Assessing the influence of lease financing on financial performance of selected public sector entreprises in Namibia.

Abstract

This mixed-methods study examined the influence of lease financing on the financial performance of 11 commercial public service enterprises (PSEs) in Namibia over 10 years (2013–2022). The research aimed to assess the extent of lease financing adoption, identify factors influencing its use, and examine its effect on financial performance, measured by return on assets (ROA). Objectives included analysing the roles of gearing, liquidity, taxation, and firm size, with firm size as a moderating factor. The methodology combined quantitative analysis of published financial data with qualitative insights from a stakeholder survey conducted via online questionnaires using Google Forms. Findings indicate that lease financing is prevalent among Namibian PSEs, particularly in capital-intensive sectors, due to its liquidity and cash flow benefits. However, it is associated with a slight negative influence on ROA, suggesting that long-term costs may offset short-term advantages. Larger firms manage lease obligations more effectively, reducing negative effects. Taxation and liquidity constraints significantly drive lease financing decisions, with tax benefits acting as a key incentive. Gearing levels also influence adoption, highlighting the need for balanced debt management. The study concludes that lease financing is a valuable tool for PSEs but requires strategic management to ensure long-term financial sustainability. Key recommendations include policy reforms to increase leasing awareness, regulatory support for transparent lease agreements, and financial literacy programs for PSE managers to optimise leasing strategies. This research contributes to understanding alternative financing mechanisms in developing economies and offers practical insights for policymakers and financial managers in Namibia.