Author: O. M. Atoyebi S.A.N FCIArb. (U.K.)., Contributor: JOY AYARA
Nigeria, the most populated African country also popularly known as the ‘Giant of Africa’, with a population of over 218 million and a land mass of 351,650 sq. miles, has over the years been the hub for investment by many foreign companies. The World Bank’s publication, ‘Doing Business 2020’, has also ranked Nigeria 73 out of 190 on enforcement of contracts, a significant improvement from previous years. Nigeria has experienced an influx of foreign investors due to its large population and vast land which serves as the targeted market and site for the products offered by these investors. Similarly, a foreigner must meet a minimum standard to participate in Nigeria’s economy.
This article will explain the requirements and process for a foreigner to participate in Nigeria’s economic sector.
Nigeria Foreign Policy
The promulgation of the Nigerian Investment Promotion Decree of 1995 and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree, can be said to be the deliberate efforts made by the then-Nigerian government to encourage foreign investors to invest in Nigeria’s economy. These and a plethora of legislations like the Investment and Securities Act, Central Bank of Nigeria Act, Nigerian Investment and Promotion Commission Act, Immigration Act, Companies and Allied Matters Act, etc. regulate the Nigerian foreign participation space. Today, a foreigner can now carry on business in Nigeria alone or partner with another foreigner or Nigerian citizen in any business sector except businesses listed in the negative list. They are;
Also, incentives have been provided by the Nigerian government to encourage foreign participation, they are;
Registration and Exemption from Registration of a Foreign Company
For a person to legally carry on business in Nigeria as a foreigner, such a person must take steps to obtain an incorporation status as a separate legal entity in Nigeria. Until its incorporation, such a person is not permitted to carry on business in Nigeria or have any right or benefits of a registered company nor have a place of business and address for service of documents or processes.
The requirement of registration does not apply to companies that are exempted under the Companies and Allied Matters Act (CAMA) or exempted under any treaty to which Nigeria is a party. The categories of companies exempted from registration under CAMA are:
For a foreign company to enjoy the status of an exempted company in Nigeria, it must apply to the Minister of Trade and Investment and provide the following information;
Upon receiving an application for exemption, the Minister, if he believes that the circumstances warrant it, may exempt the foreign company from registration obligations, subject to such conditions as he may prescribe. Every exemption granted by the Minister is for a specific period of time or the time required to complete the specified project. The Minister must publish such exemption in the Federal Government Gazette, and the publication must clearly state the period of exemption or the specified projects for which the exemption is granted. The Minister also has the power to revoke at any time, any exemption granted if he believes that such a company has contravened any provision of CAMA or has failed to meet any condition stipulated in the exemption order.
An exempted company is under the obligation to deliver to the Corporate Affairs Commission (CAC) every calendar year, a report in the prescribed form. Failure to do this will subject the company to such penalty as CAC may specify by its regulation.
Classification of Foreign Participation
Aside from participating in Nigeria’s economy as an exempted company, there are two recognized classifications of foreign participation in Nigeria.
Foreign Direct Investment
This is the direct investment by foreign investors who invest in Nigeria by establishing a company for that purpose. Upon registration, such a company enjoys all the rights of a registered company in Nigeria. Below are the procedures for foreign direct investment. This can be in the form of starting a new company or establishing a branch or subsidiary of an existing foreign company.
This is the purchase of shares of existing Nigerian companies whether private or public. This is done by foreign currency being imported through an authorized dealer usually a bank or non-banking organization appointed by the Central Bank of Nigeria and converted to Naira at the official exchange rate. Below are the procedures for portfolio investment;
Since the independence of Nigeria and the enactment of policies to promote foreign participation, Nigeria has seen the emergence of several foreign companies, especially in the oil and gas sector, import and export, management and consulting, etc. consequently, this has increased the employment and economic development, provided for human resource development, improve capital flow, create a competitive market, etc.
World Meters ‘Nigerian live population’ https://www.worldometers.info/world-population/nigeria-population/ <accessed 12/12/2022>
 2021 Investment Climate Statements: Nigeria https://www.state.gov/reports/2021-investment-climate-statements/nigeria/ <accessed 12/12/2022>
 Section 18 NIPC Act
 Section 24 NIPC Act
 Section 25 NIPC Act.
 Section 26 NIPC Act.
 Section 80 (1) Companies and Allied Matters Act 2020
 Section 80 (2) Companies and Allied Matters Act 2020
 Section 80 (3) Companies and Allied Matters Act 2020
 Section 80 (4) Companies and Allied Matters Act 2020
 Section80 (6) Companies and Allied Matters Act 2020
 Section 80 (5) Companies and Allied Matters Act 2020