Foreign investment is highly encouraged and welcomed in Nigeria as it is a means to boost its economy. Nigeria also operates a free-market economy that has no restrictions on foreigners starting up a business in Nigeria and this makes it one of the more reasons why it is encouraged for you to start up a business in Nigeria as a Foreigner.
In this blog, you shall be introduced to some of the main requirements and steps which a foreigner should undertake to invest in Nigeria.
Below are the briefly explained cardinal steps a foreigner who wants to start an investment in Nigeria must adhere to;
- Business Incorporation/Registration
The agency in charge of business registration in Nigeria is the Companies Allied Matters Act 2020(CAMA) which has clearly provided that only registered businesses in Nigeria are recognized by the law to lawfully carry on business in Nigeria. The section that supports this under the CAMA is provided for in section 78 and it reads as follows;
“Subject to section 80-83 of this Act, every foreign company which before or after the commencement of this act was incorporated outside Nigeria, and having the intention of carrying on business in Nigeria, shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters to preliminary incorporation under this Act.”
From the above provision, it is safe to say that a foreigner can be involved in different types of business in Nigeria like a limited liability company, an Unlimited Liability company, and a Company Limited by Guaranty.
A foreigner can also invest in Nigeria by entering into a partnership with a Nigerian to form a business which could be a limited liability partnership where the partner’s liability is limited to the value of capital he contributed to starting the business or an unlimited liability where the partner’s liabilities are not limited in any way.
Regardless of the above clearly provided, there is a proviso that exempts a foreigner from registering his business in Nigeria. The grounds that exempt a foreigner from registering a company are provided for in section 80 of CAMA. The grounds are;
- A foreign company invited to Nigeria by or with the approval of the Federal Government to execute any specified or individual project.
- Foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization.
- Foreign Government-owned companies engaged solely in export promotion activities and;
- Engineering consultants and technical experts engaged on any individual 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 the such contract has been approved by the Federal Government.
- Registration with the Nigerian Investment Commission(NIPC)
The NIPC is a recognized agency of the Federal Government charged with the responsibility of coordinating and monitoring all foreign investment activities in Nigeria. They are tasked with attracting Foreign Direct Investment by coming up with attractive policies for foreigners over the years.
One of the compulsory steps for a foreigner who wants to register a business in Nigeria is to register with the NIPC. Once the receipt of registration forms has been done, the NIPC within fourteen (14) working days will register the business after it has satisfied itself with all the relevant documents submitted
- Business Permits From the Ministry of Interior
Pursuant to section 36 of the Immigration Act, it states that;
No person other than a Nigerian citizen shall, on his own account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register or take over any company with limited liability for any purpose without the written consent of the Minster of Internal Affairs.
By this provision, a foreigner is expected to acquire a business permit which is a document that is issued by the Federal Ministry of Interior through the Department of Citizenship and business. The significance of this permit is that it ensures that foreign companies are not edging out Nigerian Organizations with the Ministry of Interiors that domestic companies are already engaging in.
Whether a foreign company is entirely owned by foreigners or a foreign entity is engaging in a joint venture with a Nigeria corporation it is compulsory for it to acquire a business permit.
- Opening of Bank Account
it is often required for foreigners who want to set up a business in Nigeria to open a bank account for ease of doing business. Although there is no express law that mandates a foreigner to open an account. The requirements for a foreigner to open a bank account are;
- All foreigners listed as Directors of the company must have to enroll for a bank verification number(BVN)
- The Nigerian banks may demand that any foreigner either as a director or any other staff seeking to become a signatory to the bank account must maintain Nigerian residency status.
- Procurement of Certificate of Capital Importation
The certificate of Capital Importation(CCI) is a document obtained from the Central Bank of Nigeria by a foreigner through commercial banks. The purpose of the CCI is that it confers on the foreign investor the right to repatriate capital, dividends, and profits at the official foreign exchange market rates.
- Tax Registration And Tax Identification Number(TIN)
All registered companies in Nigeria are expected to within six(6) months of incorporation register with the nearby FIRS office to the address of business operation. Every country requires tax to run the affairs of the government. The taxes are collected by the State Internal Revenue services and the Federal inland revenue services (FIRS) collects and manage federal taxes. The Tax Identification Number (TIN) is to be obtained upon commencement of business as this unique number enables the payment of taxes.
From this post, you have been made to understand that foreigners are considerably invited to invest in Nigeria as it does not only operate a free-market economy but has incentives for foreign investors put in place. As a foreigner, all you have to do is to comply with the laid down procedures for registering a company in Nigeria. These are not all the procedures but rather an insight into the requirements. We would be willing to give you more information about the processes.
For more information about your Business registration in Africa, and for all your business needs, advice, compliance, and legal requirements in the Middle East, and Asia please feel free to contact us for a free consultation. We are just a click away. We also assure you that we will tend to your requests. We at eLegal consultants look forward to meeting you and are ready to journey with you to realize your dreams. Contact us today.