By Patrick C Abuka

Investing in Nigeria is governed primarily by federal statutes, the most important of which are: (1) the Nigerian Investment Promotion Commission Decree No.16, 1995; (2) the Immigration Act, Cap 171, (3) the Foreign Exchange (Monitoring & Miscellaneous Provisions) Decree No. 17, 1995; (4) the Companies and Allied Matters Act, Cap 59; (5) the Companies Income Tax Act, Cap 60.

Since the repeal of the Nigerian Enterprises Promotion Decree and promulgation of the Nigerian Investment Promotion Commission Decree ("NIPCD") in 1995, a non-Nigerian may now freely invest and participate in the operation of any enterprise in Nigeria, except in petroleum enterprises. Other excepted areas are businesses contained in the "negative list", which are prohibited to both foreign and Nigerian investors alike. They include the production of arms, ammunition, etc., production of and dealing in narcotic drugs and substances, production of military and parliamentary wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services. Subject to the above, foreign investors may wholly own any enterprise, or enter into joint ventures with Nigerians. Sections 17 and 18 of the NIPCD refer.

Section 21 NIPCD provides that a foreign enterprise may buy the shares of any Nigerian enterprise in any convertible foreign currency through the Nigerian Stock Exchange.

Section 24 provides investment guarantees regarding transfer of capital, profits and dividends. It provides that a foreign investor in an enterprise is guaranteed unconditional transferability of funds through an authorised dealer, in freely convertible currency of: dividends or profits (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 a sale or liquidation of the enterprise or any interest attributable to the investment.

There are guarantees against expropriation under section 25. No enterprise shall be nationalised or expropriated by any Government of the Federation; and no person who owns, whether wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person.

By section 25(2), there can be no acquisition of an enterprise by the Federal Government unless the acquisition is in the national interest or for a public purpose and under a law which makes provision for payment of fair and adequate compensation; and a right of access to the courts for the determination of the investor's interest or right and the amount of compensation to which he is entitled. Any compensation payable shall be paid without undue delay, and authorisation for its repatriation in convertible currency shall, where applicable, be issued.

In its current budget, Government declared its belief in the philosophy of a market driven economy, and is pursuing a policy of deregulation and liberalisation of the economy. To this e end, Government has clearly stated that it welcomed private sector competition with commercialised government ventures. It welcomes investments in areas of telecommunications, electricity generation, exploration of petroleum section, export refineries, can and bitumen exploration, hotel and tourism, in addition to other areas. Government is prepared to enter into investment protection agreement with foreign governments or private organisation wishing to invest in Nigeria. The laws that inhibit competition in all the sectors of the economy are being identified and repealed.

This article is intended to provide a general guide to the subject matter and should NOT be treated as legal advice. Specific legal advice should be sought by you about your particular case and special circumstances.

For further information/enquiries, please contact Patrick Abuka on Tel: (234)1-263 4656, 1-263 3024, 1-263 1708, 1-263 3512, 1-263 5115, 1-263 4553 or Fax No: (234) 1-263 1687, 1-263 5189

You may also wish to read through related material on 'Legal Aspects of Investing in Nigeria' provided by Abuka, Ajegbo, Ilogu & Nwaogu. You can view the entire archive via the Internet on Business Monitor Online (, or via your online provider by entering "Abuka, Ajegbo, Ilogu & Nwaogu" and "Business Monitor" as a free text search.