Why is Nigeria an important market?
Nigeria is Africa’s most populous country with a population of 150 million. This makes one in every six Africans a Nigerian. It is also one of the largest oil producer on the continent creating huge inflows of foreign income. Without question it holds enormous commercial potential as recent administrations have focused on developing the non-oil economy and tackling corruption and red tape. The explosion of industries such as the mobile telecoms market and the unparalleled success of foreign companies such as South Africa’s MTN have also demonstrated that potential can be turned into reality. Despite persistent problems of corruption and bureaucracy the international business community increasingly sees Nigeria as the central driver of a vast African market that remains the last under-developed commercial market in the world.
How do I set up a company in Nigeria?
There is no restriction on foreign nationals or foreign entities doing business in Nigeria, however, they must incorporate a local vehicle before commencing business. Companies are set-up through and regulated by the Corporate Affairs Commission. The local entity must then register with the Nigerian Investment Promotion Commission (NIPC) before commencing business. It is possible for a foreign entity to appoint a local qualified solicitor to act as the agent who may hold shares in the local entity on appointment by the principal. Once all registration formalities are complete the power of attorney of the appointed solicitor should then lapse and the principal takes over.
Contacts for setting up a business in Nigeria:
What incentives are there for investing in Nigeria?
The Nigerian government has created numerous incentives to try and increase foreign direct investment to Nigeria. Go to our incentives section and search by sector for the pertinent incentives.
Is Nigeria a dangerous country?
Nigeria is a huge country with a turbulent political history. Despite being constitutionally stable since 1999, political power still affords opportunity for huge influence and wealth and therefore remains an intensely competitive arena where political positions can be a matter of life and death; however, contrary to popular opinion the country for the average business visitor is certainly no more dangerous than most African countries and substantially safer than many. Violent crime does exist but the vast majority of visitors have a safe and crime free experience.
The spate of kidnappings in the last few years have almost exclusively been limited to the area known as the Niger Delta where specific political tensions have spilled over and threatened the civilian and in particular the foreign worker population.
The Niger Delta is a vast area of creeks and waterways in the far south of the country where Nigeria’s oil industry is based. Most kidnappings have taken place in remote locations but more recently the region’s major city Port Harcourt has seen a number of incidents. While it is little comfort that the vast majority of these kidnapping have ended without the victims being harmed, the underlying cause of the political crisis is the extent to which the people of the Niger Delta have been amongst the most marginalised in Nigerian society despite the region being the source of Nigeria’s staggering oil revenues. Kidnappings are seen as the most effective weapon in bringing international awareness to the region’s problems and bringing pressure to bear on the Federal Nigerian Government to ensure a more equitable deal for the Delta’s indigenous population.
The other most common cause of trouble in Nigeria has been religious tensions in the north of the country. Nigeria is broadly split into a sectarian and Christian south and Muslim north. Some of the northern Nigerian States are even run on Sharia Law. From time to time clashes between different religious communities spill into violence but such incidences tend to be very localised and centred on specific issues. For example the hosting of Miss World in Nigeria triggered violent protests in northern cities killing scores of people.
By far the most dangerous aspect of travelling in Nigeria is driving. The country has a horrendously high accident rate due to the poor quality of the roads, the poor repair of vehicles and poor standards of driving. Most business visitors will spend their time in either Lagos (the commercial centre) or Abuja (capital). The country operates a substantial airport network and those travelling further afield will nearly always fly to local destinations. Should your visit require substantial road travel outside the main cities (and this should be avoided if possible) then it is essential to ensure you are provided high quality vehicles and recommended drivers.
Will I have to pay bribes to get anything done?
Categorically untrue. Yes, corruption is a major problem in Nigeria. It has been an endemic and institutional problem for many years but the common held assumption that you can’t do successful business without offering bribes is wholly untrue. Millions of Nigerians in the public and private sector every day execute their jobs without contemplating soliciting bribes. Never offer bribes and never agree to them. If anyone indicates they would like something in return just politely ignore the request or, if appropriate, suggest a genuine commercial incentive.
How do I find a reliable and honest business partner?
Getting a local business partner in Nigeria is highly recommended but finding the right partner is critical. Your biggest risk will not be ending up with a fraudulent partner but an ineffectual one – the same risk as you would find in any other country. Make sure potential business partners come recommended by someone you know and trust. Do proper research into the people and companies that you are dealing with and be sensible and cautious in making decisions. Your local Nigerian Trade Commission and the Nigerian Investment Promotion Council both offer screening services to validate the authenticity of companies.
What about ‘419’ email and fax scams? Should I avoid giving email or other contact details?
Absolutely not. There is no more danger in disclosing your email address in Nigeria as there is anywhere else in the world. People who fall victim to 419 scams do so because they fail to recognise simple and obvious warning signals.
These are the golden rules:
1. Never respond to unsolicited emails or faxes suggesting financial reward for providing assistance.
2. Never respond to unsolicited emails requesting money or spurious assistance.
3. Never send money on the promise of receiving money.
4. Never send money back to someone who has sent you money by cheque.
5. Always ensure your bank authenticates the source and clearance of any funds received.
6. If a business proposal looks too good to be true, it probably is!
None of the above should make you nervous or suspicious about doing business in Nigeria. Millions of people every day interact by email with genuine Nigerian businesses and conclude genuine business deals. Just be vigilant and sensible.
Doing Business in Nigeria – the summary guidelines:
1. Authenticate potential business partners through official channels or people you know.
2. Never pay bribes.
3. Foreigners shouldn’t travel in the Niger Delta without sufficient security organised by your hosts.
4. Be patient – establishing long-term relationships and mutual trust are the key to success in Nigeria.
5. Avoid inter-state road travel if possible. Virgin Nigeria and Arik Air are recommended for internal air travel around Nigeria.
6. Be aware of religious sensitivities â€“ particularly in the north.
7. Go to Nigeria and meet your partners. Don’t expect success without making the effort to establish proper relationships.