Challenging Africa’s IT leasing status quo
Leasing assets is gaining traction around the world, with several African countries taking advantage of the trend.
Africa’s equipment leasing market grew by 9.3% to $4.9 billion from 2020 to 2021, with Nigeria, South Africa, and Morocco ranked as Africa’s top leasing countries, and among the top 50 leasing countries in the world, according to the 2023 World Leasing Yearbook. The Yearbook’s Solifi Global Leasing Report states that the leasing industry has grown 84% in the past decade, and that the top 50 countries reported new business volume of US$1,463.19 billion in 2021.
Despite this growth, organisations in Africa remain focused on heavy equipment leasing and overlook the benefits of IT equipment leasing.
Michael Lamwe, Head of Business: Africa at InnoVent, one of Africa’s fastest-growing IT financing and leasing companies, says it is worth noting that vehicles and heavy machinery remain the dominant categories of leased assets in Africa.
“According to the Equipment Leasing Association of Nigeria (ELAN), equipment leasing is on an upward trajectory in Africa, but despite this, only 18% of leased assets were computer and office equipment in 2022,” Lamwe says.
“What we are seeing in the African market is that people are increasingly comfortable with leasing property, vehicles and construction equipment, but they have been slower to lease technology assets, which depreciate faster than vehicles or construction equipment do,” he says.
Lamwe says: “At the end of the day, there is little to no resale value on IT assets such as laptops and computers. Technology progresses so fast that a four-year-old device is practically a legacy device,” Lamwe says. “After five years or more, laptops and computers become so slow and unreliable that they could be considered a business continuity and security risk. However, using cash reserves to purchase new IT equipment, or financing it with a bank loan, impacts operating capital and pushes up costs.”
“Globally, organisations are embracing hardware-as-a-service, subscription, and leasing models to keep rotating the hardware faster, because they know the tech life cycles are short and they want to stay up to date with new features and functionality. However, the mindset around IT device ownership has been slow to change in many African markets. The rest of the world accepts this as a viable model. Now Africa needs to move with the times.”
InnoVent is challenging this mindset as it expands into African markets, offering faster technology refresh cycles at a lower total cost of ownership, through a pay-for-use structure with a residual value-based investment upfront to lower the cost of financing. Together with its asset management service, the company can offer businesses auditable savings of up to 30%.
This compelling value proposition is building a growing market for the company: since its launch in 2003, InnoVent has achieved over three billion assets under management across seven offices, for over 200 clients.