A Comprehensive Guide to Doing Business in Nigeria for Foreigners and Foreign Companies

Doing Business in Nigeria is tough given Nigeria’s business landscape, but it is also massively rewarding.

Nigeria is one of Africa’s largest economies, with a very large youth population and a growing number of businesses catering to the country’s young people. Because of this, Nigeria presents a massive opportunity for both local investors and foreign corporations seeking to do business in a choice area in Africa. Nigeria’s population exceeds 200 million people, and the Government of the Federal Republic of Nigeria is interested in attracting foreign direct investment to the country, so the opportunities for growth in different sectors of Nigeria’s economy are varied.

You should note, however, that entering a new Market with the aim of doing business in that market presents its own challenges especially if you are not a local. This is so because you will have to navigate a different legal, cultural, social and economic background than what you are used to. To make the process smoother, understanding the regulatory landscape, the cultural background and the business landscape in Nigeria is important, as well as understanding company incorporation requirements in the country. This is a very comprehensive guide designed to walk you through all the necessary steps you need to take to establish your company in Nigeria; from choosing the right investment vehicle, choosing the best location, and complying with regulatory requirements.

Brief overview of Nigeria’s economic landscape

Nigeria is often referred to as the “Giant of Africa,” and used to boast the largest economy in Africa; unfortunately that position has slipped, though it remains one of the largest economies in Africa today. Nigeria has a population that exceeds 200 million people and so offers a vast market, with significant opportunities for both local and international investors. Nigeria has a very diverse economy, with key sectors that includes oil and gas, agriculture, manufacturing, telecommunications (where South African giant MTN Nigeria leads), and professional/technical services. Nigeria’s oil and gas sector is the backbone of the economy, contributing about 10% to GDP but accounting for over 90% of foreign exchange earnings and government revenues. The sector further boasts some of the largest infrastructural investments in Nigeria, with Dangote Refinery’s investment costs runing in excess of around $20 Billion USD. 

Nigeria’s Agricultural sector employs about 70% of the labor force and contributes roughly 23% to GDP. Key products manufactured in Nigeria include cocoa, palm oil, cassava, and yams.

The manufacturing sector is driven by food and beverages, cement, textiles, and consumer goods, so foreign enterprises doing business in Nigeria generally use consumer drive as a yardstick in choosing which precise products to work with. 

Key Economic Sectors in Nigeria

1. Oil and Gas: Nigeria’s oil and gas sector remans its economic backbone, and the sector presents numerous opportunities for growth and capital investment in the exploration, production and refining of petroleum products. Nigeria’s government is also working very hard to develop local content in this key sector of its economy.
2. Agriculture: Nigeria has vast arable land in different parts of Nigeria, suited for different crops and agricultural produce. The vast land across Nigeria presents opportunities for commercial crop production, agro-processing and livestock farming for interested investors. The government of the Federal Republic of Nigeria has tried to sustain interest in this sector through capital grants, subsidies and other incentives.
3. Technology: Nigeria’s Technology sector is rapidly growing, growing so fast it’s literally catching up with the oil and gas sector, if the numerous laws and content that are produced around it are any indicators. Lagos has a strongly burgeoning startup ecosystem upwardly mobile professionals are tapping into and there’s increasing investment in fintech, e-commerce, and digital solutions both locally and internationally.

Language

Nigeria has a diverse culture as it is peopled by individuals and communities with different cultural and social backgrounds. This diversity means that the country is a melting pot of different local languages as well. However, Nigeria’s official language is English Language and any foreigner who speaks and understand the English language should have little to no difficulties navigating the country. A foreigner who doesn’t understand or speak English will definitely find it quite hard to navigate through Nigeria, as the natives who speak other international languages are very few and far between; they are exceptions, not the norm.

Foreign Businesses in Nigeria: Are they Important?

Nigeria loves foreign corporations and foreigners seeking to invest in Nigeria. The reason is simple: they contribute massively to Nigeria’s GDP through foreign direct investment portfolios. Major multinational corporations have found homes in Nigeria and Nigeria has tried several policies to keep these corporations operating in Nigeria. Foreign businesses also provide technical and professional services consumed in Nigeria, the fees of which are taxed, and these contribute immensely to Nigeria.

Foreign-owned companies doing business in Nigeria inject FDI into Nigeria’s economy in diverse sectors, ranging from the oil and gas services sector, to manufacturing and telecommunications. Some have entered into the Nigerian market but have generally chosen not to maintain significant economic presence .

Legal Frameworks that Regulate Businesses Operating or seeking to operate in Nigeria

Every country has laws that regulate business activities in their jurisdictions. Nigerian businesses are governed by numerous laws, and these include:

1. Constitution of the Federal Republic of Nigeria, 1999
2. High Court Laws of the various States in Nigeria (for dispute resolution purposes)
3. Companies and Allied Matters Act
4. Immigration Act
5. Banking and Other Financial Institutions Act
6. The Investment and Securities Act
7. Federal High Court Act
8. National Industrial Court Act
9. Business Facilitation Act
10. Finance Act
11. The Nigerian Investment Promotion Commission Act

There are dozens of laws that regulate businesses in Nigeria, across various sectors of Nigeria’s economy. We merely listed out a couple of them above. Every sector has laws that regulate activities in that sector and companies doing business in those sectors must abide by those sector-specific regulations. 

What Regulatory Bodies regulate businesses in Nigeria? 

1. Corporate Affairs Commission [CAC]
2. Federal High Court
3. High Courts of the various States in Nigeria
4. Court of Appeal (for appellate litigation)
5. Central Bank of Nigeria
6. Securities and Exchange Commission [SEC]
7. Federal Competition and Consumer Protection Council [FCCPC]
8. Federal Inland Revenue Services [FIRS]
9. Inland Revenue Services of the various States in Nigeria

Investing Locally in Nigeria as a foreigner: How to Make that possible?

The easiest way for foreigner or foreign corporation to invest in Nigeria is by migrating their business to Nigeria in order to do business in the country. Migrating their businesses to Nigeria would entail them registering a limited liability company in Nigeria so that they can carry on whatever business they wish to in Nigeria without inhibitions.

Establishing a Business in Nigeria 

In Nigeria, there are different types of business vehicles a person seeking to do business can adopt before commencing business. These include: sole proprietorship (which a corresponding need to register a Business Name with the Corporate Affairs Commission if the proprietors intend to use a name for same), partnerships, registered companies. Foreigners seeking to do business in Nigeria should understand that what applies to them is incorporated companies, not the other forms of business vehicles. For foreigners to commence business in Nigeria, they are required to incorporate a company through accredited agents of the CAC and meet all necessary regulatory requirements they are expected to comply with in relation to share capital, appointment of directors, local participation (in industries that require same), among others.

Share Capital for companies in Nigeria

Every company incorporated in Nigeria whether as a private company or as a public company must have its share capital. For companies in Nigeria, the minimum share capital is ₦100,000. There are however, different categories of companies which have specified minimum share capital requirements and the promoters of those types of companies must ensure that the share capital the initial subscribers to the company’s shares subscribe to do not fall below that stated minimum. Where foreigners wish to register a company or participate in the registration of one, then the minimum share capital for that company must not be below ₦100Million. Even if the foreigner is just one of the company’s shareholders, the company is expected to comply with this requirement or the Corporate Affairs Commission will query the registration of that company and refuse to register it.

As a foreigner seeking to incorporate a company in Nigeria, what are the share capital requirements?

Foreign-owned companies in Nigeria are required to have an authorized issued share capital of not less than ₦100,000,000 [One Hundred Million Naira]. Failure to have this share capital will cause the CAC to query the company registration and refuse to register same until the promoters of the company comply with same. Furthermore, these foreign-owned companies are required to import the share capital into Nigeria either in cash through authorized dealers, or in the form of machinery and related technology that make up the share capital amount.

Can Nigerian companies be owned by foreigners or foreign corporations 100%?

The short answer is Yes. Foreigners are free to enter into Nigeria to register companies which they own 100% without any local participation either in the operations of the company or its shareholding. Nigerian laws allow this, save for regulated industries where the Government actively pursues the development of local content and pushes for the development of local manpower and technical know-how. The same is applicable to certain class of businesses which is reserved solely for the Government of the Federal Republic of Nigeria. That aside, foreigners and foreign corporations are free to register their companies and have 100% foreign control and ownership of same without local interference. This does not mean that the companies cannot appoint nominee directors and nominee shareholders to “hold” ownership in their companies while they maintain beneficial ownership behind the scenes. In Nigeria, there is room for foreigners to do business, create their own entities, and generally work within the country’s borders.

Must all foreign companies absolutely register/incorporate in Nigeria?

While the general law is that a foreigner or foreign company is required to register in Nigeria, there are instances where a foreign company can be exempt from registration in Nigeria. For such a company to be officially exempt from registration/incorporation, they must apply for exemption. The following category of foreign companies are exempt from registration in Nigeria:

1. Where the foreign company was invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project.  
2. Where the foreign company enters Nigeria specifically to execute individual loan projects on behalf of a donor country or international organization. 
3. Where the foreign company is owned by a foreign government engaged solely for export promotion activities in Nigeria; and
4. Where the foreign company constitutes of Engineering consultants and technical experts engaged in any individual specialist project under contract, with any of the governments or government bodies in the Federal Republic of Nigeria or with any other body, of the contract approved by Nigeria’s federal government.

As a foreigner, what do I require to open a business in Nigeria?

A foreigner that wishes to register a business in the Federal Republic of Nigeria should be aware of the underlisted requirements:

1. Incorporation of a company with the Corporate Affairs Commission: If as a foreigner, you are not exempt from having to register a company in Nigeria, then you have to take necessary steps to incorporate an entity with the Corporate Affairs Commission and obtain the necessary certificate of incorporation, status report and memorandum & articles of association for your new company from the Corporate Affairs Commission.
2. Registration with the Nigerian Investment Promotion Commission (NIPC): When foreign investors incorporate their Nigerian entities, they are required to register the details of their company with the NIPC. This registration is to help them gain investment incentives due to foreign investors from the government of the Federal Republic of Nigeria.
3. Seek and obtain Business Permit: Before commencing business in Nigeria, foreign investors who registered their Nigerian entity are required to apply for business permit from the Ministry of Interior. This is a regulatory requirement.
4. Comply with necessary Immigration Requirements: Foreigners seeking to do business are required to apply for expatriate quota for their companies, then ensure they obtain the necessary residence permits before they can immigrate to Nigeria to reside and conduct business. If, however, the foreign company does not intend to establish significant economic presence in Nigeria, or where they intend to provide services in Nigeria from outside Nigeria, they can dispense with this requirement.
5. Open Bank Accounts: As a foreigner, before you can import your capital into Nigeria, you will need to open a bank account with a retail bank in Nigeria.
6. Import Capital into Nigeria: After incorporation of your company in Nigeria, you are required to actually import your company’s capital into Nigeria through authorized dealers. This importation of capital can be in the form of cash or machinery, or a mix of both. However, upon importation of cash, the authorized dealer will issue your company with a certificate of capital importation. This certifies the inflow of your capital into Nigeria.
7. Registration with Tax authorities: Every company registered in Nigeria is required to register with the Federal Inland Revenue Service and obtain a Tax Identification Number (TIN). This is necessary because the company will have to pay its income taxes to the Government of Nigeria.

Choose your business structure

The most common structure for foreigners seeking to do business in Nigeria is the limited liability company. As aforestated, the minimum share capital for Nigerian corporations with foreign ownership/participation is ₦100,000,000. There could be additional minimum share capital requirements for companies seeking to operate in certain sectors of Nigeria’s economy.

Company Registration

This is the very first step for foreigners seeking to commence business in Nigeria. They are required to register their company with the Corporate Affairs Commission in Nigeria. As a rule, individuals can incorporate their companies by themselves at the Company Registration Portal of the CAC; however, we do not recommend it, as a foreigner seeking to incorporate a company in Nigeria will definitely not know much about Nigeria’s regulatory landscape or what’s required of them to be able to incorporate. We advise that it is better to engage the services of accredited CAC professionals like our professionals here at Kabbiz Global Nominees Limited to assist you with your incorporation of your Nigerian company at the CAC.

Documents and other relevant information required to incorporate a foreign-owned company in Nigeria

1. Proof of identification: All the proposed shareholders of the company, its directors and secretary (for a foreign-owned company in Nigeria must appoint a secretary because it is not a “small company”) must provide valid Government-issued IDs to be included in its record at the CAC. This is mandatory and any proposed company that fails to provide the IDs of its principal officers and shareholders will be rejected for registration with the CAC or queried and kept pending until they provide the IDs of all its principal officers and shareholders.
2. Certificate of incorporation of foreign company and copy of Board Resolution authorizing its incorporation in Nigeria: If a foreign company intends to be the shareholder of the company, then that company is required to provide a copy of its certificate of incorporation. If it is possible, providing a certified copy of the certificate of incorporation of the foreign corporation will ease its acceptance by officers of the CAC. Furthermore, the foreign corporation is expected to provide a copy of its Board Resolution made by the members of its Board of Directors approving the incorporation of the Nigerian company and its subscription to the shares of the proposed Nigerian company. Failure to provide this Resolution will lead to the CAC querying the registration.
3. Particulars of directors, shareholders and company secretary: The relevant information needed here include: names, addresses, phone numbers, email addresses, signature, tax residence information, nationalities, IDs.
4. Memorandum and Articles of Association of the company: The Memorandum and Articles of Association of a company are the guiding documents that regulate the activities of every company incorporated and carrying on business in Nigeria. The Memorandum outlines the details of the company’s objects and its shareholding information, while the Articles outlines the governing/operational guidelines for the company operations. You are free to create specific provisions that will govern the company upon incorporation with the CAC.
5. Objects of the company: As a rule, every company getting incorporated in the Federal Republic of Nigeria must have at least one “object”; this is the business it intends to carry on in Nigeria once incorporated. A company can have as many “objects” as it wishes, however, there may be certain minimum share capital requirements for specific objects. For example, portfolio management companies are required to have a share capital of ₦150,000,000 and trying to create a company with lesser share capital than the prescribed minimum for those specific objects will lead to the CAC querying the registration.

Checklist for incorporaton

• Proposed names of the company
• Particulars of all directors and secretary. If the secretary is a corporate entity, then you must provide their certificate of incorporation.
• Particulars of all members (subscribers) of the company
• IDs of all officers of the company and its members
• Authorized share capital
• Shareholding percentages of its shareholders if they are more than one
• Particulars of persons with significant control (these are persons with more than 5% shareholding in the company where there are several shareholders, or the sole shareholder if one person/entity takes up the entire shares]

After obtaining the relevant information and gathering all documents, you as a foreigner can proceed to register your company in Nigeria. The process can take any time from five working days to twenty working days, depending on whether the company is queried for different issues and your resolution of those issues. Upon incorporation you will receive these documents: certificate of incorporation, Form CAC 1.1 (updated e-Status Report) and the company’s Memorandum & Articles of Association.

It is important to point out that, while individuals are free to register on the Companies Registration Portal and register their companies by themselves, it is not recommended as the process is complex and a non-professional will surely not understand the numerous compliance checklists they are to comply with before gaining approval with the Corporate Affairs Commission.

Can a company have Company Directors that comprise solely of foreigners?

Yes, a company can. However, despite Nigeria making allowances for single-director and single-shareholder companies, where a company has foreign participation, then such a company must have a minimum of two directors on its Board.

Are nominee directors and nominee shareholders allowed in Nigeria?

Yes, the use of nominee directors and nominee shareholders in Nigerian corporate governance is allowed by law, although the law did not expressly mention or the word “nominee”. All the same, any foreigner seeking to do business in Nigeria can utilize the services of nominee directors and nominee shareholders to run their local affairs for them in Nigeria and ensure compliance with regulatory requirements on their behalf.

The use of nominee directors and shareholders might become important if the foreigner involved does not want to have an active corporate presence in Nigeria and will be operating in Nigeria minimally. In that instance, it might make a lot of sense for them to incorporate a company and have nominee shareholders hold the shares as trustees for them, with nominee directors serving on the Board of the company, but ultimately answerable to them and acting on their instructions.

Is it easy to get business office address/location for businesses in Nigeria?

Nigerians are always open to rent or lease real estate to companies seeking to do business in the country. The price for renting or leasing differs by location and amenities available in the chosen location, though. Even if the company is not interested in having a full corporate presence in Nigeria but requires an address, there are virtual office address providers that can assist with business addresses companies can use as correspondence office addresses in Nigeria and what-not. Nigerians are fully ready for business and are always willing to open their spaces to individuals and corporations with money to pay for real estate.

What Tax Registrations are Required in Nigeria?

Upon incorporation in Nigeria, every company is expected to apply for and obtain a tax identification number for their company from the Federal Inland Revenue Service. The TIN is very important, as retail Banks in Nigeria always require a company’s TIN before they can open a bank account for that entity. Many people are often confused as to whether to obtain their company TIN from the FIRS or the Joint Tax Board, but experience shows that to pay taxes to the FIRS the TIN you obtain should be from the FIRS itself, ending in the digits 0001.

 Furthermore, companies are expected to register for Value Added Tax Number so they can remit value added taxes to the FIRS for value-added services they provide to clients and customers. On the other hand, individuals are expected to register for tax IDs as well, to pay their personal income taxes.

Obtaining all Necessary Permits in Nigeria

Applying for Business Permit and Expatriate Quota: Once a foreigner incorporates a company in Nigeria and wishes to commence business in Nigeria, the company must first take certain steps before it can lawfully commence business in Nigeria. The first step is for the company to apply for a business permit from the Ministry of Trade. There are numerous requirements a company seeking for a business permit from the Ministry must comply with, first of which is that the company must have a share capital of at least ₦100Million.

Asides applying for a business permit, such company has to designate its expatriate quota and apply for expatriate quota (usually done together with the business permit) if the company intends to employ foreigners to physically live in Nigeria and work for the company.

Registration with the Nigeria Investment Promotion Council: Another important registration a foreign company should ensure it makes in Nigeria is to register with the NIPC. This will ensure that the company can partake in incentives available to foreign-owned companies doing business in Nigeria.

National Agency for Food and Drug Administration and Control: If the company intends to manufacture or import foods, drugs, and other regulated cosmetics products in Nigeria, the company is required as a matter of compliance to register its products with NAFDAC. This is a matter of compliance for (certain) regulated products in Nigeria, and failure to register these products if same is required can lead to the products being seized and taken off the Nigerian Markets by NAFDAC.

There are other Regulators like the Nigerian Export Promotion Council a foreign-owned company can register with, but this all depends on their business objectives, sector and the regulatory requirements for those sectors.  

Importation of share capital into Nigeria

Upon incorporation, foreign-owned Nigerian companies are required by law to import their share capital into Nigeria in order to commence business in Nigeria. They can import their share capital through a structured process. They have to first be duly incorporated with the Corporate Affairs Commission; thereafter they are to remit the funds of the share capital they wish to import into a designated Nigerian Bank account held in the company’s name. Once this is done, the Bank [authorized dealer] has to issue a CCI (Certificate of Capital Importation) to the company to verify the inflow of foreign exchange into their account. The CCI is very important for regulatory purposes. The company should ensure that as it imports its share capital into Nigeria, it adheres strictly with the Central Bank of Nigeria regulations regarding foreign exchange transactions, as failure to comply with extant regulations can trigger serious sanctions against the company involved.

Opening a Bank Account in Nigeria

Can a foreigner open a bank account in Nigeria?

Foreigners are interested in opening bank accounts in Nigeria, and the answer is that they can actually open a bank account in Nigeria if they wish. However, the account opening process is not a simple process due to Nigerian Banks trying the best they can to combat money laundering and fraud.  If a foreigner intends to open a bank account in Nigeria, they have to apply for and obtain a National Identification Number (NIN), Bank Verification Number (BVN). They are also required to have a residence permit that allows them to live and work in Nigeria. Failure to provide these information and comply with these requirements will probably lead to a refusal by whatever retail banking institution they approach to open a bank account for them.

If a foreign individual meets the necessary criteria to open a bank account in Nigeria, they can open either of these accounts in the country: 

Domiciliary Account:

A domiciliary account is denominated in foreign currency, not Nigeria’s Naira. You are required to choose the currency you wish to open an account in, be it GBP, USD or EURO. When you hold this type of account, you can make transactions in that currency through the said account.

Corporate Account:

An individual foreigner cannot open a corporate account in Nigeria, neither can they operate one personally in their own personal names. To own or operate a corporate account, a foreigner is required to incorporate a Nigerian company with the CAC which will be subject to Nigerian laws and regulations. They can then proceed to open a corporate account for that company, subject to meeting all necessary requirements, including providing certain personal details of the directors of the company.

Is it possible for a non-resident foreign company to open a Bank account in a Nigerian Bank?

The simple answer to this question is no. Nigerian banks will not open a bank account in Nigeria for a foreign, non-resident company in Nigeria. If a foreigner or foreign company wishes to open a bank account in Nigeria, they are required to incorporate a Nigerian company with the Corporate Affairs Commission. Thereafter, the Nigerian entity can apply for a bank account with any of Nigeria’s commercial Banks.

Documents and details foreign-owned Nigerian companies require for account opening purposes in Nigeria

• Particulars of the proposed account signatories
• IDs of the directors/signatories of the company
• Passport photographs of the company directors and account signatories
• Company Tax Identification Number issued by the Federal Inland Revenue
• Bank Verification Number of the directors and signatories
• SCUML certificate issued by the Economic and Financial Crimes Commission (Where applicable)
• Certificate of Incorporation of the Nigerian company issued by the Corporate Affairs Commission
• Certified copies of the Memorandum and Articles of Association of the Nigerian company
• Status Report of the company (Form CAC 1.1)
• Two (2) references
• Recent utility bill (waste, water or electricity) not more than 3 months from the time of application for a bank account
• Personal details of the directors of the Nigerian company

Business Culture in Nigeria

Nigerians follow a routine working culture, following the usual 8-hour workday that is normally the norm across various parts of the world. Businesses usually commence daily operations from around 08:30AM every morning and work for eight hours, with structured breaks in-between, depending on the company culture. Traders who trade in regulated marketplaces usually have their shops open around the same time, as the markets are open by then, but usually have to close for the day from around 5PM, 05:30PM up to 06:00PM, depending on the market. Thus, any foreigner either doing business in Nigeria, or trying to get in touch with businesses and companies in Nigeria, should try and follow the work times of companies, otherwise they may have to wait for longer before receiving responses from the designated companies they are trying to get in touch with.

Investment opportunities for foreigners in Nigeria

Infrastructure

Certain locations in Nigeria like Lagos and Abuja have emerged as real estate hubs where wealthy entrepreneurs are investing their monies in commercial and residential real estate projects. Not only that, people are clamouring for improved infrastructure, so there is a near-perpetual need for good roads, airports, among other amenities. Interested foreigners with pockets deep enough to make the necessary investments can partner in Public-Private Partnerships to construct roads, railways, and airports. Nigeria is always looking for investors to partner with in these sectors.

Technology

Over the years, Nigeria’s technology ecosystem has grown, driven primarily by Lagos, with a great focus on FinTech, e-Commerce and digital banking. There are numerous opportunities in this sector, from FinTechs targeting financial inclusion of unbanked populations and digital banking, to e-commerce platforms, to investment in startups solving different unique problems for Nigerian businesses and individuals. Chinese companies are business leaders in Nigeria’s tech sector, particularly given their investments in digital banking, digital lending and FinTech.

Protection of Foreign Investments in Nigeria

Many foreigners often wonder if, upon investment in Nigeria, their investments and dividends are protected. Yes, foreign investments in Nigeria are protected, and this protection is made possible by local laws, bilateral trade agreements, and international agreements.

Protection by the Constitution: The Nigerian constitution guarantees individuals’ rights to own and control property within the country’s borders, and this includes foreign investments. The constitution prohibits compulsory acquisition of property except for public interest purposes and not without adequate compensation to the affected parties.

Protection by the Nigerian Investment Promotion Commission (NIPC) Act: The NIPC Act is one of Nigeria’s laws strictly dedicated to foreign investments in Nigeria. The NIPC Act provides the framework that encourages foreign investments and promotes same; the Act also guarantees that foreigners can repatriate their profits 100% out of Nigeria without government restrictions and further repatriate the capital they imported into Nigeria. Just like the constitution, the NIPC Act further prohibits the nationalization of foreign assets in Nigeria, except in cases of public interest, and also not without adequate compensation to the affected individuals.

Dispute Resolution in Nigeria

In Nigeria, just like everywhere else around the world, disputes arise out of commercial contracts, transactions and business dealings. To adequately address disputes Nigeria has its Court hierarchy, from the Supreme Court of Nigeria which is the highest Court in Nigeria to the lower magistrate Courts. Furthermore, Nigeria’s constitution provides for the jurisdiction of each Court; both their original jurisdiction and appellate jurisdiction where applicable. Where disputes arise, disgruntled parties can seek redress in Court. There is a downside to exploring dispute resolution through Courts in Nigeria—the justice system in Nigeria is slow. It works, but Courtroom adjudication can be terribly slow, hampered by inadequate courtrooms, slow adjudication, delay tactics employed by opponents in cases, bureaucratic inefficiencies, among others.

Due to the inefficiencies of Nigeria’s courtroom system, individuals and corporations doing business in Nigeria often explore alternatives to Courtroom adjudication and build these mechanisms into their vendor contracts, agreements, etc, in order to get faster resolution to disputes that may arise in the course of business or out of commercial transactions. It would be worthy to take this into consideration as well while doing business in Nigeria.

Do Foreigners face challenges while working in Nigeria?

The short answer is yes. While Nigeria presents boundless, limitless opportunities for growth, business diversification and market entry, Africa’s most populous Black nation has its unique set of challenges, which can and do directly impact on foreigners coming into Nigeria to do business. We shall examine some of them below.

Regulatory Uncertainty: This is a huge issue even local businesses face in Nigeria. There is a lot of regulatory uncertainty, and regulations can sway in different directions in the blink of an eye, shorting businesses, ruining investments, and even potentially leaving investors grasping at straws. The Technology and Financial sectors are some of the most uncertain sectors to do business in, as the Government can come up with regulations that can lead to serious business upheavals. They are usually always so unexpected. Instances of where regulatory uncertainties have crippled businesses include: the cryptocurrency saga, which led to the exit of Binance from Nigeria, among others. The regulatory uncertainty in Nigeria can seriously impact long-term strategic planning for businesses.

Triple-digit inflation: Inflation rates have gone up worldwide, but in Nigeria? The inflation rates can be quite shocking. The ceaseless, never-receding circle of upward inflation in Nigeria can negatively impact earnings, investments, among others. This challenge can be cushioned if as a foreigner you have steady supply of forex with which to navigate the country. Furthermore, Nigeria’s inflation can constantly erode profits and ultimately increase the cost of doing business in the country.

Poor Infrastructure and Power: Year-on-year, Nigeria’s population keeps increasing. Unfortunately, its power generation remains either stagnant or keeps falling. This had led to grid collapses and nationwide power blackouts. The constant power blackouts ensure that the cost of operating businesses in Nigeria keep increasing as businesses have to seek for alternative power sources to power on their business machinery and service their needs. Furthermore, Nigeria has an infrastructure deficit which may shock a foreigner.

Bureaucracy and Corruption: Nigeria is bogged down by complex legislations, some of which are either terribly outdated, not localized to Nigeria’s specific circumstances, or give conflicting Government agencies same power over businesses. Furthermore, Nigerian Agencies can be fantastically corrupt, and those willing to ride on the wave of that fantastical corruption get things done while those that don’t may be left reeling.

Economic Instability: Over the years, we have witnessed a free fall of the Naira, and this volatility of Nigeria’s currency can make long-term financial planning a nightmare for businesses.  

Conclusion

It is an exciting prospect to do business in Nigeria, especially for foreigners. Doing business in Africa’s largest country can seem quite daunting to a foreigner, or a foreign corporation seeking to migrate their business to Nigeria, but with the right guidance, it is very possible and easy. Business consultants who understand Nigeria can make the transition easier for you, so we advise getting in touch with one to begin your FDI journey into Nigeria.

Please note that this article does not constitute advice; it is a mere guide. You should consult specialist advice for your specific circumstance.

If you are a foreign entity expanding into Nigeria, or a foreigner seeking to do business in Nigeria, you can reach out to us via email at [email protected] or alternatively click the link here to chat us on WhatsApp.  We will be happy to assist you with your inquiries and needs.

Additional Guide:

“A Foreigner’s Comprehensive Guide To Doing Business In Nigeria [Updated 2024]”