Regulations governing foreign investment in Nigeria have evolved with the times, becoming comprehensive and accommodating. Foreign entities looking to invest in Nigeria will encounter a flexible, well-structured, and highly beneficial system, allowing them to confidently enter Nigeria’s business landscape, either independently or in partnership, subject however, to the observance of relevant regulations and obtention of required permits.
This article provides an in-depth analysis of Nigeria’s foreign investment and immigration principles, with a view to providing a guide for foreign parties interested in exploring the ample investment opportunities in Nigeria.
Foreign entities looking to invest in Nigeria will encounter a flexible, well-structured, and highly beneficial system
Relevant Laws Regulating Foreign Investment and Immigration in Nigeria
The laws regulating foreign investment and immigration in Nigeria include (but are not limited to) the following: Companies And Allied Matters Act, 2020 (CAMA), and Companies Regulation 2021; Nigerian Investment Promotion Commission Act, Cap. N117 L.F.N. 2004 (NIPC Act); Immigration Act, No. 8 2015, and Immigration Regulations 2017; Foreign Exchange (Monitoring & Miscellaneous Provisions) Act Cap. F34 L.F.N. 2004; National Office for Technology Acquisition and Promotion Act Cap. N62 L.F.N. 2004; Investment and Securities Act (ISA) 2007; Industrial Inspectorate Act Cap. I8 L.F.N. 2004; Companies Income Tax Act Cap. C21 L.F.N. 2004, and Personal Income Tax Act (as amended), amongst other legislations.
Nature of Business or Foreign Investment Allowed
As mentioned earlier, Nigeria operates a friendly and open foreign investment policy, creating investment opportunities in almost all its economic sectors. However, a clear delineation is made, tagged ‘The Negative List’, showcasing an extensive list of enterprises in which both local and foreign investments are prohibited. Expressly, section 17 of the NIPC Act provides for this, stating:
“Except as provided in section 18 of this Act and subject to this Act, a non-Nigerian may invest and participate in the operation of any enterprise in Nigeria.”
Section 18 further provides that the above provision of the Act does not apply to matters in the ‘Negative list’. Later, in Section 31, we are furnished with the meaning of this phrase, as well as the list itself:
“Negative list” means the list of those sectors of investment prohibited to both foreign and Nigerian investors, that is: (a) production of arms, ammunition, etc.; (b) production of and dealing in narcotic drugs and psychotropic substances; (c) production of military and paramilitary wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services; and (d) such other items as the Federal Executive Council may, from time to time, determine.”
Therefore, a foreign investor is not allowed to venture into any of the enterprises listed above, in addition to any other enterprise that the Federal Executive Council may prescribe, as provided in paragraph (d) above.
Necessary Registrations and Permits/Approvals for Foreign Investment
1. Registration Under CAMA- with the Corporate Affairs Commission
Section 78(1) of CAMA 2020 provides that a foreign company incorporated outside Nigeria and intending to carry on business in Nigeria shall be incorporated as a separate entity in Nigeria for that purpose (See also section 19 NIPC Act). However, section 80(1) CAMA provides that a foreign company or entity may apply to the Minister (The Minister of Industry, Trade, and Investment) to be exempted from registration if it belongs to any of the following categories or types of companies:
(a) Foreign companies (other than those specified in paragraph (d)) invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;
(b) Foreign companies which are in Nigeria for the execution of a specific individual loan project on behalf of the donor country or international organisation (such as WHO, IMF, World Bank, UNICEF);
(c) Foreign government-owned companies engaged solely in export promotion activities, and;
(d) 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 Federal Government has approved such contract.
Section 80 (2) – (8) CAMA further sets out the procedure for the application and grant of exemption and the particulars that must be set out by the company making such application for exemption to the Minister under the Act. By section 82 of CAMA, such an exempted foreign company is conferred the status of an UNREGISTERED COMPANY. Section 84(b), however, provides that the unregistered status does not affect the foreign company’s right or liability to sue and be sued in Nigeria, either in its corporate name or that of its agent.
2. Registration with the Nigerian Investment Promotion Commission (NIPC):
NIPC is a Nigerian government agency responsible for coordinating and overseeing all investment promotion activities. It houses a One Stop Investment Centre (OSIC) through which it acts as a liaison centre and helps foreign nationals or enterprises interface with twenty-seven (27) other government agencies like the Immigration Service, Corporate Affairs Commission (CAC), and the Securities and Exchange Commission (SEC).
Apart from incorporating a Nigerian company under CAMA, section 20(1) of the NIPC Act provides that a foreign investor intending to do business in Nigeria must also apply to the NIPC in the prescribed form for registration before commencing business operations.
However, the Business Facilitation (Miscellaneous Provisions) Act 2022 (BFA) has introduced an amendment to the NIPC Act by adding section 20 (3), which now permits enterprises registered in Nigeria who subsequently acquire foreign participation after commencing business to register with NIPC within three months of such acquisition – Part XV, section 54 BFA.
3. Registration with the National Office for Technology Acquisition and Promotion (NOTAP):
A foreign investor engaged in the transfer and acquisition of foreign technology in Nigeria is required under section 5 of the NOTAP Act to register contracts relating to the same with NOTAP. This is to be achieved through an application for which a Certificate of Approval may be issued or refused by the Director of the National Office.
Section 4(d) provides an extensive list of contracts registrable under the Act. The obligation to register such contracts rests on both the licensor and licensee of such technology. However, by virtue of section 7 of the NOTAP Act, we can conclude that failure to register does not render the contract invalid. The only effect is that repatriation of fees, royalties or profits by or on the authority of the Central Bank of Nigeria and other authorised dealers (banks) will not be permitted unless a certificate of registration accompanies the application to repatriate in respect of such contract.
4. Immigration Regulations, Approvals and Requirements for Foreign Investments in Nigeria.
The Ministry of Interior primarily regulates immigration in Nigeria through the Nigerian Immigration Service (NIS). These regulatory bodies have made extensive provisions on the requirements and processes a foreigner must fulfil before being allowed to enter and work or do business in Nigeria. First, such foreigners must obtain a Visa (excluding citizens of ECOWAS or countries having visa-free agreements with Nigeria), Expatriate quota, Residence Permit and Business permit.
Currently, the procedure is for an interested foreign investor to apply to the NIS, provide the required information/documents, and pay the necessary application fees. Once the Comptroller General of Immigration approves the application, the foreigner would be issued a Combined Expatriate Residence Permit and Aliens Card (CERPAC) and Expatriate Quota, which confers them with the authority to reside and do business in Nigeria. See sections 8-10 of the Immigration Act, 2015 and sections 11-12 of the Immigration Regulations, 2017.
Assurances of Ease of Business to Foreigners Under the NIPC Act
Certain assurances to aid ease of doing business have been provided for foreign investors under sections 25 – 26 of the NIPC Act, which provides that:
i. No enterprise shall be nationalized or expropriated by any Government of the Federation.
ii. There would be no acquisition of an enterprise by the Federal Government save for national interest or for a public purpose, in which case, there shall be payment of fair and adequate compensation without undue delay. The affected person shall also have the right of access to court to determine his interest and the amount of compensation to which he is entitled.
iii. No person who owns, wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other persons.
iv. There shall also be an effective dispute resolution mechanism guided by international precepts.
Nigeria has various investment opportunities and friendly foreign investment regulations and policies which have been implemented to attract investors and guarantee ease of doing business. A foreigner who intends to take advantage of these ample investment opportunities must, however, comply with the regulatory procedures and requirements explained above, amongst others.
Marvis Oduogu is a Team Lead at Stren & Blan Partners and supervises the Firm’s Taxation, Immigration, Labour and Employment Practice Groups. Ifeanyi Ezechukwu and Favour Etagbemukwe are Associates in the Firm’s Commercial Dispute Resolution, Taxation, Immigration, Labour and Employment Practice Groups.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners that provides thought leadership insight on business and legal matters.
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