Micro Leasing, as the name connotes, is another form of leasing that involves little capital and equipment. It also involves the lessee, lessor and the vendor. With it, little capital is often required.
It could also be called a Small Scale Enterprises Leasing. One of the problems of small scale enterprises is their inability to attract capital.
The current trend is that, there is an attraction towards big ticket leases with focus on oil and gas industries, blue chip manufacturing companies and the telecommunication companies. Small scale enterprises are in a difficult situation especially in developing economies.
Financing problems constitute one of the bottlenecks encountered by the small and medium-scale enterprises in developing countries, including Nigeria.
Banks and most big lenders offer mainly short-term financing which is not suitable to small enterprises. To make matters worse, they demand collaterals for their loans and other forms of financing.
These problems have limited the access of small-scale enterprises to capital and other credit facilities. No doubt, robust economic development cannot be achieved without putting in place programmes that would create employment to reduce poverty among the populace especially the growing number of graduates.
Micro finance is about providing finance to the lower level of fund users, who are traditionally not served by the conventional lending institutions. These categories of fund users who constitute 75 per cent of the borrowing public, operate in the informal sector and therefore are at disadvantage when it comes to sourcing funds needed to operate their small business.
Government in the past had tried to address this imbalance when it floated the defunct small finance house like the Federal Saving Bank and the Peoples Bank, among others.
Unfortunately, these institutions could not address the need of this class borrowers due to potential interference in the affairs of the institutions.
To fill the funding gap, many micro finance institutions have come in form of local and foreign aided Non-Governmental Organisations (NGOs). Their number have increased significantly in recent times, due to persistent demand.
No doubt, the emergence of these institutions will stimulate lending to small enterprises, that are managedoperated mainly by the low income populace.
First, the rate of failure of small business is very high. It is also, a game of numbers becanuse the more they are, the greater the risk of default, hence leasing companies are distrubed by this problem facing micro leasing.
Secondly, visible leasing depends, to great extent, unlike other kinds of financing, on accurate appraisals of the markets for lessee’s products and services.
Lessee self assessment alone is inadequate particularly given the propensity of small enterprises-dominated trades to be swamped by excessive new entrants. Sound appraisal of small-scale business sectors requires specialised knowledge and skills and most financing institutions servicing the small enterprises market are not particularly familiar with these markets.
Successful leasing is based on the possibility of calculating and structuring lease installments, in such a way that the fair market value of the lease asset remains at time above the amount the lessee would need to pay in order to purchase the asset from the lessor.
This calls for high level of skill and knowledge about the equipment. Thirdly, administering large numbers of small value contracts generates high overheads, monitoring business performance in order to anticipate and preempt repayment problems which can prove costly, depending on the management information systems in place.
Fourthly, for security reasons and effectiveness, lessors prefer to lease items that are easy to move.
This, unfortunately also makes assets more prone to threft or absconding by the lessee. In practice, lessors need additional forms of guarantee for contacts with small enterprises.
Moreso, the market research capacity of most enterprises is limited.
Therefore, when they want to invest in new equipment they are often not fully aware of the full costs, sales volumes and market available.
Since the leasing company also has an interest in seeing the leased assets used to their full capacity, research into the markets for the leased equipment should not be left to the small enterprises alone, and the fact remains that most of the leasing companies are really for this kind of research for small ticket leases.
Finally, most of the small scale enterprises are untested. They do not have enough resources to pay for the services of professionals, and for this reason, leasing firms are always willing to deal with a well structured organisation with good records keeping and credits history.

Bethel Toby