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NIC bags Sh1.2bn police vehicle leasing contract

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President Uhuru Kenyatta handing over new leased vehicles to the Police Service in February, last year. FILE PHOTO | NMG

Listed NIC Bank #ticker:NIC says it has bagged a deal to supply 400 trucks to the Kenya Police worth Sh1.2 billion, the second large contract to a lender this fiscal year.

The deal will see the mid-sized bank’s leasing arm NIC Leasing Liability Partnership partner with car dealer Isuzu East Africa to deliver the 400 Isuzu trucks, buses and double-cab trucks.

“This is NIC Bank’s first leasing agreement with the national government,” said NIC Bank executive director Alan Dodd in a statement.

Mr Dodd said the vehicles will be deployed by the National Police Service (NPS) and Kenya Prisons.

“Under the agreement, the government will be paying rental for the vehicles on a quarterly basis,” said Mr Dodd.

NIC Bank is the second commercial lender to win such a deal after it emerged early this month that Co-operative Bank’s #ticker:COOP joint leasing venture with South African logistics firm, Super Group, is set to net its second major deal to supply 412 trucks—also to the Kenya Police—worth Sh2.2 billion.

Under the deal, Co-op Bank is the financier, with leasing specialists Rentco and Fleet East Africa — which is Super Group’s regional arm — arranging the leasing. They will collaborate with motor vehicle dealers CMC Motors and Isuzu East Africa.

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 for leasing firms, financiers and car dealers. “This is a big milestone in ensuring police mobility and safety in their duties,” Mr Kenyatta said in Nairobi last year

Vehicle leasing is fast gaining currency in Kenya, with investors who opt for the model spared the headache of raising upfront cash.

Stung by the interest rate controlling regime that took effect in 2016, Kenyan financiers are now casting nets wide to turn the tide of diminished earnings.

They are looking at a piece of the leasing segment currently dominated by foreigners to shore up revenues. The leasing sector has over the last past six years doubled to about Sh50 billion with a potential of over Sh500 billion, according to recent data from the Leasing Association of Kenya.