Nigeria remains a compelling destination for foreign direct investment in 2025. With its population of over 200 million, abundant natural resources, and a growing technology and services sector, the country offers significant business opportunities across industries—from fintech and logistics to manufacturing, infrastructure, and real estate.
However, Nigeria's regulatory and legal landscape is complex, multi-layered, and often misunderstood by newcomers. At The Trusted Advisors, we routinely guide international clients through the process of entering and operating within Nigeria's business environment. This article outlines the legal considerations every foreign investor should understand before launching or expanding a business in Nigeria.
1. Choosing the Right Business Structure
The most common and suitable structure for foreign-owned businesses is the Private Company Limited by Shares (Ltd), which allows for 100% foreign ownership under Nigerian law. Other structures, such as partnerships or public limited companies, may apply in certain industries or for joint venture models.
Setting up a private limited company involves registration with the Corporate Affairs Commission (CAC), followed by obtaining statutory documents such as:
- Certificate of Incorporation
- Memorandum & Articles of Association
- Tax Identification Number (TIN)
While the CAC has embraced digital registration, foreign investors often benefit from engaging local counsel to navigate name reservations, documentation requirements, and post-incorporation filings efficiently.
Also Read: Doing Business in Nigeria: What Investors Must Know About Nigeria's FDI Environment
2. Sector-Specific Licensing & Regulatory Approvals
Merely incorporating a company does not authorize business in regulated sectors. Depending on the nature of your operations, you may need one or more approvals from relevant regulators:
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Failure to secure the right licenses can result in fines, shutdown orders, or denial of repatriation rights.
3. Capital Repatriation & Tax Considerations
A key concern for foreign investors is the ability to repatriate capital and profits. Nigeria permits this through official channels under certain conditions:
- Certificate of Capital Importation (CCI): Issued by a commercial bank and endorsed by the Central Bank of Nigeria (CBN), this document proves that investment funds came into Nigeria legally. It is a prerequisite for dividend/profit repatriation and loan repayment in foreign currency.
- Tax Compliance:
- Company Income Tax (CIT) – 30% (or 20% for SMEs)
- Withholding Tax – 5% to 10% on dividends, interest, royalties
- Value Added Tax (VAT) – 7.5%
- Other levies may apply at the state or local government level
Strategic tax planning, especially in the context of cross-border structures, can significantly reduce exposure and ensure compliance.
4. Immigration and Employment Regulations
Setting up local operations may require foreign personnel. Key immigration steps include:
- Business Permit from the Ministry of Interior
- Expatriate Quota Approvals
- Combined Expatriate Residence Permit and Alien Card (CERPAC) for individual employees
At the same time, companies must comply with Nigerian labour laws, which regulate employment contracts, termination rights, minimum wage, and statutory contributions (e.g., pension, health insurance, and industrial training).
A well-drafted employment contract and an employee handbook tailored to Nigerian law are essential to managing your workforce risk.
5. Contracting and Legal Risk Management
Whether leasing property, engaging vendors, or entering a joint venture, you must ensure your contracts are:
- Legally enforceable in Nigeria
- Clear on jurisdiction, dispute resolution mechanisms, and governing law
- Reviewed in light of statutory protections, such as the Investments and Securities Act or the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act
We advise clients to prioritize risk allocation in commercial agreements, IP protection, and exit clauses, especially when dealing with unfamiliar partners or markets.
6. Dispute Resolution: Courts or Arbitration?
Nigeria recognizes both litigation and alternative dispute resolution (ADR) mechanisms. In cross-border arrangements, arbitration is often preferred due to:
- Neutrality
- Speed and confidentiality
- Recognition under the New York Convention (to which Nigeria is a signatory)
The Trusted Advisors provides strategic advice on drafting effective dispute resolution clauses tailored to your commercial realities and enforcement concerns.
Conclusion: The Value of Local Counsel
Navigating Nigeria's legal terrain requires more than general knowledge. It demands local insight, regulatory awareness, and a practical, deal-oriented approach.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
