Nigeria is the top recipient of FDI in Africa with GDP rate that averaged more than 5% over the last decade. This followed a deliberate attempt by government to liberalize the business environment to accommodate the private sector as the engine of growth while government remains the enabler. This is in addition to an attempt to diversify the economy to accommodate critical non oil sectors with FDI as the major source.


The primary legislation governing investments in Nigeria is the NIPC Act No. 16 of 1995, with other supportive laws and policies jointly ensure a sustainable conducive business environment, enhanced periodic reform of the economy by the FGN. Nigeria needed an agency to market its attractions and create a one-stop-shop to smooth the pathway for incoming investors.


The NIPC Act:

  •  Repealed series of hitherto laws that imposed strict control on foreign investment. Notably: the Industrial Development Coordination Committee Decree No. 36 of 1988 and the Nigerian Enterprise Promotion Decree of 1972
  •  Establishes the legal foundation for a very liberal and open investment framework. It is a cross-sectoral legislation that aims to encourage inflow of foreign investments in all sectors of the economy.
  • Allows foreigners to invest and participate in the operation of any Nigerian enterprise without any restriction
  •  Allows 100% foreign ownership of firms. However, in the oil and gas sector, investment stays limited to joint ventures or production-sharing agreements.
  • Allows repatriation of profits/dividends to home country in any convertible currency


Other Legislations:

  • Foreign Exchange Monitoring and Miscellaneous Provision Act (FEMMP)
  • Complementary to the NIPC Act as it eased restrictions in foreign exchange dealings and creates an autonomous Foreign Exchange Market.
  • Repealed the Exchange Control Act No. 16 of 1962 that imposed significant restrictions on exchange transactions
  • Enables funds transfer without prior approval
  • Opened up the Nigerian capital market to foreign portfolio investment: any foreign exchange purchased from the Market may be repatriated from Nigeria without hindrance
  • Foreigners are thus allowed to invest in, acquire, dispose of, create or transfer any interest in securities and other money market instrument in foreign or local currency


Companies and Allied Matters Act (CAMA):

  • Requires prospective investors in Nigeria to register with the Corporate Affairs Commission (CAC), under various forms of companies: public or private liability company, etc.
  • Establishment of companies in Nigeria
  • The establishment of all enterprises in Nigeria is governed by the provisions of the Companies and Allied Matters Act (CAMA). The Corporate Affairs Commission (CAC) that executes the Act continuously initiates reforms to address the inefficiency in the system, especially the registration process through the implementation of an electronic registration system; reduce cost; and eliminate requirement for a qualified solicitor to act as an agent to fulfil all registration formalities for SMEs.

Incorporation/Registration

  • Incorporation with Corporate Affairs Commission (CAC): Prospective investors in Nigeria must register with the CAC, under various forms of companies: enterprise, public or private liability company etc.
  • Registration with Nigerian Investment Promotion Commission (NIPC): an enterprise in which there is foreign equity participation is required by law to register with NIPC after incorporation to benefit from investment incentives and other facilitation services
  • Registration with Federal Inland Revenue Service (FIRS)

Operating Licenses /Permits

  • Banking and Finance - License from the Central Bank of Nigeria.
  • Solid Minerals –License from Ministry of Mines & Steel Development.
  • Power generation and distribution - license from Nigerian Energy Regulatory Commission (NERC) (as the regulatory agency).
  •  Information Communication Technology (ICT) - License from Nigerian Information Technology Development Agency (NITDA) or Nigerian Communication Commission (NCC).
  •  Food and Pharmaceuticals –License from National Food and Drug Administration and CManufacturing companies - SONCAP Certification for its products from the Standard Organization of Nigeria (SON).
  •  Investment in enlisted activities – register with Securities and Exchange Commission (SEC) etc.

Minimal Sectoral restrictions

  • Activities considered crucial to national security exists that restrict participation to domestic investors who have to obtain security clearance to embark on such ventures. These are firearms, ammunition, military and paramilitary apparel and psychotropic substances.
  • The Nigerian Oil and Gas Industry Content Development Act 2010, establishes specific rules on local content requirement to apply to the oil and gas sector.
  • Section 34-I of the Public Procurement Act supports a margin of preference for locally manufactured goods during public procurement.
  • Activities covered under the Coastal and Inland Shipping (Cabotage) Act No 5 of 2003 are also subject to specific sectoral restrictions.
  • Outside of the oil and gas sector, there is no restriction on key personnel employment.
  • There is no de jure minimum capital requirement for foreign investors, but investment with foreign equity participation must in practice be of a ten million naira minimum share capital.


Legal protection/guarantee of investment in the NIPC Act
The NIPC Act is an investment protection legislation, which provides important guarantees that investors consider as a prerequisite condition before taking the decision to invest.

  • Protects against unlawful expropriation, and gives a guarantee of free transfer of funds. In the event of a dispute arising between a foreign investor and the government, the Act also opens access to international arbitration forums.
  •  Grants judicial determination of the amount of compensation to which the investor is entitled in accordance with international standards.
  • Sets out the basic principles of a non-discriminatory access to both foreign and domestic investors, although it does not explicitly embody the principle of National Treatment.


Dispute settlement provision
NIPC Act also contains a dispute settlement clause that governs disputes arising between the authorities and both domestic and foreign investors. By virtue of Article 26 of the Act, investors have the right to resort to conciliation and arbitration to settle any investment dispute against the Nigerian authorities.
Ratification of Bilateral International Trade (BIT)
The Federal Ministry of Justice has renewed efforts to ratify concluded BIT with partner countries so as to give those treaties full legal rights. This will add additional layer of protection for foreign investors and lower the perceived political risk of investing in Nigeria.
Protection of Intellectual Property (IP) rights


Nigeria has developed a fairly comprehensive, legal framework for protecting intellectual property rights. Intellectual property rights give businesses an incentive to invest in research and development and ultimately lead to the creation of innovative products. This is in addition to providing holders of right with the necessary confidence to share new technologies including in the context of joint ventures.


Tax Incentives
The Federal government is in the process of streamlining tax incentives to improve governance and transparency and ultimately improve the investment climate. Currently, the investment incentives are managed by various MDAs.  The Federal Inland Revenue Service (FIRS) has rolled out ITAS online filing system that ensures transparency, eliminates corruption and instils efficiency in the tax administration.
Some fiscal incentives offered to investors include:
o    Pioneer Status (Tax Holiday) incentiveis administered by NIPC in collaboration with the Industrial Inspectorate Department of Federal Ministry of Industry Trade and Investment(FMITI) and the Federal Inland Revenue Service (FIRS).  
o    All other forms of incentives: For all other forms of incentives, firms apply for qualification to relevantMDAs, and MDAs obtain approval from the FMF. They include among others:

  • Very low VAT regime – 5%
  • I Investment in Infrastructure – 20% of cost per annum for 5 years
  • Research & Development – use of local inputs – 140%
  •  Minimum local raw materials utilization – 20% for 5 years
  • Attractive Capital Allowance for Specified activities  

Other Incentives
Registering property and access to land
The constraint around access to land is being addressed by government through greater synergy between the NIPC and state governments to remove corruption, reduce land and property fees and procedures.

Free Trade Zones/EPZ
The zones provide common infrastructures facilities and special incentives to attract investments
Strong Financial Reporting Standards
The Financial Reporting Council of Nigeria has developed a national Code of Corporate Governance
The Capital Market
The Nigerian capital market has been opened to foreign portfolio investment. Foreigners can invest, acquire, dispose of, create or transfer any interest in securities and other market instruments either in foreign or local currency.

VITAL CONTACT

  • The Executive Secretary/CEO,

Nigerian Investment Promotion Commission (NIPC)
Plot 1181, Aguiyi-Ironsi Street,
Maitama, Abuja, Nigeria
Tel: +234 (09) 2904882, +234 - 704 6346232
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.nipc.gov.ng