as discussed in Section
2.4 and 3.3, would also apply to the financial institutions that are proposing to engage in leasing
or Ijarah contract in the PRIME intervention regions.
Other than regulatory, legal and taxation gaps that exist in the leasing sector as a whole, other
challenges may be more pronounced for the MFIs listed above (Table 2). OCGFC, as one of
the 5 government supported leasing companies receives various support from the NBE and the
government e.g., funding support from CBE. However, the MFIs listed above are in early stages
of establishment, with Afar MFI and Ray MFI receiving their business licenses from NBE only
recently. These MFIs have limited knowledge and very little experience in leasing operations
(i.e., equipment based underwriting, structuring, pricing, procurement, accounting etc). In
addition, lack of professional staff, lack of leasing awareness by potential suppliers and the
public, the need for funding will be some of the challenges in which they will need support.
PRIME hasnumerous opportunities for capacity building interventions indeveloping
leasing/ Ijarah contractthrough the institutions mentioned-abovein the PRIME project
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regions. The interventions are likely to strengthen the institutions in providing leasing services,
and in turn, benefit the communities. The different options for support are highlighted below.
o
Establish partnerships:The first step would be to establish partnerships between
Mercy Corp and OCGFC, and the MFIs in Afar and Somalia for support in capacity
building to develop leasing or Ijarah contract products in their communities.
o
Provide on-site technical support and training on leasing business management:
In supporting the financial institutions that plan to engage in leasing or Ijarah contract in
the PRIME Regions, Mercy Corps should consider providing significant training and
workshops as well as on-site technical assistance linked to investment opportunities.
Training should focus in leasing on niche sector(s) (or specific value chain) with sizable
market. For example, training at an MFI near Awash may be provided on leasing or
Ijarah for a niche such as small agro-processing equipments, while training at a leasing
company in Borena or Jijiga, may be on leasing in livestock sector, in particular dairy
subsector. The specific trainings should include lease underwriting, funding, lease terms,
and collection at lease term. However, such trainings should occur once the
operating manuals and directives are issued by NBE.
o
Support in tailoringthe operational manual prepared by NBE (with support of IFC)
into local context,and provide training on the material to staff at OCGFC and the MFIs
in Afar and Somalia.
o
Assist in identifying leasable assets: OCGFC, as an MFI-owned leasing company is
mandated to support SMEs in accessing industrial equipments in the government
mandated sectors. OCGFC already knows the suppliers in the textile, metals, agroprocessing, and leather sectors. Support intervention could be provided by Mercy Corps
to OCGFC and the MFIs engaged in understanding the local leasing demand,
identification of the market to serve, identify the suppliers, and then create
partnerships with the suppliers.
o
Development of MIS: OCGFC has an immediate need in developing a suitable MIS
platform for growth. The Excel package that it is being used currently will not serve for
much longer. In addition, the development of such MIS support in itself would require
staff training. Thus, Mercy Corps’ support intervention in OCGFC and the MFIs in Afar
and Somali could be in developing an appropriate leasing MIS and MIS strategy. In
working with the MFIs, it may be appropriate to work with AEMFI, since the association
has supported MIS interventions for micro-finance sector in the past.
o
Provide training to suppliers: It would be crucial to train suppliers on how leasing can
be mutually beneficial to them and to the leasing company as well as the lessees.
Training in the form of workshops would assist in introducing suppliers to leasing
companies, while increasing leasing awareness. Suppliers require lease knowledge in
areas such as establishing partnerships with leasing companies, understanding how
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leasing positively impacts sales, documentation, maintenance agreement and the roles
of warranty and transparent pricing.
o
Provision of lease fund for designated intervention: After support in the development
of MIS strategy and some level of capacity building, Mercy Corps could provide a
revolving lease fund designated for specific interventions e.g., dairy value chain and
agro-processing etc., to be administered by the leasing company. OCFFC indicated that
it is currently under discussion with an NGO to serve as a fund administrator for specific
interventions.
o
Develop a comprehensive lease awareness activity/campaign: Leasing is an
unfamiliar product unlike loans to many in Ethiopia. When supporting OCGFC in
Oromia, and the MFIs in Afar and Somali, there will be a need to create leasing
awareness activity for staff at the institutions, and then for suppliers, and finally for their
respective communities at large. Both the lessors and the suppliers should jointly
involve in creating lease awareness in the communities. Support is needed to leasing
companies in identifying leasable assets, which vary from one local area to another.
Equipment suppliers also need much knowledge about leasing since they are used to
the concept of “pay to rent” and not “pay to own”. Awareness raising activities to the
public should identify the product that could be leased and demonstrate how it could be
accessed. The MFIs and the suppliers in partnership should engage in increasing public
awareness by showing how a concrete leasable asset can be leased to a potential
lessee. Some training or workshop for potential customers on how to identify leasable
asset and prepare documentation would be of significant value in the development of
leasing.
4.1.1
Oromia
Considering the regulatory framework, the best institutional option for intervention in Oromia is
through OCGFC.
OCGFC’s senior management was interviewed for this report. Senior staff was recruited
primarily from the affiliated MFI, OCSSCO. OCGFC’s management indicated that significant
support is needed for the leasing company in raising capacity of staff and senior management in
leasing operations including lease management, procurement, and asset management. It was
also indicated that appropriate MIS platform for leasing was required immediately.
In Oromia, possible strategies to promote lease products may include facilitating partnerships
between OCGFC and playersin the dairy value chain. From interviews with some senior staff of
the PRIME project, the writer concludes that Mercy Corp’s staff is already familiar with
enterprises that have promising prospects in the PRIME project regions. Mercy Corps could
facilitate lease awareness activity partnerships between OCGFC and these private enterprises.
For example, in Guji and Borena, Mercy Corp could facilitate partnerships between OCGFC and
those entrepreneurs looking to expand their milk collection centers near urban areas with
Leasing Regulatory Framework Analysis and Intervention Options for the PRIME Project
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market access. Also in Oromia, there are some dynamic multi-purpose unions well known by
staff (e.g., Liben Union).
4.1.2
Afar
In Afar, Afar MFI is the only financial institution that could engage in leasing/Ijarah. None of the
new MFI-owned and government supported leasing companies is based in Afar. To support
potential beneficiaries of the PRIME project with leasing, Mercy Corps should consider
collaborating with Afar MFI, the only MFI in Afar.
Afar MFI is a recently formed MFI that is partially owned by the Afar Regional Administration.
Its current capital is approximately 3 million Birr, and it expects to receive additional capital of 14
million from the regional administration.
Afar MFI is developing its financial products based on Islamic microfinance contracts that follow
the principles of Islamic finance mainly, Murabaha (cost plus mark-up sale contract), Musharaka
(profit or loss sharing contract), these would be equivalent to loan products, and Ijarah, which is
equivalent to lease finance.
Although Afar MFI’s management is currently providing training to staff, it appears from
discussion with a senior manager that the training may not be adequate. Based on the writer’s
discussion with management, the understanding of Islamic banking practices by management
seems ambiguous too.
Afar MFI requires all areas of support interventions including developing knowledge of Ijarah
contracts, capacity building, technical on-site support, and more.
4.1.3
Somali
In Somali, Somali MFI and Ray MFI are the only institutions that could engage in leasing/Ijarah.
None of the new MFI-owned and government supported leasing companies is based in Somali.
To support potential beneficiaries of the PRIME project with leasing, Mercy Corps should
consider collaborating with both Somali MFI and Rays MFI.
Both Somali MFI and Ray MFI are planning to engage in Ijarah mode of financing to be provided
in the Islamic banking window. Both institutions are new MFIs. Below are highlights on the
respective institutions:
Ray MFI is a 100% privately owned MFI with 6 Shareholders that received its business license
from NBE in the last month. While the headquarters is in Addis Ababa, it plans to have 11
branches throughout Somalia in the next 3 months. Ray MFI has capital of 10 million Birr, of
which 2.5 million Birr is paid-up. It has submitted a proposal to Mercy Corps Innovation fund for
another 10 million to assist with some start-up operations.
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The institution is in process of putting staffing in place; however, it is experiencing lack of skilled
professionals in the area. Other major challenges for the MFI in implementing Ijarah are:
o Lack of MIS: Due to the highly dispersed population the need for appropriate MIS is
more evident.
o Supplier identification
o No public awareness on leasing
o Funding – the budget allocated for Ijarah is relatively small compared to funds allocated
for loans.
Based on Sector and demand study, Ray MFI determined that it will engage in Ijarah in bricks
production, woodwork and metalwork, beehives production and cobblestone production.
However, during the meeting for writing this report, it was evident that different regions of
Somalia have different demands. Nonetheless, the MFI will focus on demand driven assets.
For example, in the Shebele area of Somalia Region, the demand is likely to be for agroprocessing equipments, while in Jijiga it is likely to be small industrial equipments.
In parallel to starting the operation, Ray MFI has committed to conducting a study of all products
that it will be offering. The study will conduct need assessment of sectors and prioritize sectors
for commitment by Ray.
Somali MFI is owned by seven shareholders including 5 private sector entities, 1 Nongovernmental Organization (Ogaden Welfare Development Association) and the regional
government. It appears to be well capitalized with 33 million Birr. The MFI was established in
2011, and currently has 16 branches across Somali Region. Its headquarter is in Jigiga.
The MFI is planning to provide different financial services to the community it serves. Currently
the MFI is supported by Mercy Corps in its development of mobile and agent banking
activities.The MFI also engages in fund administration for Save the Children, Oxfam GB and
Sasakawa Foundation, in administering funds that are designated for specific project
interventions that benefit pastoralists and agro-pastoralists. In preparation to engage in leasing,
the MFI is training its staff in Ijarah contract. However, it was recently informed by NBE that the
MFI’s engagement in Ijarah contract requires a separate application for approval. It appears that
unlike Ray MFI, Somali MFI may not have included its plan to engage in Ijarah contract at the
time of the initial application.
The writer discussed with a senior manager who indicated that in the MFI’s market area there is
strong demand for livestock and agro-processing small equipments such as irrigation
equipments, water pumps. Demand for equipments in dairy processing and leather sectors are
also strong. Identification of equipment suppliers is yet to be conducted.In the urban areas of
the region, demand for items such as sewing machines and other small equipments necessary
for micro-enterprises are strong.Somali MFI is experiencing fast growth and it expects there will
be strong demand for Ijarah contract.
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Finally, Mercy Corps should consider collaborating with Rays MFI and/or Somali MFI in their
development of Ijarah given the anticipated strong demand and the benefits to the community in
line with the goals of the PRIME project. The support interventions above-mentioned, such as
support in capacity building, MIS development, technical on-site support, identification of
suppliers, as well as the possibility of establishing lease fund for designated sub-sector
interventions should be further explored.
4
CONCLUSION
Presently, leasing is undeveloped with very little leasing knowledge in the sector. As an
alternative to credit however, leasing has great potential in Ethiopia, particularly in the
agriculture sector where 80% of Ethiopia’s population is engaged for livelihood. There have
been significant recent developments in the leasing sector that paves the way for implementing
and supporting initiatives that would support the sector and benefit access to finance to
communities that are underserved by financial institutions.
The legal and regulatory framework had numerous gaps that would make lease operations
challenging. Primarily driven by strong interest to meet the growth targets of the manufacturing
sector and create employment to meet the targets under the GoE’s GTP, the government and
NBE are committed to create conducive environment for leasing. NBE with the support of IFC
has identified gaps, and there is an ongoing progress and activities planned to close the gaps
identified, and develop a vibrant leasing sector in Ethiopia.
Given the activities planned by NBE with support of the IFC to improve the leasing landscape,
there are a number of options for Mercy Corps to support intervention with collaboration of
financial institutions in the PRIME project regions, primarily focusing on the needs of pastoralists
and agro-pastoralists communities. To support leasing in the PRIME project regions, market
research needs to be conducted to determine sector demand for leasing equipments in
communities. Mercy Corps may provide support in various capacity building and technical
assistance to the financial institutions that plan to engage in leasing/Ijarah. Creating leasing
awareness among suppliers and the public is another significant area of intervention. Support
will also be needed in identifying suppliers and creating partnership between the suppliers and
leasing companies.
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Bibliography
o PRIME, May 2013: Financial Services EMMMA Assessment Report
o PRIME, June 2014: Baseline Report
o IFC, 2008: Leasing in Development: Guidelines for Emerging Economies
,
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