Leasing is a finance mechanism that entrepreneurs all over the world use to finance vehicles, machinery and equipment. The important feature of leasing is that entrepreneurs can start using the equipment before they really own it.
During the period in which the entrepreneur pays the lease instalments, he or she already realises an extra income through the use of the equipment. Some microfinance institutions have started to offer a lease product next to their usual range of savings and credit products. Leasing offers the advantage of better security. As long as the client has not fully paid the lease instalments, the asset remains owned by the MFI.
Other advantages are the absence of fund diversion and – in some countries – tax incentives. Microfinance institutions that want to develop a viable leasing programme will have to make a considerable investment in staff training and systems development. The difference between a “lease” and a “loan” affects the whole organisation.
While product developers need to familiarise themselves with lease product design and pricing issues, senior management needs to explore possible partnerships in a leasing programme. Accountants will need to be aware of accounting and taxation issues, while loan officers experienced in credit evaluation might have initial difficulties. This course will provide participants with the knowledge to develop a viable leasing programme.
The course will follow the content of the ILO micro-leasing manual, covering the following topics:
