Co-op Bank bags Ksh. 890M govt leasing deal

The Co-operative Bank of Kenya on Wednesday sealed its first leasing deal by bagging a lucrative Ksh.890 million fleet leasing deal with the State.

The transaction, which makes up part of a larger Ksh.2.2 billion contract, will see the lender participate in the financing and delivery of a total of 125 vehicles to the Ministry of Interior, the National Police Service and the Prisons Department through a jointed venture with South African based global leasing firm Super Group.

The lender will further collaborate with motor vehicle dealer Isuzu East Africa Limited to meet the delivery of the fleet which is made up of trucks, pickups and buses.

Co-operative Bank expects the deal to boost its newly-established leasing firm, dubbed the ‘Co-op Bank Fleet’ by supporting customers in the acquisition of assets and enhancing the lender’s diversification into differentiated revenue streams.

“This partnership between Co-op Bank and Super Group is mutually beneficial as it taps the synergies created by the joint venture. The leasing business provides an opportunity for the bank to better support customers and at the same time enable the bank to diversify its income streams,” Co-operative Bank Group Chief Executive Officer Gideon Muriuki said.

Leasing has grown to be widely accepted as a cost-effective means of acquiring business assets while fostering the sound management of cash-flows by both States and private sector stakeholders.

The activity sheds off heavy costs associated with carrying assets while allowing entities to better manage and control expenditures.

The Kenyan government has been adopting the leasing trend as an alternative to the acquisition of assets as a means to reduce expenses. Sectors such as oil and gas, co-operatives, manufacturing, construction, transport, mining and ICT are expected to drive up the high-uptake of leasing into the future.

According to experts, buying assets no longer makes commercial sense compared to hiring equipment/machinery when only needed.