All You Need to Know as a Foreign Investor in Nigeria

A “foreigner” or “alien” refers to a person or entity, whether corporate or incorporated, that is not a Nigerian citizen or association. Section 20(4) of the Companies and Allied Matters Act (CAMA) states: “Subject to the provisions of any enactment regulating the rights and capacity of aliens to participate or undertake in trade or business, an alien or a foreign company may participate in the formation of a company.” A foreign investor in Nigeria may conduct business individually or in partnership with a Nigerian, provided they comply with all laws governing foreign participation in business in Nigeria.

 

Section 11 of Nigerian Investment Promotion Commission (NIPC) Act provides that a non-Nigerian, whether company or individual, may invest and participate in the operation of any enterprise in Nigeria except those in the negative list. The negative list includes: arms and ammunition; narcotic drugs and psychotropic substance; para-military and military wears and accoutre.

VARIOUS LAWS REGULATING FOREIGN PARTICIPATION IN BUSINESS IN NIGERIA

1. Companies and Allied Matters Act (CAMA) 2020,
2. Nigerian Investment Promotion Commission (NIPC) Act 2015 – Section 19 of the Nigerian Investment Promotion Commission Act which requires alien to register with the Commission before commencing business in Nigeria.
3. Nigerian Immigration Act 2015 – Obtaining business permit under Section 36 of the Act.
4. Investments and Securities Act (ISA) 2007 – Section 13 of the Investments and Securities Act which empowers the Securities and Exchange Commission (SEC) to keep and maintain Foreign Direct Investments (FDI) and Foreign Portfolio Investments (FPI) in Nigeria.
5. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap F.34 LFN 2004.
6. National Office for Technology Acquisition and Promotion Act: Sectiom 5 provides that where transfer of foreign technology to Nigerian partners is involved, such Technology must be registered.
7. Industrial Inspectorate Act
8. Companies Income Tax Act
9. Personal Income Tax Act
10. Federal I land Revenue Service (Amendment) Act
11. Stamp Duties Act

A foreigner may choose to register or incorporate a company with other aliens or Nigerians; he may wish to buy shares in an existing company. Where he is incorporating a company, he may do business in any area except the negative list. Foreign Investors must incorporate their businesses with the Corporate Affairs Commission and pay stamp duties to the Federal Inland Revenue Service, be it a public company or private company.

They must obtain a business permit and expatriate quota from the Ministry of Interior.

Foreign companies must register with the Nigerian Investment Promotion Commission (NIPC) after incorporation at Corporate Affairs Commission.

Nationals of ECOWAS have a right of entry into Nigeria for 90 days validity period and must register with the Nigerian Immigration Service which will issue a residence card to be eligible to do business in Nigeria.

BUSINESS PERMITS

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 such purpose without the written consent of the Minister of Internal Affairs – Section 36(1)(b) Immigration Act,  2015. The Business Permit is the operational licence granted to an expatriate to enable him carry on business activities in Nigeria. The consent of the Minister of Interior is issued in the form of Business Permit.

EXPATRIATE QUOTA

This is the official approval granted to a company to enable it employ individual expatriates to specifically designated jobs and the quota must state its duration. Section 35(1)(a) of the Immigration Act provides that “no person other than a citizen of Nigeria shall accept employment, not being employment with the Federal or a State Government, without the approval of the Comptroller General of Immigration.  The approval is what is known as “Expatriate Quota”.

There are two types of expatriate quotas viz:

(i)  Permanent until Reviewed – This is usually granted to the Chairman of the Board of a company or the Managing Director. As the name implies, it is permanent until there is a supervening circumstance, which will necessitate its review.

(ii) Temporary Quota – This is usually granted to the directors or other employees of the company. The maximum number of years granted in the first instance is five (5) years renewable for a further period of two years.

RESIDENCE PERMIT

Every alien may enter Nigeria and stay therein for three months without a residence visa (Tourist Visa). However, any person who is not a citizen of Nigeria who desires to enter Nigeria for purpose of residence (that is, beyond three months) must obtain a residence permit. The application for residence permit is made by the employer company to the Nigerian Embassy or Consular Officer in the country where the applicant resides by way of a letter (two copies) accompanied by a valid passport of the alien from the company requesting permission to employ the foreigner to the Immigration Department (via Consular authorities). Also to be attached is a letter of employment and the photocopy of the Expatriate Quota.

On approval, the foreigner is then granted an STR Visa which on arrival in Nigeria will be regularised and the alien issued a work permit. ECOWAS Nationals have a right of entry into Nigeria for a period of 90 days validity, and must registered with the Nigerian Immigration. Such persons will be issued a residence card to be eligible to do business in Nigeria A foreigner can participate in doing business in Nigeria either through Foreign Direct Investment (FDI) or Foreign Portfolio Investment (FPI).

He has to register his business either a limited liability (public/private) etc, with the Corporate Affairs Commission, pay Stamp Duties to the Federal Inland Revenue service which is done upon completion of payment of filing fees and also pay annual returns to the commission every year after incorporation after the first 18 months of incorporation. Then he registers with other government bodies depending on the area of business in which he wishes to operate.