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For business owners, identifying a sustainable and enabling business environment is fundamental to establishing a successful enterprise. Consequently, investors naturally gravitate towards jurisdictions with the potential to advance their business objectives.


With relatively recent amendments to local company and tax laws aimed at creating a more enabling business environment for local and foreign business owners and Nigeria’s ratification of the African Continental Free Trade Area (AfCFTA) Agreement, the country is better positioned to attract foreign investments and establish profitable business presence for foreign investors in the country.


Investment Options

In Nigeria, businesses can be structured as sole proprietorships, partnerships, or companies, which may be limited or unlimited in their liability. By Nigerian company law, partnerships and companies may be established by local or foreign entrepreneurs who may hold a direct or indirect stake in the business.


Investors, while structuring their businesses may either set up wholly owned companies or may establish joint ventures with other local investors. Foreign investors are permitted by Nigerian Company Law to own 100% equity and hold investments in any business in Nigeria outside those contained in the negative list as provided in Section 31 of the Nigerian Investment Promotion Commission (NIPC) Act.  The prohibited business activities include the production of arms and ammunition, production and dealing in narcotic drugs and psychotropic substances, production of military and para-military wears and accoutrement and such other items as the Federal Executive Council may from time to time determine.


For legitimate business operations, the Companies and Allied Matters Act 2020 (CAMA) requires companies with business operations in Nigeria to be registered with the Corporate Affairs Commission (CAC). This requirement is also extended to foreign companies who intend to operate businesses in Nigeria. An exemption from the requirement of registration by a foreign company may only be granted upon the satisfaction of special conditions contained in the CAMA.


Foreign companies who apply for an exemption from registration must have either been invited by the Federal Government of Nigeria to carry out a special project or must have been commissioned by a donor organisation to execute a project in Nigeria. They may also be foreign government owned companies engaged solely in export promotion activities or may be engineering or technical consultants engaged on any individual or specialist project under a contract with any of the governments in Nigeria.


Importation of Capital

As an incentive to foreign investors carrying on business in Nigeria, the Federal Government guarantees the repatriation of capital by foreign investors, where investors import such capital into the country through the official foreign exchange window.  The Central Bank of Nigeria (CBN) through its Authorised Dealers (commercial banks) issues Certificates of Capital Importation (CCIs) to investors as an official document to evidence the inflow of foreign exchange. CCIs may also be issued for foreign exchange inflows brought in the form of loans or other investment instruments. The issuance of CCIs for inflows of this nature is subject to the guidelines provided by the CBN’s Foreign Exchange Manual.


The CBN in 2017 replaced the issuance of paper CCIs with the electronic version (eCCIs). ECCIs are enhanced versions of paper certificates and are transferrable between banks upon an investor or lender’s request. ECCIs provide a platform to banks to issue, administer, and reconcile their stock of CCIs in a more efficient manner. The operation of eCCIs also facilitates the receipt of the CBN’s approval on transaction requests and improves the overall turnaround time for processing capital transfers. eCCIs allow foreign investors in Nigeria to freely repatriate the proceeds of the investments in respect of which the CCI was issued.


Permits and Licences

The Nigerian Investments Promotion Commission (NIPC), the regulatory body vested with the powers to oversee the activities of foreign business operations in Nigeria was established by the Nigerian Investment Promotion Act Chapter N117 Laws of the Federation of Nigeria 2004 to encourage, promote and co-ordinate local investments.


Section 20 of the NIPC Act requires all business enterprises with foreign participation to apply to the NIPC for a business licence before the commencement of business operations within the country. The NIPC therefore issues business registration certificates for the regulation of foreign owned businesses in Nigeria. It is important to note that in addition to the business and work permits, certain industries require the grant of licences to companies in specific industries for particular business operations. Examples of these are telecommunication licences issued by the Nigerian Communications Commission (NCC), Mining licences and permits issued by the Mining Cadastre Office within the Ministry of Mines and Steel Development (MMSD), CBN licences for Payment Service Companies and other Financial Technology Companies, the National Agency for Food and Drug Administration and Control Permit for the importation of food and drugs from outside Nigeria, etc.


The Ministry of Interior has launched the e-citibiz portal to facilitate applications for business permits and expatriate quotas. Business Permits enable wholly owned foreign companies or joint venture arrangements to operate legally in Nigeria, while expatriate quotas are granted to companies to enable them engage the services of expatriates for a period of three (3) years in the first instance. The licences are renewable bi-annually within a ten (10) year time frame.

Expatriates may obtain a Combined Expatriate Residence Permit and Alien Card (CERPAC) which doubles as a residence/work permit for the duration of their stay in Nigeria. The CERPAC which may be issued for an initial two-year period, is renewable upon expiration.


To ease the process of registration and obtaining grants and permits, the NIPC established the One-Stop Investment Centre (OSIC), which houses relevant government agencies to provide fast tracked services to investors during the business registration process. The objective of the center is to simplify business entry processes by removing administrative and regulatory bottlenecks pertaining to doing business in Nigeria. The participating agencies at the OSIC include the NIPC, the CAC, the Federal Inland Revenue Service (FIRS), the Nigerian Immigration Service (NIS), the Nigerian Customs Service (NCS), National Office for Technology Acquisition and Promotion (NOTAP) and several other relevant regulatory bodies.


Notable for regulating the transfer of technology internationally between foreign and local companies is NOTAP. NOTAP was established by the NOTAP Act to facilitate the identification, selection, and adaptation of foreign technology in Nigeria.  NOTAP registers and monitors contracts/agreements for the transfer of technology connected to the use of intellectual property such as trademarks or patented inventions, the supply of technical expertise for the development of technical assistance, the supply of basic or detailed engineering, the supply of machinery and plant, the provision of operating staff or managerial assistance and training of personnel and other matters connected to technology importing. Upon the registration of these contracts and agreements, NOTAP provides applicants with certificates of registration.


Trade Area Agreements

With Nigeria’s recent ratification of the African Continental Free Trade Area Agreement (AfCFTA), the country is positioned to participate in more liberal intra-African trade, with reduced tariffs and trade costs. This development contributes significantly to increasing the potential for foreign direct investments, as trade agreements are established with the purpose of attracting new businesses by lowering trade barriers, reducing trade tariffs, and eliminating the bottlenecks and bureaucracy associated with international trade.

The country’s ratification of the AfCFTA enhances the country’s position in international trade and by implication, foreign participation when considered alongside the operation of the country’s free trade zones.


Incentives for Doing Business in Nigeria 

A number of incentives are available for investors who choose to establish a business presence in Nigeria some of which are outlined below:


  1. Full Repatriation of Capital– Foreign Investors are guaranteed the right to fully repatriate capital and profits to foreign jurisdictions, provided the capital is imported through Authorised Dealers with the required Certificates of Capital Importation obtained. Investors are assured of the freedom to move their assets and capital whenever the need arises without the risk of expropriation by the Nigerian government.


  1. Tax Reliefs– Various tax incentives are made available to foreign-owned companies in Nigeria.

Companies engaged in wholly agricultural activities for example are entitled to carry forward un-utilised capital allowances indefinitely. A 95% capital allowance is enjoyed in the year a qualifying expenditure is incurred by an agriculture/agro-allied company.


An Agriculture credit guarantee scheme fund also exists to provide guarantees on the payment of interest and principal in respect of loans granted by any bank for certain agricultural purposes, with the aim of increasing the level of bank credit to the agricultural sector.


New companies whose business operations center around the mining of solid minerals also qualify for an exemption from the payment of companies’ income tax for their first three years of operation. This is in addition to the provision of an accelerated capital allowance at 95% of qualified capital expenditure on mining in the first year of use of a mining asset.


  • Pioneer Status– Pioneer status is a tax holiday which grants qualifying industries and products relief from payment of corporate income tax for an initial period of three years, extendable for one or two additional years. Pioneer status is granted to companies who operate in specific industries like the agricultural, mining and quarrying, manufacturing industries, etc.


  1. Double Taxation Reliefs– Nigeria has set up a number of double taxation reliefs for the benefit of foreign investors to ensure multiple payment of tax on the same income is prevented in more than one jurisdiction. Where a foreign resident of Nigeria has paid foreign tax on an income derived from a treaty partner of Nigeria, the Article on Elimination of Double Taxation in the tax treaty and Section 46 of the Companies Income Tax Act, Section 39 of Personal Income Tax Act, Section 62 of Petroleum Profit Tax Act or Section 41 of Capital Gains Tax Act as the case may be, would allow for credit reliefs against similar tax payable in Nigeria by that resident. The amount of foreign tax paid is deductible from the tax payable in Nigeria on the same income.


  1. Reconstruction and Rural Investment Allowance: Section 32 and Section 34 of the Companies Income Tax Act (CITA) provide for reconstruction and rural investment allowance on companies’ expenditure respectively. The expenditure must have been incurred on the provision of plant and equipment and facilities such as electricity, water, or tarred roads for the purpose of trade or business. A company may enjoy an allowance up to 10% of the actual expenditure incurred on plant and equipment and a 100% allowance where there are no facilities at all, a 30% allowance where there is no water, 50% where there is no electricity and 15% where there was no tarred road before the establishment of their business presence.


It is important to adequately consider the requirements necessary to be fulfilled in establishing a business presence in Nigeria. For investors, local and foreign alike, this creates a valuable process of evaluating the business clime and affects the strategic decision-making process undertaken in their establishment of business interests.


By: Yetunde Olasope- Partner, Lexworth Legal Partners


Helena Okonkwo- Associate, Lexworth Legal Partners



This document is intended only as a general discussion on the subject of this article. Please do not regard it as legal advice. We would be delighted to provide additional details or advice about specific queries, if required.

For further enquiries, kindly send an email to y.olasope@lexworthlegal.com or h.okonkwo@lexworthlegal.com.