Nigeria, proclaimed as Africa’s largest economy in 2014 after recalculating its Gross Domestic Product (GDP), is an attractive destination for investors. This recalculation included previously undervalued sectors such as its flourishing entertainment industry (Nollywood and Nigerian music) and Information and Communications Technology (ICT). With a GDP exceeding $510 billion and an annual growth rate surpassing 6%, Nigeria offers vast investment opportunities.

Nigeria’s appeal to investors goes beyond its diverse natural resources. The country boasts a vast pool of human capital, with highly trained professionals available at competitive costs. Investors can take advantage of numerous incentives across various sectors, making Nigeria a high-return investment market. Additionally, Nigeria’s investment environment is supported by robust financial institutions and government agencies, ensuring a conducive atmosphere for business growth.

Nigerian Investment Promotion Commission (NIPC)

The Nigerian Investment Promotion Commission (NIPC) is a federal agency tasked with coordinating, monitoring, and assisting with the establishment and operation of enterprises in Nigeria. Serving as the gateway to investment in Nigeria, the NIPC offers a window to the international investment world. The Commission collects, analyzes, and disseminates information on investment opportunities and sources of capital. It also advises on business partnerships and identifies specific projects in which potential investors can participate.

The NIPC is responsible for registering companies that fall under the NIPC Act and facilitating interactions between investors and government ministries, departments, agencies, and financial institutions. It also manages the One-Stop Investment Centre (OSIC), which assists with company incorporation and registration matters. Visit www.nipc.gov.ng for more information.

One-Stop Investment Centre (OSIC)

Established in 2006 within the framework of the NIPC, the One-Stop Investment Centre (OSIC) facilitates investment in all sectors of Nigeria’s economy. It serves as a single portal for sourcing information and completing necessary formalities to obtain required approvals for business operations. OSIC consolidates the services provided by various government agencies involved in company registration and operational formalities, ensuring a coordinated and streamlined approach.

Services Offered by OSIC:

• Providing information and data on Nigeria’s economy, including advisory services on investment opportunities.
• Granting business entry approvals, permits, and authorizations.
• Assisting with company incorporation and registration.
• Facilitating post-entry approvals, licenses, and other sector-specific permits.
• Assisting with tax registration and clearance.
• Helping with work permits, expatriate quotas, and other immigration formalities.
• Facilitating customs clearance for investment projects.

Business Incorporation and Registration: A Mandatory Requirement

All businesses in Nigeria must be registered with the Corporate Affairs Commission (CAC) before commencing formal operations. Registration can take various forms, depending on the type of business:

• Private Limited Liability Company (Ltd)
• Public Limited Company (PLC)
• Unlimited Company
• Company Limited by Guarantee
• Subsidiary or Branch of a Foreign Company
• Partnership or Joint Venture
• Sole Proprietorship
• Incorporated Trustees (religious, charitable, philanthropic, or cultural)
• Representative Office (in special cases)

A minimum share capital of 10,000 Naira is required to set up a private company (Ltd), while a public company (PLC) requires a minimum share capital of 500,000 Naira. Additionally, a minimum subscription of 25% of the authorized capital is required at the point of incorporation.

Company Registration Process:

The company registration process in Nigeria has been streamlined and simplified through the OSIC to enhance efficiency and speed. Companies can now be registered in a matter of days. The main steps in the process are:

1. Prepare the Memorandum and Articles of Association for the proposed company.
2. Conduct a name availability search at the Corporate Affairs Commission (CAC) for the proposed company name. Once approved, purchase and complete the incorporation forms. The registration fee is 10,000 Naira.
3. Submit the documents to the Federal Inland Revenue Service (FIRS) for payment of stamp duties and stamping.
4. Submit the completed documents, along with the relevant permits, to the CAC for verification and final approval.
5. Upon approval, the Certificate of Incorporation is issued, along with Certified True Copies of relevant documents. Post-registration processes are completed at the CAC Head Office.

Incorporating and Operating a Foreign Company

Foreign companies seeking to establish and operate in Nigeria must complete the required formalities for local incorporation of a Nigerian branch, subsidiary, or autonomous business entity. A local incorporation must be completed before any business activity begins. Investors may give power of attorney to a solicitor during the incorporation process. However, the solicitor’s role ceases upon completion of the registration formalities.

After incorporation, the company must register with the NIPC before starting formal operations. It can also apply to the NIPC for other investment approvals, such as expatriate quotas and incentives like Pioneer Status.

Exemption from Incorporation:

Exemption from local incorporation may be granted under specific conditions in accordance with Section 56 of the Companies and Allied Matters Act. Applications for exemption must be addressed to the National Council of Ministers, through the Secretary to the Government of the Federation (SGF). Exemptions may apply to:

• Foreign companies executing specific loan projects on behalf of donor countries or international organizations.
• Foreign government-owned companies engaged solely in export promotion activities.
• Engineering consultants and technical experts on specialist projects under contract with Nigerian governments or approved bodies.

Corporate Affairs Commission (CAC)

The Corporate Affairs Commission (CAC), established under the Companies and Allied Matters Act of 1990, is an autonomous body regulating the formation and management of companies in Nigeria. The CAC provides a wide range of services before, during, and after incorporation and registration of businesses.

Functions and Services of CAC:

• Registration of business names and incorporation of companies.
• Registration of Incorporated Trustees.
• “Same Day Incorporation Services” for companies that meet certain conditions.
• Issuance of True Certified Copies of filed company documents.
• Registration of share capital increases, mortgages, etc.
• Processing statutory filings of annual returns, changes in the memorandum and articles, addresses, etc.
• Management and winding-up of companies.

The CAC has branches in all 36 states of Nigeria and is ISO 9001 accredited for its services. Visit www.cac.gov.ng for more information.

Representative Offices

Foreign companies may set up representative offices in Nigeria. However, such offices can only serve as promotional and liaison offices. Local expenses must be covered by the foreign company, and the representative office cannot engage in business activities, conclude contracts, or open/negotiate letters of credit.

Legislation on Investment

Two principal laws govern investment in Nigeria, with a focus on foreign investment:

1. Nigerian Investment Promotion Act No. 16 of 1995
2. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of 1995

The NIPC Act outlines the roles of the NIPC in coordinating, monitoring, and encouraging investment in Nigeria. Key highlights of these acts include:

• Foreigners may invest and participate in enterprises in Nigeria.
• Enterprises with foreign participation must be registered with the NIPC.
• Foreign enterprises can purchase shares in Nigerian enterprises in any convertible currency.
• Foreign investors in registered enterprises are guaranteed the unconditional transferability of funds through authorized dealers in any convertible currency.

Investment Protection:

Nigerian legislation provides strong assurances for investment protection, guarding against nationalization or expropriation without prompt and adequate compensation. Investors are also guaranteed access to the courts to determine their rights and compensation in the event of government acquisition for public purposes.