Establishing a Business

Establishing a business in Nigeria has progressively become straightforward, transparent, and investor-friendly. With reforms, policies, and incentives targeted at easing navigation in the regulatory environment, Nigeria is committed to scaling past hurdles and creating momentum for high-return investments and thriving businesses. With Nigeria's strategic advantages, including market access, skilled workforce, and population, the country is emerging  as  an  attractive  destination  for business growth in Africa. The nation continues to enhance its economy's openness to both foreign and domestic investments, providing a scalable foundation in West Africa.

The Nigerian Market

The Nigerian market is dynamic and vibrant, driven by strategic advantages that position it as an emerging hub for viable opportunities in Africa. Establishing a successful business while navigating sector dynamics becomes efficient with general contextual awareness in the backdrop.

The Nigerian consumer base is evolving:

• With a large proportion of young population, demand for affordable consumer goods, entertainment, and digital services is increasing.
• Urbanization and growing middle-class populations in cities are witnessing increased expenditure on private housing, healthcare, education, and lifestyle products.
• Mobile platforms for banking, retail and communication services are booming due to high numbers of active internet users.
• Fintech, agribusiness, renewable energy, power, and other sectors are expanding.

Collaborating with local businesses through joint ventures, technical partnerships, and distributorships is a commonly adopted strategic entry point for foreign investors while doing business in Nigeria. Depending on the sector, incentives or licenses may require collaboration with Nigerian entities. Additionally, having an awareness of regional business practices significantly enhances operational efficiency.

For more details on sector-specific information, please reach out to the Nigerian Investment Promotion Commission (NIPC).

Financing Options for Foreign Investors

Nigeria offers a range of financing options tailored to different investor profiles, from multinational corporations to SMEs and impact-driven ventures.

Foreign investors, especially those partnering with local entities, can access government-backed financing initiatives:

• Nigeria Sovereign Investment Authority (NSIA) oversees infrastructure, agriculture funds, renewable energy, and healthcare, co-investing in strategic infrastructure and development projects. Investors may explore partnership opportunities.
• Development Finance Institutions (DFIs) like Bank of Industry (BOI) and Development Bank of Nigeria (DBN) offer financing for different investors in certain sectors and have their specific pre-requisites for eligibility. For more details, kindly explore the Central Bank of Nigeria (CBN) guidelines.

The NIPC offers a variety of incentives aimed at encouraging foreign direct investments (FDIs), including:

• Investment laws that provide guarantees against expropriation and nationalization to ensure the repatriation of profits and dividends, subject to regulatory procedures.
• Tax holiday of up to five years in sectors like agriculture, processing, and ICT for qualifying businesses.
• Import duty exemptions on machinery and raw materials, and capital allowances on qualifying expenditures.

On the private sector financing front, specific sectors like fintech and technology are expanding. Options include:

• Business financing from commercial banks for qualifying enterprises.
• Access to venture capital and private equity through participation in funding rounds or co-investment opportunities.
• Support from partnerships, cooperatives, and private funds sourced from the diaspora, contributing to informal yet effective capital channels for small and medium-sized enterprises.

Investors are encouraged to familiarize themselves with the Central Bank of Nigeria (CBN) guidelines on currency repatriation and access to foreign exchange. Furthermore, engaging with licensed advisors, legal counsel, or business consultants is highly recommended for comprehensive support.

Investor-focused regulatory framework

Nigeria's liberal investment laws and protective measures ensure adequate support to foreign direct investments for long-term engagement.

Some well-defined laws protecting investor rights include:

• The Nigerian Investment Promotion Commission (NIPC) Act ensures 100% foreign ownership in most sectors and unconditional repatriation of capital, profits, and dividends. It also offers protection from expropriation or nationalization, except under lawful and non-discriminatory conditions with fair compensation.
• The Companies and Allied Matters Act (CAMA) allows foreign investors to register businesses as 100% foreign-owned or in partnership with Nigerian entities. It is also the primary law governing corporate registration and operations.
• Reforms under the Finance Act streamlines tax-related aspects and enhances navigation efficiency.

Special Economic Zones (SEZs)

Nigeria established Special Economic Zones (SEZs) to attract and support manufacturing and processing investments and export-related activities. Foreign investors can enjoy full ownership rights and access to government-supported regulatory frameworks through the Nigeria Export Processing Zones Authority (NEPZA).

Benefits of investing in these zones include:

• Tax holidays of up to five years
• Simplified customs procedures and business licensing
• Duty-free raw materials and machinery importation
• Access to infrastructure

Major SEZs include:

• Lekki Free Trade Zone (Lagos)
• Calabar Free Trade Zone
• Kano Free Trade Zone
• Ogun Guangdong Free Trade Zone

Intellectual Property Rights (IPR) Protection

Intellectual property is the cornerstone of innovation and investment. The Federal Ministry of Industry, Trade, and Investment oversees the registration of investor IP. Nigeria is also a signatory to international IP agreements, including the World Intellectual Property Organization (WIPO) and the Paris Convention. Nigeria ensures that due safeguards are in place, including:

• Patents and Industrial Designs under the Patents and Designs Act
• Copyrights regulated by the Nigerian Copyright Commission
• Trademarks, protected under the Trademarks Act

Enforcement of these protections can vary, and Nigeria has established legal pathways for protecting and asserting IP rights.

Dispute resolution

Nigeria is a signatory to the New York Convention, allowing enforcement of international arbitral awards. It is recommended that investors work with experienced legal counsel and include dispute resolution mechanisms in their contracts. Options for dispute resolution and legal recourse for foreign investors include:

• Commercial courts in major commercial centers offer access to formal legal remedies.
• Alternative Dispute Resolution (ADR) through institutions like the Chartered Institute of Arbitrators Nigeria and Lagos Court of Arbitration, provides structured platforms for resolving commercial disputes outside of courts.