Lease charges are usually prohibitive i.e. the cost of finance is excessive. It may not be known to businessmen. Uncertainty as to returns from such assets i.e. the returns from such assets leased may not encourage the growth of lease finance.
There is an imperfect market as a number of companies lease assets on basis of credibility of the lessee. Lack of flexibility i.e. a number of assets which are ideal for leasing are unavailable. Kenya’s financial markets are underdeveloped and this has affected the development of lease finance. After lease service is poor and this leads to loss of revenue.
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