World Bank?s IFC Starts Leasing & Financing for Sierra Leone
| By Sheriff Ismail Dec 6, 2012, 17:14 |
The International Finance Cooperation (IFC)- a subsidiary of the World Bank- is??introducing ?Leasing/ Equipment Financing to boost the competitiveness of local entrepreneurs. The emphasis is to create the enabling environment for the local businesses to access the much needed resources/finance facilities to start and run their business without the usual worries of huge capital and or collateral.
Starting a business requires a great deal of financial investment, and in some cases, one needs to obtain a large amount of equipment for the business to run.When this is the case, businesses may have the option of financing their equipment or leasing it to lessen the blow to their cash flow. The latter is a NOT common occurrence in Sierra Leone?s economic environment. Therefore the IFC initiative will not only serve as an impetus to the growth of the private sector but would provide a strong anchor for the country?s Local Content Policy enacted in August 2012 under the auspices of the Ministry of Trade and Industry.
?
Leasing has proven to be an effective financial tool used to achieve rapid economic development in both developed and developing countries. A healthy leasing industry facilitates economic growth, because leasing increases finance flows to the productive sectors of a country?s economy, and increases financing options for private businesses. Leasing is an effective mechanism for jump starting a growing economy and particularly advantageous to developing countries like Sierra Leone. Equipment use plays an important role in the economic development of any given nation. Finance Leasing has proven to be an effective financial tool used to achieve rapid economic development in both developed and developing countries. In developed countries leasing is used to finance about one third of private investments. While in developing countries it has recorded high growth rates since the 1990s.?
Leasing could offer access to finance opportunities to small businesses, or SMEs, by allowing them to acquire productive assets without the need to provide otherwise difficult to obtain collateral. Such assets, typically in the form of equipment, in turn, are used for productive purposes, allowing SMEs to grow their businesses. SME growth in turn, contributes to the stimulation of the country?s economic development.
?
However, in emerging economies such as Sierra Leone, there is a low level of leasing penetration.
?
What is Leasing/equipment financing and how it works?
?
Leasing is an agreement that allows one person (Lessee) the use of another person?s owned asset (Lessor). The lessee makes specified regular payments to the lessor as a consideration for the use of an asset. The basic principle of leasing is that, asset usage and ownership are kept separate.
?
How does Leasing works ? The basic form of lease transaction
In its basic form a lease transaction involves the following process:
1. The lessee selects a supplier, equipment and negotiates on price with the supplier.
2. The lessee approaches a lessor (bank or leasing company) for financing of the equipment.
3. Lessor assesses the lessee?s application, if approved signs a contract with lessee.
4. The lessor pays for the equipment.
5. The supplier delivers the equipment to the lessee.
6. The lessee makes periodic specified payments to the lessor during the lease period.
7. When the lease period expires the lessee either returns the equipment or buys it.
In subsequent articles, I will discuss the relevance of leasing to government, the individual businesses and the institutions providing the lease. I would also discuss how and where this IFC product will be accessed.
?
? Copyright by Awareness Times Newspaper in Freetown, Sierra Leone.
Source: http://www.worldleasingnews.com/news/world-banks-ifc-starts-leasing-financing-for-sierra-leone/
monkees songs rail gun harrisburg top chef texas great pacific garbage patch ben affleck and jennifer garner google privacy changes
কোন মন্তব্য নেই:
একটি মন্তব্য পোস্ট করুন