Assessment of lease financing in Ethiopia among DBE, ACGFC and OCGFC.
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Date
2018-06
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Addis Ababa University
Abstract
The main target of the study is to assess the current situation of lease financing by focusing on some basic points like: internal factors and external factors that affect lease financing, nature and benefit of lease financing and future prospects. Lease financing is an alternative means and sophisticated mechanism to fill gaps of finance accessing. Even though in Ethiopia it is at infant stage leasing is very important for developing countries in which business environment is weak. The study uses both qualitative and quantitative method. Both primary and secondary data were used as evidence for the study. In identifying the respondents from the study population a mix of both random and purposive sampling were adopted. Three lease providing companies DBE, ACGFC and OCGFC were used to take 65 sample respondents. The collected were analyzed through descriptive statistics that involves tables, frequency distribution and percentage. In the study, basic challenges like: lack of leasing expertise in the market; existence of inadequate supply chain linkages, existence of limited domestic suppliers; and absence of specialized leasing training center, lack of stakeholder integration, shortage of hard currencies and re-possession, absence of adequate local manufacturers, long lease processing time, awareness gap and rental problem were identified. Despite these challenges, the study identified that leasing has high market potential for growth in Ethiopia due to government support, economic growth and industry focus of the country. Conclusion and recommendation is given based on the questionnaire and interview results. The study concludes that leasing is best opportunity to get finance without collateral and credit history. And also the study recommends lease sector should create strong bond with different stakeholders, promote local manufacturing create an enabling environment and the general awareness of leasing to create vibrant lease ecosystem.
Description
A Thesis submitted to school of graduate studies of Addis Ababa University in partial fulfillment of the requirements for the degree of masters of Science (Msc) in Business Administration (finance)
Keywords
Capital goods finance, Leasing, Lease finance