Doing business in Nigeria

The document is a general guide for foreign investors who intend to establish a new business in Nigeria, Western Africa.

Country Profile:

  • Population (2024): 229,152,217
  • Area: 923,768 square km
  • Capital: Abuja
  • Political system: Presidential
  • GDP/capita (2024): $1,087.89
  • Currency: Naira (NGN)
  • Language: English
  • Key ethnic groups: Igbo, Yoruba, Hausa
  • ISO Code: NGA
  • Telephone code: +234
  • Nominal Gross Domestic Product: NGN 18.28 trillion (NBS – Q1 2024)
  • Top three sectors: Crop Production – 19.24%, Trade – 15.7%, and Telecommunications & Information Services – 14.58%
  • Inflation rate: 34.19% (CBN – June 2024)
  • Monetary policy rate: 26.75% (CBN – July 2024)
  • Exchange rate: $ 1,591.58 / 1 USD $ (CBN – August 2024)
  • Economic hubs: Lagos, Rivers, Ogun, Delta, Oyo, and Kaduna states and Abuja. 

Source:

NBS – National Bureau of Statistics

CBN – Central Bank of Nigeria

PHASE ONE: RESEARCH

Review the market size, key competitors, industry, funding, business plan of the proposed entity in Nigeria. Expert opinion before setting up a business in Nigeria will aid the investor in making informed decisions. 

PHASE TWO: INCORPORATION

The incorporation phase involves registering the business as a legal entity with the Corporate Affairs Commission (CAC) in Nigeria.

  1. Conduct a public search for businesses in Nigeria on the CAC website at https://pre.cac.gov.ng
  2. Reserve the preferred business name with CAC.
  3. Register the new business using the CAC online portal. The type of business can be a sole proprietorship, partnership, private company, or public company.

PHASE THREE: REGISTRATION WITH REGULATORY AGENCIES

Businesses with foreign participation are required to register with the following regulatory bodies;

  1. Nigeria Investment Promotion Commission (NIPC): Regulates foreign investment in Nigeria. Upon registration, NIPC will issue a Business Registration Certificate to the company.
  2. Federal Ministry of Interior: Issues Business Permit and Expatriate Quota to businesses with foreign participation. A Business Permit allows an entity with foreign investment to operate legally in the country.
  3. Nigerian Immigration Service: Issues CERPAC (Combined Expatriate Residence Permit and Aliens Card) to foreigners living in Nigeria.


In addition, a business may need to obtain a permit from regulatory agencies such as;

  1. National Agency for Food and Drug Administration and Control (NAFDAC)
  2. Central Bank of Nigeria (CBN): CBN is responsible for monetary policy, financial stability, and economic development.
  3. Federal Competition and Consumer Protection Commission
  4. Securities and Exchange Commission (SEC)
  5. Department of Petroleum Resources (DPR)

Specific licenses/approvals

  1. Copyright registration with the Nigerian Copyright Commission
  2. Trademark / Patent / Design registration with the Commercial Law Department, Federal Ministry Of Industry, Trade And Investment
  3. Construction approval, building approvals,
  4. Customs clearance for cross-border trade.
  5. Professional license and approvals relevant to the industry


General requirements

The following registrations are general requirements for a new business, including foreign-owned companies.

  1. Registration with the Federal Inland Revenue Service (FIRS) and relevant State tax authorities
  2. Opening of a corporate bank account with a reputable financial institution
  3. Appointment of external auditors

PHASE FOUR: OPERATIONAL FRAMEWORK

 

  1. Employment Law: Relates to employees or workers. Covers Labour Act, Pension Reform Act, Employee Compensation Act, Immigration Act, Trade Unions Act, Factories Act, National Housing Fund Act, and Industrial Training Fund Act.
  2. Nigeria Data Protection Regulation: Guides a company’s use of personal data.
  3. Environmental Impact Assessment: Early-stage approval from the Environmental Assessment Department is required for activities or projects that will significantly affect the environment.
  4. Corporate Governance: Code of corporate governance for regulated businesses.

 

PHASE FIVE: COMPLIANCE

  1. Compliance with different regulations guiding the business operations. This includes financial reporting, monthly, and annual returns to agencies.
  2. Consideration of capital repatriation: A certificate of capital importation (CCI) from CBN is required to repatriate funds at the official rate.

 

Setting up a new business entity in Nigeria can be overwhelming. However, consultation with experts will enable an investor to make sound decisions.

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