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Leasing sector's portfolio mainly goes to real estate projects: Experts We're still at the tip of the ice berg; there are various opportunities in the sector, says Executive Chairman at EFG Hermes Leasing
The financial sector, including the leasing field, in Egypt should be under tougher supervision than that imposed on the banking sector, said Ali Shaker, head of the Arab African International Leasing company. The number of companies operating in the leasing field massively grew in Egypt in the past period; however, obstacles still face the sector, panelists indicated Tuesday during the Partnership for Development Initiative conference taking place in Cairo. With the definition of leasing being unclear, and with new entrants to the field, more supervisory regulations need to be imposed to monitor the activities of the sector, a number of experts indicated. Nonetheless, despite the obstacles, the sector managed to achieve high growth, as from the beginning of the year until September, the value of contracts increased by 191%, reaching EGP 14bn, compared to EGP 4.9bn in the same period the preceding year. The growth however is highly attributed to financial leasing being used as a tool for real estate and dredging projects. Thus supplying other sectors is vital to ensure real growth in the sector. Wael Ziada, Executive Chairman of EFG Hermes Leasing, noted that the leasing portfolio in most companies operating in the field is directed towards the real estate sector, a trend that requires correction as more focus should also be directed towards the manufacturing sector to cover the fields of transportation, logistics and others. The conference's main focus was on leasing, portraying it as a new venue for investment. In order to finance clients or companies through leasing, whether venture leasing, operational leasing or otherwise, leasing companies depend almost solely on banks for supplying the needed finance for its clients, which is considered a hurdle for the sector.
"Leasing companies should look for other non-banking tools for financing projects," highlighted Shahinaz Rashad, head of the Egyptian Leasing Association (ELA). Further, the insufficiency of available trained human resources in the field is another hurdle facing the sector, according to Abdelmohsen Elsemary, Managing Director at QNB Al-Ahli Leasing. Moreover small and medium enterprises (SMEs), which should represent a significant portion of the leasing sector, are not getting the right attention. Thus, there should be leasing companies operating solely to satisfy SMEs' needs, Shaker noted. "We are still at the tip of the ice berg there are still various opportunities in the sector to be exploited," Ziada concluded.
