Invest in Nigeria
Nigeria is one of Africa’s most attractive destinations for investors. Besides the diverse natural resources it is endowed with, Nigeria disposes of a huge human capital, with trained and qualified professionals readily available at competitive costs in the employment market. Investors would also be impressed by the array of investment incentives they can take advantage of in various sectors. Nigeria, investors would quickly discover, is a market characterised by the high return on investment it offers.
Top investment opportunities in Nigeria:
Real Estate
Nigeria’s real estate industry has enormous investment potential due to the country’s growing population and housing demand. This market guarantees high returns on investment and includes a variety of high-demand properties, such as:
- Residential Properties
- Commercial Properties
- Land
- Mixed-Use Properties and more.
The investment returns vary across different regions of Nigeria. For instance, in Lagos, select real estate investment plans provide an annualized yield of 10% and a guaranteed capital gain of 10% to 20% over two to four years on particular properties.
If you’re considering investing in the Nigerian real estate market, you can explore various opportunities such as rental properties, commercial real estate, and more.
Small and Medium Scale Enterprises (SMEs)
Small and Medium Scale Enterprises (SMEs) are the backbone of the Nigerian economy. The National Bureau of Statistics reports that Small and Medium-sized Enterprises (SMEs) make up 96% of businesses and 84% of employment in Nigeria. These SMEs number around 17.4 million, and they generate approximately 50% of industrial jobs and almost 90% of the manufacturing sector, measured by the number of businesses operating.
How to Invest in SMEs
Investing in small and medium-sized enterprises (SMEs) is a great way to support local businesses while also making a profit. This entails providing funds to help these businesses expand. You can choose to invest in SMEs by:
- Equity: Equity financing entails purchasing shares in an SME
- Debt financing: Debt financing involves giving a loan to the SME
Additionally, there are crowdfunding platforms where you can also invest in SMEs.
Technology
Nigeria’s technology industry has grown dramatically in recent years, as evidenced by the emergence of numerous tech startups that have received significant investments from both domestic and foreign investors.
Furthermore, Nigeria has a rapidly growing pool of tech talent, which is bolstered by a slew of tech hubs and incubators. As a result, the industry has access to a vast talent pool, and favourable policies that position it for exponential growth.
Investing in Nigeria’s tech startups typically involves providing seed funding or venture capital. Interested investors can choose to invest through venture capital firms, angel investor networks, or by directly investing in the startups themselves.
Overall, the Nigerian tech industry is an attractive investment destination, offering a wealth of opportunities for investors looking to tap into its potential for growth and innovation.
Agriculture Investments
Nigeria’s agricultural sector is the country’s largest employer of labour and makes a significant contribution to its GDP. The sector has enormous potential for growth and development, given the country’s vast arable land and favorable weather conditions.
You can explore various investment opportunities in Nigeria’s agricultural sector, such as:
- Crop cultivation
- Livestock farming
- Agro-processing
- Export of agricultural products.
The expected returns on agricultural investments vary depending on the type of investment and the level of risk. You can expect to earn attractive returns on investments in agricultural commodities such as rice, cassava, plantain poultry and catfish farming. You can also earn returns by investing in agro-processing ventures or by leasing land to farmers.
Nigeria’s investment environment is supported by strong and reliable financial institutions and government agencies.
Nigerian Investment Promotion Commission
The Nigerian Investment Promotion Commission (NIPC) is a Federal Agency charged, among others, with coordinating, monitoring, and providing necessary assistance and guidance for the establishment and operation of enterprises in Nigeria. It is not only the gateway to investment in Nigeria for foreign investors and Nigerian investors seeking to engage in value-added activities in their country, but also Nigeria’s window to the international investment world. NIPC collects, collates, analyze and disseminates information and data on investment opportunities and sources of capital. It advises on business partnership and identifies specific projects in which potential investors can be solicited to participate.
The NIPC registers and keeps records of all companies to which the NIPC Act applies. It maintains the interaction between investors and ministries, government departments and agencies, financial institutions and other authorities concerned with investments. It anchors the One-Stop Investment Centre (OSIC) which interfaces with companies on incorporation and registration matters. www.nipc.gov.ng
One Stop Investment Centre-OSIC
Established in 2006 within the framework of the Nigerian Investment Promotion Commission (NIPC), One-Stop Investment Centre (OSIC), as its name indicates, is an organ set up to facilitate investment in all sectors of Nigeria’s economy. It provides a single portal or contact point for sourcing information and carrying out the necessary formalities with a view to obtaining all the required approvals before the operation of a business. The centre also assists existing and prospective investors with statistical data and information on the Nigerian economy, investment climate, legal and regulatory framework, as well as sector and industry- specific information, to facilitate the making of informed business decisions.
Services offered by OSIC include:
- Providing general information and data on Nigeria’s economy, as well as advisory services on investment opportunities;
- Granting of business entry approvals, permits and authorisations;
- Assisting with company incorporation and registration;
- Facilitating post-entry approvals, licences and other sector-specific permits with statutory government agencies with extant mandate;
- Assisting with tax registration and clearance;
- Assisting with work permit, expatriate quota and other immigration formalities;
- Facilitating Customs clearance for investment projects. OSIC brings together, for speedy service delivery, several agencies and ministries, among others.
Business Incorporation And Registration: A Mandatory Requirement
All businesses in Nigeria must be registered with the Corporate Affairs Commission before going formally into operation. Registration can take various forms as follows, 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 Ten Thousand Naira (N10 000) is required to set up a private company (Limited Liability). For a Public Company (PLC) the required minimum share capital is five hundred thousand naira, (500,000 Naira). A minimum subscription of 25% of the authorised capital is also required at the point of incorporation.
Company Registration Process
Company Registration process has been streamlined and simplified to enhance efficiency and rapidity, with the establishment of the One-Stop Investment Centre (OSIC), located in the premises of the Nigerian Investment Promotion Commission (NIPC). Through the services of OSIC, companies can now be registered in a matter of days. However, companies which so wish can engage the services of a legal counsel to perform the registration formalities, although this may attract a substantial fee. The following are the main steps in the process of company registration:
- Prepare the Memorandum and Articles of Association of the proposed company.
- Conduct at the Corporate Affairs Commission availability search on the proposed name of the company; once the company name is approved, a set of incorporation forms should be purchased and filled; the registration of business name can be conducted without the assistance of a legal practitioner and attracts a fee of 10,000 Naira (Ten Thousand Naira).
- Submit appropriate documents to the Federal Inland Revenue Service for payment of stamp duties and stamping.
- Submit the completed and stamped documents with together with the corresponding permits to the CAC for verification and final approval.
- The Certificate of Incorporation is then issued, with the accompanying Certified True Copies of relevant documents to the investor. All post-registration processes are done at the Head Office of the Corporate Affairs Commission (CAC) where all files are kept in safe custody and data entered on the CAC records.
Incorporating and Operating a foreign Company
Foreign companies wishing to establish and operate in Nigeria must accomplish required formalities for the local incorporation of the Nigerian branch or subsidiary, or autonomous business entity. Prior registration must be done before embarking on any business activity. An investor may, however, give power of attorney to a solicitor for a limited period of time during which incorporation is being processed. This arrangement would then be indicated in the relevant incorporation documents, specifying that the solicitor, whose name appears therein, is merely acting as an “Agent” or “Principal”. The appointed solicitor ceases to function in the specified capacity upon the completion of the registration formalities. The locally incorporated company must then register with the Nigerian Investment Promotion Commission (NIPC) before commencing formal operations. It may also apply to NIPC for other investment approvals (expatriate quota, etc.) and incentives ((Pioneer Status, etc.).
Exemption from Incorporation
Where applicable, exemption from local incorporation may be granted in accordance with Section 56 of the Companies and Allied Matters Act. Application to this effect should be addressed to the National Council of Ministers, through the Secretary to the Government of the Federation (SGF). The National Council of Ministers eventually grants the exemption in the terms it deems fit. Below are the concerned categories of businesses:
- Foreign Companies which are in Nigeria for the execution of a specific individual loan project on behalf of a donor country or an international organisation;
- Foreign government-owned companies engaged solely in export promotion activities;
- Engineering consultants and technical experts on any individual specialist project under contract with any of the governments of the Federation or any of their agencies or with any other body or person, where such contract has been approved by the government.
Corporate Affairs Commission (CAC)
The Corporate Affairs Commission (CAC) was established by the Companies and Allied Matters Act (1990) as an autonomous body to regulate the formation and management of companies in Nigeria. The Commission dispenses a wide range of services before, during and after incorporation and registration of business enterprises. It administers the Companies and Allied Matters Act promulgated in 1990 and commonly called the “Companies Act”. It is headed by a Registrar General/ Chief Executive Officer.
Among the functions and services offered by the Corporate Affairs Commission Headquarters are:
- Registration of business name and incorporation of companies;
- Registration of Incorporated Trustees;
- Same Day Incorporation Services, whereby, under certain conditions, companies can be registered within one day;
- Issuance of True Certified Copies of filed company documents;
- Registration of share capital increases, mortgages, etc.;
- Processing the statutory filings of Annual Returns, increase, changes in the memo and articles, addresses, etc.
- Management and winding- up of companies.
The Corporate Affairs Commission has branch offices in all the 36 states of the Federation. It enjoys accreditation for ISO 9001 for its services. www.cac.gov.ng
Representative Offices
A foreign company may set up representative office in Nigeria. However, such an office can only serve as a pro- motional and liaison office and its local expenses have to be covered by the foreign company. It cannot engage in business activities or conclude contracts or open or negotiate any letters of credit.
Legislation on Investment
Two principal laws govern investment in Nigeria, with emphasis on foreign investment:
The Nigerian Investment Promotion Act N° 16 of 1995;
- The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act N°17 of 1995. The functions Nigerian Investment Promotion Commission (NIPC), as stipulated by the NIPC Act 16, 1995, are wide-ranging and include coordinating, monitoring, encouraging and providing necessary assistance to and guidance for the establishment and operation of businesses in Nigeria. The NIPC is also to promote investment in and outside Nigeria through effective means. The highlights of the above- mentioned Acts (N°16 and N° 17 of 1995) with regards to investment are as follows:
- A foreigner may invest and participate in the operation of any enterprise in Nigeria;
- An enterprise in which foreign participation is permitted shall, after its incorporation, be registered with the NIPC;
- A foreign enterprise may buy shares of any Nigerian enterprise in any convertible currency;
- A foreign investor in a registered enterprise is guaranteed unconditional transferability of funds through an authorised dealer, in any convertible currency, be it: – dividends or profit (net of taxes) attributable to the investment; – payments in respect of loan servicing, where a foreign loan has been obtained; – proceeds (net of taxes and other obligations) in the event of sale or liquidation of enterprise or any interest attributable to the investment; – the entire capital can be transferred should the investor decide to relocate elsewhere.
Investment Protection
The legislation on investment also provides solid assurance regarding the protection of investment. It guards against nationalisation or expropriation of an enterprise by the government and the compulsory dispossession of an investor of his/her interest in the capital of an enterprise, whether wholly or in part. It guards against the acquisition of an enterprise by the government unless the such an acquisition is in the best interest of a public purpose, in which case adequate compensation must be paid promptly, with authorisation for full repatriation of the proceeds in convertible currency, where applicable. The law also gives the investor the right of access to the courts for determination of his/her interest of right and the compensation to which he/she is entitled.
Investment Promotion and Protection Agreements
Countries willing to invest in Nigeria may choose to enter into bilateral Investment Promotion and Protection Agreement (IPPA) with the Nigerian government. Deregulation of Equity Structure in Nigerian Enterprises
The Nigerian Investment Promotion Commission (NIPC) Act N° 16 of 1995 has effectively abolished any restrictions in respect of the limits of foreign shareholding in an enterprise registered in Nigeria. However, certain categories of enterprises remain subject to authorisation for non-Nigerians:
• Production of arms and ammunition;
• Production of and dealing in narcotics and psychotropic substances;
• Manufacture of military and paramilitary wears and accoutrements;
• Participating in coastal and inland shipping
