body-container-line-1
06.06.2006 Business & Finance

No Direct Leasing Business For Banks - Expert

06.06.2006 LISTEN
By GNA

Mr Sudhir Amembal, a world-leasing expert, yesterday advocated non-direct involvement of banks in the business of leasing mainly because they would crowd-out leasing companies. He said: "Banks should not be allowed to directly participate in leasing because it does not provide a level playing field for the players in the leasing industry."

Mr Amembal told the Ghana News Agency that banks had the capacity to borrow at lower or cheaper rates of interest compared to leasing companies hence the legal regime and the regulatory framework under leasing should allow banks to only form subsidiaries instead.

Speaking at the opening of the 10th African Leasing Convention in Accra, Mr Amembal said Africa had leasing potentials, which were vastly untapped despite the enormous benefits that the industry could offer.

"Leasing plays a substantial role in the economic development of a nation," he said, and noted that the industry would grow if Africa economies could develop the ability to learn from mature markets such as the United States (US) and the United Kingdom (UK) and developed the infrastructure base.

In terms of volumes, he said the London Financial Group Leasing Report indicated that leasing activities rose from 511.7 billion dollars in 2003 to 579.1 billion dollars in 2004.

Ranking by volumes and percentage of market penetration, US topped with 220 billion dollars and 29.9 per cent respectively followed by Japan with 74.41 billion dollars and 8.7 per cent.

No African country featured in the first 50 countries that were ranked whether in terms of volume, growth and market penetration.

Touching on challenges in emerging lease markets in Africa, Mr Amembal identified some of them as lack of or inadequate legislations, inappropriate tax laws, rigid regulations, shallow capital markets and inadequate credit information.

In a related interview with Mr Stephen Ameyaw of Bank of Ghana, he said banks under the universal banking law were not prohibited from directly engaging in leasing. He, however, said the existing leasing law in Ghana permitted them to form subsidiaries or units that dealt mainly with the business of leasing.

body-container-line