A Guide for Foreigners on How to Start a Business in Nigeria

Nigeria has developed into a holistic corporate coalition of different businesses running their operations and growing inside the Nigerian market, therefore, structuring a diverse economy. These businesses hold an intangible intrinsic value towards the development of industries in Nigeria, creating corporate congestion, thus, influencing and motivating new and aspiring entrepreneurs to set up business in Nigeria. New companies have been storming Nigeria’s business market like race cars in a drifting to a rally track.

The central ideology behind this is that ever since Nigeria had hit rock bottom in 2016 due to their unprecedented share of industrial tragedies, the government has been working towards ensuring stealthy recovery of the economy. Thus since the economy is in the improving stages and the government pumping in investments towards infrastructure, most business entities sought this to be an opportune moment to start a business in Nigeria eyeing the factor that market penetration will also be simplified.

Why is Nigeria a Healthy Investment for Foreigners?

1. Supportive Legal Structure

A few months ago on 17 January 2019, the House of Representatives passed the Companies and Allied Matters Act (Repeal and Re-Enactment) Bill; and just for the sake of information flow, the said legal document had previously been passed by the Senate on 15 May 2018. This document is a proclamation that contains several relevant provisions in the context of Nigerian company law. The newly drafted Bill includes necessary legal amendments that can simplify the entry and exit for foreign national investors in to and fro from the Nigerian business market. Therefore, investors may not worry about company incorporation procedures and market penetration and in any case, company revaluation and wrap up procedures.

2. Newly Emerging Sectors

Nigeria has a history of being defined as a fuel dominated economy, having the second largest fuel reserve within the nation's borders. But very recently, new sectors of business have been on the rise with the consumer market happily embracing the emerging companies that are simplifying lifestyle through the diverse range of products and services. The newly emerging businesses that are elevating the corporate landscape by catering to the vast consumer needs in Nigeria are –

  • E-commerce
  • Oil and Gas
  • Electronics retail
  • Construction Infrastructure Development
  • Construction material retail
  • Packaged Fruit Beverage
  • Confectionaries
  • Poultry Farming
  • Telecommunication services

3. Ease of Networking

The market has developed into an ecosystem of businesses cohesively networking and partnering with each other to ensure coalesced industrial growth. This development has significantly impacted the habit of networking for many entities across various sectors of business. Establishing the foundation of trust for partnerships, joint ventures and bulk investments in new and emerging start-up firms. The networking facilities have become a mitigating factor for foreign entities to enter and socialise with various firms and actively grow towards a versatile developing economy.

4. Incentives for Foreign Nationals

The government provides for multiple incentives for Foreign National companies and business persons to facilitate their operations in Nigeria for a short term as well as a long term with specific legislative incentives –

  • Quick procedure for business incorporation
  • Flexible immigration and business permit provision
  • A structured legal process for repatriation of Capital and Interest
  • Except for a few outlined core businesses that significantly involve the government, foreign nationals can own 100% of the shares of their respective limited liability companies

Business Registration in Nigeria

  • Decide a company name after which you must check for the availability of the name within the register of the Corporate Affairs Commission (CAC).
  • The next step includes filling up of the form CAC 1.1 which entitles the business owner to provide information about the internal details of the company such as – the status of authorised share capital and details of the directors and the shareholders.
  • Create the Memorandum of Association (MOA) and Articles of Association (AOA), inclusive of the following - company objectives, shares issued to each of the directors. This document must be duly signed by a witness, which can also be the company secretary who is the legal representative of the company.
  • Payment of the requisite amount or initial amount must be made to the CAC as registration fee and stamp duty based on the type of company/business entity the volume of your share capital.
  • The form CAC 1.1 and the MOA as well as the AOA must be duly stamped signed by the directors, shareholders, witnesses and authorised CAC agents.
  • The documents that have been acquired post completion of the formalities must be submitted online in the following manner -
    1. Form CAC 1.1 duly filled
    2. MOA and AOA of the company
    3. Name availability notification from CAC
    4. Identification proof of all the stakeholders
    5. Details of Legal Practitioner/Company Secretary
    6. The CAC receipt for payment of registration fees

The procedure for analysis of legitimacy and official examination of the documents is a comprehensive one; therefore, it may consume time up to 3 days. Post verification, the CAC will send a notification along with the company's RC number. On receiving the confirmation, owners can start operating their business in Nigeria; however, they are still obligated to register for paying taxes through the company secretary as per the Nigerian taxation system.

Now that you have all the information for starting a business in Nigeria, you are partially prepared to enter the Nigerian market. Although your business idea might be a future corporate juggernaut, we are aware that the tiresome process of company incorporation could be a significant hurdle. Let us assist you in the process of company incorporation and post incorporation services. With our network and expertise, we can get your business up and running with all the necessary permits and registration that will otherwise take an incremental amount of time for individual business owners. Contact us to know more about how we facilitate business setup in Nigeria.