Lease Financing and Asset Acquisition in Nigerian Small and Medium Enterprises

Lease financing offers small and medium enterprises a mechanism to acquire productive assets without the immediate capital outlay of outright purchase, addressing one of the most persistent financing barriers in the Nigerian business environment. This study examines the use of lease financing in asset acquisition among small and medium enterprises registered with the Small and Medium Enterprises Development Agency of Nigeria across the South East and South West geopolitical zones. Primary data are collected from 180 enterprise owners and financial managers in Enugu, Aba, Ibadan, and Abeokuta through structured questionnaires. The study assesses awareness and adoption rates of finance and operating leases, perceived benefits and limitations, and the influence of lease financing on asset base expansion and operational capacity. Data are analysed using descriptive statistics, chi-square tests, and binary logistic regression identifying predictors of lease adoption. The theoretical framework draws on the financial intermediation theory, transaction cost theory, and the small business finance literature on alternative financing mechanisms. The study situates its analysis within the equipment leasing market as regulated by the Central Bank of Nigeria and the activities of the Equipment Leasing Association of Nigeria. Existing literature from Nigeria and comparable African economies confirms that informational barriers, limited lease market depth, and collateral requirements often prevent small firms from accessing lease products even when they are theoretically superior to debt financing. Findings carry implications for the Central Bank of Nigeria, the Small and Medium Enterprises Development Agency of Nigeria, and commercial banks developing lease product portfolios for the business sector. Keywords: lease financing, asset acquisition, small and medium enterprises, equipment leasing, Nigeria