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Investment Opportunities in Nigeria

The Federal Government of Nigeria has provided many investment opportunities in many sectors of business. The following are some of the priority areas identified by the Government. First find out about incorporating business in Nigeria.

  • Investment Incentives and Guarantees
  • Manufacturing
  • Incorporating a Business Enterprise & Legal Requirements
  • Mining and Mineral Resources
  • Principal Laws regulating Foreign Investments
  • Agriculture
  • Taxation
  • Banking and Finance
  • Nigeria Export Zones (EPZ)
  • Operating Licenses
  • Remittances

Incorporating a Business Enterprise & Legal Requirements

It is a legal requirement that all business enterprises must be registered with the Registrar-General of the Corporate Affairs Commission (Registrar of Companies). It is essential that a foreign investor wishing to set up business operation in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary. Business activities may be undertaken in Nigeria as a:

  • Private or Public limited liability company
  • Unlimited liability company; Company limited by guarantee;
  • Foreign Company (branch or subsidiary of foreign company)
  • Partnership/Firm;
  • Sole Proprietorship;
  • Incorporated trustees;
  • Representative office.

Some Notable Exemptions to the Legal Requirements

Where exemption from local incorporation is desired, a foreign company may apply in accordance with Section 56 of the Companies Act, to the National Council of Ministers for exemption from incorporating a local subsidiary if such foreign company belongs to one of the following categories:

  • Foreign Investment in Nigeria
  • Foreign companies invited to Nigeria by or with the approval of the Federal Government of Nigeria to execute any specific individual project;
  • Foreign companies which are in Nigeria for the execution of a specific individual loan project on behalf of a donor country or international organisation;
  • Foreign government-owned companies engaged solely in export promotion activities
  • Engineering consultants and technical experts engaged in 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 such contract has been approved by the Federal Government.

The application for exemption from disclosing certain details about the applicant is to be made to the Secretary of the Government of the Federation (SGF). If successful, the request of the applicant is granted upon such terms and conditions as the National Council of Ministers may deem fit.

Representative Offices

Foreign companies may set up representative offices in Nigeria. They only serve as promotional and liaison office. As a rule, a representative officer has to be registered with the Corporate Affairs Commission.

Principal Laws Regulating Foreign Investments in Nigeria

The principal laws regulating foreign investments in Nigeria are: The Nigerian Investment Promotion Commission Decree No. 16 of 1995 and the Foreign Exchange (Monitoring Miscellaneous Provisions) Decree No. 17 of 1995.


Deregulation of Equity Structure in Nigeria Enterprises

The Nigerian Enterprises Promotion (Repeal) Decree No.7 of 1995 has abolished any restrictions, in respect of the limits of foreign share holding, in Nigeria registered/domiciled enterprises. The only enterprises, which are still exempted from free and unrestrained foreign participation, are those involved in:

  • Production of arms and ammunition
  • Production of and dealing in narcotic drugs and psychotropic substances;


Provisions Relating to Investments

Notable amongst the provision relating to investments are the following:

  • A non-Nigerian may invest and participate in the operation of any enterprise in Nigeria;
  • An enterprise in which foreign participation is permitted, shall after its incorporation or registration, be registered with the NIPC.
  • A foreign enterprise may buy the shares of any Nigerian enterprise in any convertible foreign currency.
  • A foreign investor in an approved enterprise is guaranteed unconditional transferability of funds through an authorised dealer, in freely convertible currency of:
    • Dividends or profit (net of taxes) attributable to the investment
    • Payments in respect of loan servicing where a foreign loan has been obtained; and
    • The remittance of proceeds (net of all taxes) and other obligations in the event of sale of liquidation of the enterprise or any interest attributable to the investment.

Priority Areas of Investment

The NIPC issues guidelines and procedures, which specify priority areas for investments and prescribed incentives and benefits, which are in conformity with Government policy.


Incentives for Special Investment

For the purpose of promoting identified strategic or major investments, the NIPC may in consultation with appropriate Government agencies, negotiate specific incentive packages for the promotion of investment.


Investment Incentives and Guarantees

The Federal Government has made available tax holidays for pioneer companies-those producing for export, establishing new industries or expanding production in sectors vital to the economy. The Government also grants non-tax incentives to non-pioneer firms. In addition, the Government offers a number of general and industry-specific incentives.

General incentives

  • A debit-conversion programme allows foreign companies to obtain an enhanced exchange rate when they are injecting new equity into a production project that has been approved by the Central Bank of Nigeria (CBN).
  • Small and medium-scale industries are eligible for loans from the Bank of industry and other development banks.
  • The Raw Materials Research and Development Council provides grants for research and development that leads to the greater use of Nigerian raw materials in domestic industry.

Industry-specific incentives

  • Agro-industrial ventures benefit from a five-year tax holiday, an agricultural credit scheme guaranteed by the CBN, subsidised fertilisers and zero import duties on raw materials used to make livestock feed.

Nigeria Export Processing Zones

The Nigeria Export Processing Zones Authority was set up under the Nigeria Export Processing Zones Decree 63 of 1992.

The Authority has the mandate to grant all requisite permits and approvals for operators within the zones, to the exclusion of other government bodies and agencies.

Investment Procedures Within the Nigeria Export Processing Zones (EPZ)

Any company, person or group of persons wishing to carry out approved activity within a zone shall apply to the Nigerian Export Processing Zones Authority (NEPZA) using the prescribed forms and shall submit such documents and information in support of the applications. The forms shall specify the application fees and such other details as the Authority may stipulate from time to time. A feasibility study in respect of the investment project, which the applicant wishes to undertake in the zone, shall be attached as an annex to the application and shall contain the following among others:

  • Project description
  • Market survey
  • Funding proposals
  • Financial projections
  • Environmental impact statement and control measures

Application to undertake approved activity in the zone duly received, shall be considered by the Authority within 30 days of receipt and the Authority shall notify the applicant in writing of its decisions to grant the said approval or otherwise. The approval shall be subject to such terms and conditions as may be imposed by the Authority.

If the application is approved the investor may proceed to carry out the following:

  • Apply for company registration
  • If outright purchase of factory building is desired.
    • Payment of 10% deposit of the selling price of the standard factory building within 3 months of approval;
    • Payment of the balance 90%, 5 month after;
  • Renting of factory building
    • Down payment of one-year rent required not exceeding 3 months after signing the rental contract. Thereafter, rental charges shall be paid in the first quarter of every year.
  • Leasing the standard factory
    • Payment of 40% lease value on approval;
    • Payment of 30% at the end of the 5th year;
    • Payment of 30% balance at the end of the 10th year.
  • Leasing of serviced plots
    • Down payment of 40% on completion of factory building;
    • 30% at the end of the 5th year;
    • 30% at the end of the 10th year.

Construction must be completed within a period of one year, which can be extended for another 6 months. A plan of the building shall be submitted to the Authority for approval. The land lease contract shall be signed within 2 months after allocation of land. The area occupied by such building shall be between 60%-70% of the leased land and construction shall start within 3 months after signing the lease contract.

With condition(s) in (iii) fulfilled, the investor may proceed to carry out the following:

  • Remittance of Investment Capital through banks in the zone and notify the Authority on arrival.
  • When the factory building is ready, investor(s) may bring in machinery for installation and workers employed. Therefore, the Authority shall be required to carry out pre-inspection, and if found satisfactory, a certificate to commence production will be issued.
  • Companies intending to sell the permitted 25% of their total production in the domestic market will be required to notify the Authority for necessary documentation and payment of appropriate levies and charges as applicable.
  • The Company shall apply to the Authority for assessment of invested capital for later repatriation purposes. This is applicable to companies which are 100% foreign owned and those with part foreign equity participation only.

Investment Requirements

  • Industries must be guaranteed to be environmentally friendly.
  • At lease 75% of total products to be exported.
  • Maximum of 25% of products can be exported to the customs territory on payment of appropriate levies and duties.
  • Minimum investment capital outlay is 500,000 US Dollars or its Naira equivalent.

Types of Industries Permissible in Nigeria Export Processing Zones

  • Electrical and Electronic Products
  • Leather Products
  • Plastic Products
  • Petroleum Products
  • Rubber Products
  • Cosmetics
  • Garments
  • Chemical Products
  • Metal Products
  • Educational Materials and Equipment
  • Communication Equipment and Materials
  • Sports Equipment and Materials
  • Machinery
  • Handicraft
  • Optical Instruments and Appliances
  • Medical Kits and Instruments
  • Biscuits and Confectioneries
  • Printed Materials, Office Equipment and Appliances
  • Paper Materials-
  • Food Processing
  • Pharmaceutical Products


Areas of industrial investment which receive the bulk of government industrial incentives include:

  • Industries which can source their raw materials locally e.g. in the agro and agro-allied sub-sectors for which there are abundant natural resources in Nigeria, including food preparation, e.g. fruit drinks, cereal milling, feed mills and vegetable oil processing;
  • Industries, which support food production programmes through local manufacture of chemicals, equipment and light commercial vehicles in particular, and chemicals as well as petrochemical-based manufacturing industries in general;
  • Industries with multiplier effects such as flat sheet mills and machines tools industry including foundries and engineering industries for spare parts.
  • Petrochemical and liquefied natural gas projects;
  • Investment in research institutes particularly in the area of adaptive research and commercialisation of local inventions;
  • Foundry and forges;
  • Metal fabrication;
  • Pharmaceutical;
  • Food processing;
  • Leather and leather products;
  • Textiles and wearing apparel;
  • Non-metallic building materials, e.g. bricks, ceramics and glass.

Mining and Mineral Processing

This sector offers tremendous opportunities for interested investors. The Federal Government of Nigeria welcomes investor in the following areas:

  • Coal
  • Gemstone cutting and polishing;
  • Gold processing;
  • Mineral benefaction plants for gypsum talc, kaolin, marble, dolomite, ryte;
  • Mini-sugar production;
  • Lead and zinc;
  • Refractory bricks;
  • Processing of salt from sea water;
  • Small and medium-scale plant for sheet metal production;-
  • Bottled mineral water;
  • Mining of industrial minerals;
  • Telecommunications.

Operating Licenses

Certain enterprises require approvals and/or licenses to operate whether they are owned by Nigerians or not. Examples of the sectors where licenses are needed are banking where a:

  • Central Bank of Nigeria license is needed
  • Insurance where a license from the National Insurance Commission is required,
  • The oil sector where Department of Petroleum Resources licenses are needed
  • The telecommunications sector where licenses from the Nigerian Communications Commission are needed.

The detailed regulations identifying the various licenses available and stating what is required to obtain each of them are numerous. It is therefore important to check with the relevant body.



The old and cumbersome, restrictive exchange control laws have been repealed by the Government. Foreign investors are free to bring in capital for investment, and they are free to repatriate both the income and capital proceeds on such capital.

Monies brought in or taken out may be so dealt with under either of two schemes:

The Autonomous (now interbank) Foreign Exchange Market (AFEM), a relatively free market in which both the Central Bank of Nigeria (CBN) and the Authorised Dealers participate as traders.
Debt Conversion Programme (DCP). Under this scheme the foreign investor buys Nigeria debt stock with hard currency and then sells the stock to the CBN in return for naira to be invested in Nigeria. The CBN benefits by getting Nigeria’s foreign debt stock reduced, and the foreign investor gets an exchange rate better than available on the AFEM. For details visit CBN website


Companies income tax rate is 30%. There is an additional education tax of 2% on the income of companies. Withholding tax of 5% is chargeable on unearned income. For foreign investors, the 10% withholding tax on dividends is the final tax on dividends. The top personal income tax rate is 25%.

Value added tax (VAT) is chargeable on goods and services at 5%. The Capital Gains Tax rate is 10%, and shares in companies are exempt from capital gains tax. This is a very significant tax relief for investors. Stamp duty is chargeable on various documents at various flat and ad valorem rates, depending on the nature of the instrument, up to a maximum of 2% of the value involved. There are Pay-As-You-Earn income tax regulations, and various social insurance-type contributions are compulsory.

There are also a tax holiday and tax allowance incentives for investors. For example, tax holidays for up to five years may be granted to investors in the manufacturing and gas utilisation sectors. Companies operating in Nigeria’s export processing zones are exempted from all taxes including both import and export duties.

Further, import duty relief may be obtained on certain machinery, and there are tax allowances for using local raw materials in manufacturing, being a labour-incentive (and therefore employment-generating) business, expenditure on training, infrastructure, research and development and in economically disadvantaged areas.


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