Financial Sector Deepening Africa together with Nathan Associates analysed different aspects of leasing in Africa. The study, published in March, applies a market systems approach to agricultural equipment leasing in sub-Saharan Africa in order to capture a holistic view of how the leasing market currently works.

The analysis entails core market functions such as supply and demand as well as supporting market functions and the policy environment.

Topics covered in the country analyses in detail

• Capacity of financial sector
• Relative importance of agriculture in the overall economy
• Total employment provided by the agriculture sector
• Presence of major agricultural equipment suppliers
• The presence of leasing companies

Countries analysed

Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Zambia.

Conclusions of the study

• Constraints throughout the market system for leasing currently create an environment, where the effective demand to lease equipment is limited and the incentives for financial service providers to offer agricultural leasing products are low.
• Most farmers are unaware of how leasing works and what its potential benefits are compared to traditional bank loans.
• Financial service providers do not see sufficient market opportunity to justify investing in the skills and capacity required to effectively offer leasing to the agricultural sector.
• At the same time, there are significant benefits attached to supporting leasing in sub-Saharan Africa. The availability of financial leasing for agricultural equipment can greatly increase mechanisation, especially for smallholder farmers, and therefore has potential to drive meaningful development impact.