Uganda hosts the world’s most respected guru in the field of leasing, Sudhir P. Amembal (above). The one-day convention slated for the Kampala Sheraton Hotel’s Rwenzori Ballroom has attracted ministries, corporates, business fraternity. The one-day workshop will focus on emerging lease economies. Alex Balimwikungu spoke to Moses Kibirige, dfcu’s general manager development finance. Excerpts:
Question: To the common man, what does the term leasing mean? What does it entail?
ANSWER: Leasing is another way of borrowing funds other than getting loans. It is a means of helping businesses by accessing them with assets. In leasing, the lender (lessor) gives an asset to the borrower (lessee) to use the asset over an agreed period. The asset financed is the collateral while with loans there is need for collateral. Under leasing, one doesn’t have to use money immediately, it depends on the mutual understanding between the lessor (owner of the equipment) and the lessee (current user of the equipment).
What products do you offer? We offer finance lease and operating lease. With the finance lease, the lessee pays the lessor equal installments and at the end of the lease period, the equipment goes to the lessee. Under this arrangement, the agreement cannot be cancelled. With the operating lease, it is not automatic that the leased equipment reverts back to the lessee; the lessor can lease the equipment to another party at the end of the contract. This agreement is cancelable by either party.
How are the participants at the convention going to benefit from Sudhir Amembal’s talk?
For starters, they will be listening to a world-renowned expert on leasing. They are going to interact with someone who has made his hands dirty in leasing. On the whole, the workshop is expected to achieve several attributes namely, to raise the awareness of leasing in Uganda and how it can work for the corporate industry. He is also expected to emphasise the area of record-keeping and how record-keeping is one of the best ways to benefit from leasing, focus on tax regulation and legislate on how to improve the leasing sector. Most importantly, the workshop will help to create an intricate network amongst participants after sharing experiences.
What are the main attractions for one to get a lease? Why should an average enterprise join the leasing fray? Isn’t it only for the big companies?
No at all. Leasing is also meant for the small, medium and micro enterprises too. Though we started with companies that needed leases of over $100,000 we now offer leases to enterprises that need as little as sh2m. Some of our attractions include the fact that the borrower (lessee), uses cash acquired from the leased asset to pay back the rentals. Lease processing takes less than two weeks and more importantly, we insist on very little rental requirements.
What do you highlight as the challenges to the development of leasing in the Ugandan economy?
Well, like in Ghana, Nigeria and South Africa where the industry is already developed, experts tell you that the problems mainly dwell around lack of awareness by the public and major funding for the leasing process. As things stand today, we are facing an acute lack of sufficient trained professionals. However, over the years, dfcu has endeavoured to train its employees abroad to gain more expertise. Another major challenge is that Uganda doesn’t have a leasing legislation. What we use is business law, the common law and the tax statute. There is need for a leasing law. We also require tax incentives if leasing is to be bolstered. It is done in other countries with great success. I believe we can make it too.
Any achievements registered in dfcu leasing 10 years of operation?
I should say yes, because, looking at our motive, which is development of the industry and targeting some profits, we have set up a profitable leasing operation and the clientele is growing by the day.
