The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and Elizade JAC Motors are developing an initiative to provide financing for small and medium-sized enterprises (SMEs) to acquire light-duty trucks. This aims to address the transportation costs faced by SMEs, particularly those relying on hired vehicles or ageing second-hand trucks to move goods and provide services. The initiative is expected to support a shift from reliance on third-party transporters to ownership of logistics assets.
Under the arrangement, SMEs will have access to trucks with capacities ranging from 1.6 tonnes to 10 tonnes, with available power options including petrol, diesel, hybrid, and compressed natural gas (CNG). Chief Operating Officer of JAC Motors, Arvind Bhardwaj, stated that the initiative was conceived to address recurring transportation expenses incurred by small businesses. The company's assessment indicates that the initial lower cost of acquiring used trucks can be offset by higher expenditure on maintenance and repairs over time.
According to JAC Motors' assessment, an SME could spend about N8.7 million more over five years on a used vehicle than on a new truck when maintenance, repairs, tyres, batteries, and other associated costs are taken into account. This highlights the potential long-term benefits of acquiring new trucks through the financing scheme. Senior Brand Manager of JAC Motors, Olumide Olaokun, provided further details on the truck models available, including the 1.6-tonne truck available in petrol and hybrid CNG variants.
The 1.6-tonne truck's hybrid CNG variant can cover about 120 kilometres on a tank, with operating economics depending largely on the availability of CNG infrastructure and the cost of the alternative fuel. The 3-tonne, 5-tonne, and 10-tonne models are diesel-powered. Olaokun's comments underscore the importance of considering the operating costs and logistics of the trucks in the financing scheme. The proposed financing structure involves customers providing an initial contribution and financing the balance through participating banks.
One financing illustration presented involved a 20 per cent initial contribution, an annual interest rate of 25 per cent, and a four-year repayment period. The monthly repayment for the 1.6-tonne truck was projected at less than N800,000. Another option allows prospective buyers to pay 10 per cent to reserve a vehicle while financing for the balance is processed by the bank. This flexible financing structure aims to make the trucks more accessible to SMEs.
Zonal Coordinator, South-West Zonal Office of SMEDAN, Olukayode Shode, emphasized that access to productive assets remains an important consideration in efforts to strengthen the capacity of SMEs. The initiative aligns with the government's broader SME development agenda, particularly improving access to finance and productive assets. For many small businesses, transportation is a high operating cost, and solutions that enable SMEs to own productive assets can help reduce operating constraints.
By providing SMEs with access to financing for light-duty trucks, the initiative is expected to improve productivity and support sustainable business growth. The collaboration between SMEDAN and Elizade JAC Motors reflects a strategic effort to address the challenges faced by SMEs in Nigeria. The financing scheme has the potential to make a positive impact on the operations and growth of SMEs across the country, enabling them to reduce transportation costs and improve their overall competitiveness.
Key points
- SMEs in Nigeria may access financing to acquire light-duty trucks under an initiative by SMEDAN and Elizade JAC Motors.
- The initiative aims to address transportation costs faced by SMEs and support a shift from reliance on third-party transporters to ownership of logistics assets.
- The financing structure involves customers providing an initial contribution and financing the balance through participating banks.
