Unlocking public sector potential
Why finance the public sector? In the Nordic region, we see it as a growth opportunity. Public sector leasing grew 41% in Nordea Finans Sverige in 2009, compared to a contraction in corporate finance. Outright buying is going to reduce.
In Sweden, public sector leasing is worth €1.2bn, and in Finland it is €800m. The most commonly leased assets are buses, construction, energy, medical, trains, and water equipment.
To be competitive it is important to learn about the legislation and to understand the procurement set up. In Sweden, there is a big difference between working with a small municipality in the north and the city of Stockholm. There are the local rules and regulations, as well as European Union directives.
At Nordea we have a specialised sales force, with a relationship manager in the bank and specialists developing the offering. Often we are negotiating through procurement consultants, which are getting bigger and bigger.
Consultants, procurement companies and trade organisations are all an important part of the sales network. In the public sector, it is also important to bring the vendor into the relationship.
As budget constraints come more into force, the cost of use and total cost of ownership is more important than the investment budget.
Product development and finding new ways of leasing is vital. Today’s business is a lot of buses, cars, energy, power plants, and waste. But products and offerings are developing. For example, asset life cycle management solutions, especially for ICT and medical equipment, have worked well.
Service elements include an asset register, reporting, recycling, and cost management.
The future of public sector leasing could be that we lease an old people’s home, rented by number of beds. The package might include real estate, medical equipment and medical operatives; and then a menu of other products and services to choose from – a jacuzzi, entertainment solutions, or catering services perhaps.
Schools and kindergarten packages could follow the same route with real estate, temporary buildings, solar panels, and ICT infrastructure.
Legislative knowledge, distribution networks and sales expertise, and product innovation, are how to unlock a sustainable business in public sector leasing.
Susanne Petersson is CEO of Nordea Finans Sverige