Co-operative Bank’s #ticker:COOP leasing venture with South African logistics firm Super Group has bagged its first deal, to supply 40 trucks to the Kenya Police, marking the lender’s entry into the lucrative vehicle leasing market.
The Co-op-Super Group joint venture won the Sh404 million leasing deal in the first half of this year. Isuzu East Africa has already supplied the trucks. The Johannesburg Stock Exchange-listed Super Group on Monday disclosed it had “secured its first government full maintenance lease contract in Kenya” while releasing its full-year financials for the period ending June 2017.
“Significant new tenders are currently being submitted with regard to further opportunities in Kenya being pursued, which should bode well for this business going forward,” Super Group said in regulatory filings.
Co-op Bank, as financing partner in the deal, is eying additional income from the four-year police vehicle leasing contract amidst reduced interest income in the wake of interest rate caps.
Super Group bid for the Kenya Police leasing contract through its subsidiary FleetAfrica.
Co-op Bank said the leasing unit will leverage on its client base and ownership involving Saccos to offer car lease deals to co-operatives such as matatus and farmers.
“We are exploring further opportunities,” Co-op Bank group CEO Gideon Muriuki told the Business Daily.
Vehicle leasing is fast gaining currency in Kenya because investors are spared the headache of raising upfront capital to acquire a fleet. The servicing costs are also borne by the supplier and it may allow easier upgrades to a newer model.
President Uhuru Kenyatta’s move to turn to vehicle leasing to boost the capacity of the police service and other agencies has come as a boon to leasing firms, financiers and auto dealers.
Treasury plans to spend Sh8.1 billion on leasing vehicles for the national police service in the current fiscal year, which began July 1, up from Sh6.1 billion last fiscal year.
Toyota leased 250 Hino trucks to the police in 2015, with Isuzu East Africa missing out in the inaugural government leasing deal.