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LEASING
Star Rentals Banks on Innovation and Excellent Customer Service to Thrive By Oroni Tendera
In the majority of African countries, high interest rates and prohibitive collateral requirements prevent most businesses from securing the necessary credit to acquire expensive machinery, equipment or vehicles. Traditional banking and commercial credit are, therefore, often only available to the top end of the market.
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The acquisition of assets-particularly expensive capital equipment-is a major commitment for many businesses. How that acquisition is funded requires careful planning,” says Oscar Saina, the general manager at Star Rentals. He opines that rather than pay for the Startupmagazine.co.ke
July 2019
asset outright using cash, it always make sense for businesses to look for ways of spreading the cost of acquiring an asset, to coincide with the timing of the revenue generated by the business. Thus the most common sources of medium term finance for investment in capital assets are asset-leasing or asset-finance. IFC defines leasing as an alternative method of payment for the use of equipment such a vehicle, machinery or any manufactured instrument over a speci-
fied period of time. “In its simplest form, leasing is particularly useful as a financial instrument for businesses in Kenya because it reduces the initial capital requirements for acquiring equipment,” notes the executive. The idea to start Star Rentals was initiated in 2014 and finalized in 2016 when the company officially begun its operations. The firm is part of the larger logistics heavyweight, Siginon Group. At the outset, we foresaw huge opportunities in the industry, says Saina. “The cost of acquisition of assets for businesses was overwhelming. The government had also capped the interest rates which locked out many small players from traditional forms of financing. So, most of them opted for asset leasing.” At the same time, the Government of Kenya adopted leasing as the framework to provide access to a largely increased number of well-maintained and utilized vehicles. This stemmed from the hindsight that public service transport system had generally been inadequate to meet GoK service delivery requirements due to the age, condition and poor utilization of government vehicles. “So the pie was basically large enough for any player,” notes the GM. Initially established as an independent asset leasing firm, Star Rentals understood the success of its customer’s businesses would not be judged by solely on their bottom line, but on a complex myriad of factors, including their underlying capital assets. “As such, we partner with our customers to visualize their objectives, thereby making it easier for them to acquire used or new equipments that can help their businesses grow,” offers Mr. Saina. “We are flexible and deliver solutions with a difference.”
