The government has contracted Co-op Bank Fleet Africa Leasing to finance a fleet of 125 vehicles to be used by the Ministry of Interior, the National Police Service and the Prisons Department.
Co-operative Bank Group CEO Gideon Muriuki says leasing business provides an opportunity for the bank to better support customers to acquire assets, technologies and equipment they require while enabling the bank diversifies income streams.
Even though leasing is seen as a cost saving model of asset ownership with the government approximating that using it would save about 30 percent in procurement costs, its adoption in Kenya has been slow.
This is attributed to low technical capacity as well as financial challenges faced by providers especially from large companies or government agencies who might require assets running into billions of shillings.
To tap this, co-operative bank and global leasing specialist Super Group based in South Africa recently established a joint venture leasing firm.
Co-operative Bank Group Managing Director Gideon Muriuki says: “Super Group Limited is an established global leader in leasing business operating in three continents and is listed on the Johannesburg and Sydney stock exchanges. This partnership between Co-op Bank and Super Group is mutually beneficial as it taps the synergies created by the joint venture.”
The Co-op Bank Fleet Africa Leasing Limited has got off to a roaring start after sealing its first leasing deal worth over 890 million shillings from the government, which is part of a larger 2.2 billion shillings deal.
The leasing deal entails the financing and delivery of a fleet of 125 vehicles comprising trucks, pickups and buses to the Ministry of Interior, the National Police Service and the Prisons Department.
Muriuki says the leasing business provides an opportunity for the bank to better support customers to acquire the assets, technologies and equipment they require at the same time enable the bank diversify its income streams.
Experts expect county governments as well as those in the Oil and Gas, Co-operatives, Manufacturing, Construction, Transport, Mining and ICT sectors to drive the uptake of leasing.