Foreign investments in Nigeria; The legal requirements.


It can be challenging to set up a business(s) in a foreign country. Added to the fact that it is a new business clime, there are legal requirements and regulations to be complied with. However, in Nigeria, despite the various laws and regulations it is a fairly uncomplicated process. Nigeria has the largest economy in Africa with a population of over 200 million people[1], notwithstanding several challenges of insecurity and poor infrastructure battling its economy, it has huge growth potential, especially as president Buhari in line with the scheme for promotion of ease of doing business in Nigeria, has just signed into law the Nigeria Startup Act 2022 which aims to promote the development, operation, and growth of Startups in the technology industry, this presents a great opportunity for investors who are looking to invest in Nigeria, particularly in the technology industry.

Let us look at the requirements to legally set up a business in Nigeria as a foreign company;


Foreign investment in Nigeria can be either through Foreign Portfolio Investments which is investing in stocks and securities of companies operating in Nigeria or by Foreign Direct Investment FDI which is incorporating a business. A foreign company can also operate in Nigeria by setting up a branch or subsidiary locally. This can be done through the incorporation of the business and by complying with the local laws and frameworks regulating businesses in Nigeria.[2] There are various business structures in Nigeria through which a company can operate, vis; companies limited by liability, Joint venture partnerships, Incorporated trustees, and companies limited by guarantee. However, there are circumstances where a foreign company may apply to be exempted from registering as an entity in Nigeria to operate,[3] companies that fall under the following categories are exempted:

  1. Foreign companies invited by or with the approval of the federal government of Nigeria to carry out a specified individual project.[4]
  2. Foreign companies in Nigeria to carry out specific individual loan projects on behalf of donor countries or international organization
  3. Foreign government-owned companies engaged solely in export promotion activities
  4. Engineering consultants or technical experts engaged on any individual contract specialist project under contract with any of the governments in the federation or any of their agencies or with any other body or person where such contracts have been approved by the federal government.

The application for exemption may be made through an application to the minister stating all the required details as listed in 80(2)

Tax Registration

The Companies and Income Tax Act (CITA) provides for the taxation of profits of companies (except oil and gas exploration and production companies) while Value Added Tax Act 2004 provides for the taxation of goods purchased by consumers and services rendered. Accordingly, all companies subject to tax under CITA must obtain a Tax Identification Number TIN and register for VAT at the Federal Inland Revenue Service (FIRS)

Registration with NIPC (Certificate of Business Registration)

By the virtue of section 17 of the Nigerian Investment Promotion Commission (NIPC) Act 2004, a foreigner can invest or participate in any business in Nigeria except those excluded by the NIPC Act sections 18 and 31 such as; firearm and ammunition, narcotic drugs, military, and para-military wares.

Section 20 of the Act requires that any company in Nigeria with foreign participation register with NIPC; obtain a Certificate of Business Registration before commencing business in Nigeria

 Business Permit

After incorporation, a foreign company is required to obtain a business permit that authorizes foreigners to conduct business legally in Nigeria. By section 36(1)(a) and (b) of the Immigration Act 2015 and paragraph 4 of the Immigration regulations (2017) a foreigner shall not establish a business in Nigeria without the consent of the Minister responsible for immigration matters, the consent is issued in the form of a Business Permit through the Department of Citizenship and Business, Federal Ministry of Interior.

Importation of Investment Capital

Foreign Exchange (Monitoring and Miscellaneous Provisions) Act FEMMA 2004 provides that any person may invest in any business with foreign currency imported into Nigeria through an authorized dealer (usually a bank licensed to deal in foreign exchange). This is done through the issuance of a Certificate of Capital Importation. Therefore, a foreign investor seeking to export capital investment to Nigeria is required to indicate the beneficiary of the investment funds, state the purpose of the fund, and obtain a Certificate of Capital Importation (CCI) issued by an authorized dealer evidencing the receipt of investment capital within 24 hours of receipt of the funds.[5]

Expatriate Quota

This is a document issued by the federal ministry of interior that permits foreigners to live and work in Nigeria. Where a Nigerian company intends to employ foreigners, it must obtain an expatriate quota approval for the relevant position. This is also applicable to a foreigner who is an owner of a registered business in Nigeria. Expatriate approval is typically valid for 3 years and is renewable for consecutive terms. Section 36 (1)(a) and (b) Immigration Act 2015.

Residence permit

Upon the company obtaining the expatriate quota, the company may proceed to process a Subject to Regularization (STR) Visa, through that, the foreign employee(s) can process and obtain a Combined Expatriate Residence Permit and Alien Card (CERPAC) which permits the employee to reside and work in Nigeria.

Transfer of  Technology

The transfer of technology in Nigeria is governed by National Office for Technology Acquisition and Promotion. NOTAP Act, which established regulating agency NOTAP. The Act makes it compulsory for all agreements for the transfer of foreign technology into Nigeria to be registered with NOTAP within 60 days of execution of the agreement. However, where the contracts fall under the category listed under section 6 (2) of the Act, such contracts would not be registered. Where a contract registerable by NOTAP has not been registered no payment can be made to the credit of a person outside Nigeria on the authority of the Federal Ministry of Finance, Central Bank of Nigeria, and any licensed bank with regard to payment accruing from such contracts.[6]

Protection and incentives that applies to Foreign Investments in Nigeria

In recent years the Nigerian government set up a lot of incentives to improve the ease of doing business as well as encourage local business participants and build the confidence of foreign investors. The NIPC Act provides both general and special incentives to investors in the Nigerian economy, also the Nigeria Startup Act 2022 makes provisions for tax and fiscal incentives which foreign investors in the technology industry may take advantage of.

Company ownership structure

By sections 17 & 18 of the NIPC Act, foreigners can have 100% ownership of investment in a business in Nigeria, however, there are restrictions on the acquisition of shares by foreigners in specific industries such as oil and gas, aviation, shipping, broadcasting, etc.

Incentives for Special Investment

By section 22 NIPC Act NIPC has the power to consult and negotiate with appropriate government agencies specific incentive packages for investors to promote identified strategic or major investments.

Repatriation of profits

Subject to payment of the applicable taxes, Section 24 NIPC Act and FEMMA section 15(2) also guarantee unconditional transferability and remittance of foreign currency imported into Nigeria (through CCI) for Investment through an authorized dealer in a freely convertible currency. This also applies to the proceeds of investments on funds (profits, dividends, and loan repayments).

Access to domestic courts

By section 6(6) of the Constitution of the Federal Republic of Nigeria, the judicial powers of the Nigerian court extend to all matters between persons or between government authority and any person in Nigeria. And to all actions relating thereto in the determination of questions as to the civil rights and obligations of that person. Consequently, save where parties have agreed to the contrary, a foreign investor is guaranteed access to the Nigerian courts.

Guarantees Against Expropriation

Section 25 NIPC Act protects the nationalization or expropriation of any business or foreign-owned investment by any government in Nigeria. However, where acquisition is made in the national interest or for a public purpose such investor shall be entitled to fair and adequate compensation, and a right of access to court to determine the interest and the amount to which the investor is entitled.

Applicability of International law and International Arbitration

Section 26 NIPC Act grants a foreign investor the option of recourse to international arbitration machinery for the settlement of disputes. Where there is disagreement on the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes Rules shall apply.

Assistance to Enterprise

Section 27 guarantees assistance and guidance to be provided by NIPC, as may be required by an enterprise, and also act as a liaison between the enterprise and government departments, agencies, and other authorities.

Tax-based Incentives

Protection from double taxation

Nigeria has double taxation treaties with 16 countries.[7] The double taxation agreement seeks to reduce the impact of double taxation by Nigeria and the treaty countries on income and capital gain from business ventures as such foreign tax payable by taxpayers in these countries is allowed as a credit against tax payable in Nigeria.

Pioneer Status Incentive (PSI)

This is governed by Industrial Development (Income Tax Relief) Act 2004. It is a tax holiday that grants relief to companies from paying corporate income tax for a period of initial 3 years and is extendable for 2 years. Businesses in sectors vital to the economy, for instance, pharmaceutical, waste management, tourism, manufacturing, and mining are granted this relief in their formative years to enhance their capacity to make reasonable profits for reinvestment into the business.

In-Plant Training

This applies to industrial establishments that have set up in-plant training facilities. Such industries enjoy a two (2) percent tax concession of the cost of facilities for the training for five (5) years.[8]

Investment in Infrastructure

This is a form of incentive granted to industries that provide facilities that ordinarily, should have been provided by the government. Such facilities include access roads, pipe-borne water, and electricity. Twenty percent (20%) of the cost of providing these infrastructural facilities, where they do not exist, is tax deductible.


Despite the underlining challenges to its economic growth, Nigeria remains the largest market in Africa and a top choice for investment due to its numerous untapped investment opportunities in several sectors for instance agriculture and mining sectors (with the attractive incentives attached to them), large consumer market and high purchasing power. However, to be able to do business in Nigeria, the discussed regulatory and legal frameworks are to be complied with to avoid the risk of losing your business and to qualify for those incentives made available under the law. Therefore, if you are a foreigner or a Nigerian based abroad but seeking to invest in Nigeria, get familiar with these requirements or take a step further to get a lawyer to help you navigate these complexities.

Ifeoma Uka is an attorney in Solape Adesuyi and Associates, a law firm with several years of experience and proficient lawyers in corporate law practice who can help you meet these requirements. For more information, please contact us at if*@so***********************.com


[2] Section 78 Companies and Allied Matters Act (CAMA) 2020

[3] Section 80 CAMA 2020

[4] For example, Julius Berger plc, and Reynolds Construction Companies, Chinese Civil Engineering Construction Companies in construction projects.

[5] Section 15 Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 2004

[6] NOTAP Act Section 6

[7] Federal Inland Revenue Service Nigeria

PWC Worldwide Tax Summaries 2022


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