Equipment is the honest end of business finance: a machine either earns its keep or it does not, and the financing either lets it or strangles it. The halal instrument for equipment is Ijarah, the lease, and Nigeria's non-interest banks all offer a version. One of them publishes its full price, which makes this one of the few corners of the market where you can do real arithmetic before entering a branch. All terms below verified August 4, 2026.
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How Ijarah equipment finance works
The bank buys the machine and owns it. You use it and pay rent. Because ownership sits with the bank, the asset itself is the core security, the bank carries owner's risk, and your arrears cannot compound into a growing debt the way loan interest does; unpaid rent is owed rent, not a snowball. At term end, ownership transfers to you (Ijara wa Iqtina). The Shariah integrity of the structure lives in that ownership: a lease where the customer bears every owner's risk from day one while the bank just collects payments is a loan in costume. The two strongest published implementations in Nigeria both keep the ownership real.
The published benchmark: AltLease
The Alternative Bank's AltLease funds plant, machinery, power solutions, office equipment and vehicles for SMEs with every material number public: up to N20,000,000 per obligor, a markup rate of 30% per annum (explicitly not flat, so charged on the reducing exposure), a 30% commitment deposit (Hamish), and a maximum tenure of 24 months, with the bank retaining ownership through the lease and proforma invoices required from bank-approved vendors. Eligibility is demanding: one month of corporate relationship, CAC documents, projected cash flow for the facility duration, three years in the line of business, six months at the trading location, and clean credit reports for all directors. The pricing is honestly brutal: 30% per annum with 30% locked upfront over a maximum of two years means total costs approaching half the asset's value in the worst configurations, and AltBank deserves credit for putting that on the public internet where every competitor hides theirs.
The tenor alternative: Lotus at 48 months
Lotus Bank's SME shelf leases equipment through Ijara for up to 48 months, double AltLease's runway, with zero account maintenance, processing and management fees, and markups negotiated per risk profile rather than published. For heavy machinery whose payback stretches past two years, the longer amortization may matter more than the invisible rate, and AltLease's public 30% gives you the anchor to negotiate Lotus against. Lotus finances only profitable organisations at least a year old. Jaiz leases machinery and equipment through Ijara within its agricultural finance and Ijara wa Iqtina on its corporate shelf; TAJBank runs a companion Ijara lease alongside its Murabaha asset finance; Summit Bank's SLOF publishes 12-60 month tenors with unpublished pricing. None of the three publishes rates.
The comparison at a glance
| Product | Ceiling | Tenor | Pricing | Deposit |
|---|---|---|---|---|
| AltBank AltLease | N20m per obligor | 24 months | 30% p.a. (not flat), published | 30% Hamish |
| Lotus SME Ijara | Not published | Up to 48 months | Negotiated; zero fees | Not stated; flexible security |
| Jaiz Ijara (agric/corporate) | Not published | 6-36 months (agric) | Not published | Not published |
| TAJBank Ijara lease | Not published | Not published | Not published | Not published |
| Summit SLOF | Not published | 12-60 months | Not published | Case-dependent |
The productivity test
At a 30% per annum cost of capital, an asset must be seriously productive to justify financing. The test to run before any signature: monthly rental (ask for the schedule in naira) versus the monthly cash the asset will generate or save. A generator that ends daily diesel-versus-grid losses, a vehicle that directly carries revenue, a machine that unlocks a contract, these can clear 30% and the lease is rational. Capacity bought on hope, ahead of demand, will not clear it, and the fixed rental will eat the business that signed for it. Where the payback period runs past 24 months, push the conversation to Lotus's 48-month line and negotiate with AltLease's published grid in hand.
Before you sign
- Get the full rental schedule in naira and the ownership-transfer mechanics in writing.
- Confirm who insures the asset and at what cost; takaful applies across AltBank's stack, and its published SWAY AG rate is 2% of the financed asset for context.
- Check the approved-vendor list early; both AltLease and Lotus's dealer-verified models restrict where the machine can come from.
- Ask what happens if the equipment fails: an owner-bank in a genuine Ijarah bears owner's risk, and the contract should say so.
- For agricultural equipment, quote SWAY AG first: 9% per annum, published, if you fit its farmer, women or youth frameworks. See the agriculture guide.
Ijarah equipment finance in Nigeria is structurally the market's best-executed product family and economically its most demanding. The published 30% tells you the truth about the environment; the negotiable alternatives give you room to beat it. The wider SME context is in our complete guide, and the AltBank products in the AltBiz review.
Frequently asked questions
Who bears maintenance and breakdown costs during an Ijarah?
The classical allocation: the owner bears ownership costs (major structural maintenance, takaful as owner, risks of loss not caused by the user), while the lessee bears usage costs (routine servicing, consumables, damage from misuse). How a specific Nigerian contract draws that line is exactly what to read before signing: a lease that pushes every owner-type cost onto you while keeping ownership's benefits is drifting toward a loan in costume. Ask AltBank, Lotus or Summit to point at the clauses; the answer tells you how genuine the ownership is.
Can I upgrade or replace equipment mid-lease?
Not unilaterally; the bank owns the asset, and swaps or upgrades are contract amendments. Practically, the market's short tenors (24 months at AltLease) limit the pain, since technology cycles rarely outrun the lease. Where obsolescence is a real risk (IT hardware, some processing equipment), raise it at negotiation: options worth requesting include early-termination pricing, trade-in mechanics through the approved vendor, or simply matching the tenor to the asset's honest useful life rather than stretching for lower rentals.
Why does Lotus's 48 months matter so much against AltLease's 24?
Because rental scale is tenor arithmetic. N10 million of equipment amortized over 24 months floors at about N417,000 monthly before markup; over 48 months, about N208,000. For a machine whose cash generation ramps slowly, the shorter schedule can strangle the business the equipment was meant to grow, even at an identical annual rate. That is why the honest comparison is never rate-versus-rate alone: it is the full monthly schedule against your projected cash from the asset, month by month, for the whole term.
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Is generator and solar financing treated differently?
Power assets are explicitly covered: AltLease names power solutions among its financeable assets, and the market's one fully published retail product is Jaiz's EnerJaiz solar finance (10-20% down, N10m-N500m tiers by segment, 24-36 months, 28-30% per annum, takaful required). The economics are unusually favorable to financing because power assets displace a measurable existing cost, diesel and downtime, so the productivity test has hard numbers on both sides. Compute the monthly saving honestly and put it against the rental; power is one of the few asset classes where 30% money can still clearly pay.