EQUIPMENT LEASING AS A SOURCE OF FINANCE IN CONSTRUCTION INDUSTRY

ABSTRACT

The aim of this study is to find out how the establishment of Equipment Leasing in the Federation has helped in financing investment. To carry out this study, four research questions were formulated. In this study, a questionnaire was used to collected relevant data from the staff of Marlum Construction Company, Emene, Enugu. The findings revealed that Marlum has a positive perception that the established of Equipment Leasing in the federation helped in improvement of investments while lessens also have positive perception, better perception in all the issues raised in the research work. The relative recent development of leasing in Nigeria as compared to other forms of finance have been said to be the reason for the stunning lack of information about it and the options it offers to the business concern in Nigeria. This lack of information is pitiful in that most members of the public are not even aware of its presence in Nigeria. The need for organized and comprehensive information could not be over emphasized.Furthermore, being new most investors are not really well informed as to the profitability or otherwise of leasing as a finance option, hence the low level of firms that engaged in leasing which goes to compound the problem of the Nigerian investors not having much choice as to the best alternative available to him. Subsequently, this study will go a long way in projecting the profitability and future prospects of leasing business in Nigeria and also contributing to the development of leasing in Nigeria which under the present economic condition its impatience cannot be over emphasized.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

Equipment leasing started in Nigeria in early 60’s through off-shore United Kingdom leasing companies. Awelewa (1989, pp.20) with the outbreak of civil war in 1967, these leasing transaction became impossible due to difficulties in exchange control measures introduced by the military Government. The Marlum Civil Engineering and construction Company, Enugu is not an exception in the equipment leasing. The Marlum have been in existence from 2002 to date in this leasing process. Equipment leasing was their main source of finance. The leasing increased their paid up capital. At a time it started to dwindle due to the lessor could not meet up to the expectations of demand by the construction company. Sometimes, the lessor may not use the equipment as a result of depreciation occurance. Delay in the payment caused the dwindle. The lessor may not finish the payment until he died. Before leasing the equipment, the lessor has to write the designated place where the equipment has to be used. The person has to be registered in a well-know company. The purpose of which the equipment you want will be indicated in the form. Most problems are encountered by Marlum Construction company is over used and breakdown of equipment. The lessor does not give adequate information about the equipment after used. When another lessor comes to use the same equipment , the damages which have been caused by the former, will be noticed. The company has been suffering from this because of insecurity in the use of equipment.

1.2     STATEMENT OF THE PROBLEM

Marlum had been suffering financial problems as a result of the delay in payment by the lessor and it had equally denied them cash for working capital. Some of the lessor could not meet up with the company demand in leasing out the equipment as a result of restricted guideline. The Marlum security officers were not always at their duty post and this negligence of duty created a lot of problems to the extent that they were present even when equipment is returned. Marlum spends so much time and money in the courts because of the litigation of all types particularly with respect to recovery of bad debts or doubtful debts.

1.3     PURPOSE OF THE STUDY

The past development of leasing in financing organization and options it offered to marlum construction company Emene, Enugu.

However, in the purpose of the study, the researcher intends to identify the mistakes and possible solutions to such.

To find out how the marlum had suffered financial constraints

To find out why the lessor could not meet up with the guidelines

To investigate why security officers are not on their duty post when at work.

To find out how marlum had been able recover their debts.

1.4     SCOPE OF THE STUDY

The researcher encountered numerous difficulties ranging from finance, time consuming and personal comfort. In as much as the researcher is student and carries out the research work with a limited amount of money, he is bound to have financial problems hence the researcher work required much money for producing questionnaire or interview guides and transportation. The financial problem prevented the researcher from traveling to other parts of the country for effective data collection, hence only Enugu Metropolis was used.

1.5     RESEARCH QUESTIONS

Does Marlum suffer financial problems as a result of delay in the payment by the lessor?

Do the lessor meet up with the company demand in leasing out the equipment as a result of restricted guideline?

Do marlum personnel spend so much time and money in the cause of recovering bad and doubtful debts?

1.6    THE SIGNIFANCE OF THE STUDY

There is a strong need to study the equipment leasing as a source of finance in Nigeria. It is necessary that this study be done so that this practice, prospectus and problems will then be examined and tackled by the authority in-charge for smooth running of the company. This study will also give an idea into ways of under taking smooth leasing system.

This study will also be very useful in the school system to  enrich the academics in the library.

It will also serve as a useful guide for any person intending to go into  leasing practices. It will also be very useful to the policy makers of marlum Construction Company in tackling management issue on leasing.

1.7  DEFINTION OF TERMS

There are some words considered technical which if not defined might be in impediment to an ordinary man’s understanding and appreciation of the research work.

They are:

LEASING:- Any reference to leasing in this study is deemed to mean alternative source of finance.

LESSOR:- For the purpose of this study, this refers to some one who grants a lease.

LESSEE:-This refers to someone who is granted a lease or whom the property is been leased.

LEASE:- Legal agreement under which the owner of property allows another party to use the property for a specified period and previously arranged payments.

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