In the discourse as to the future and growth of the African continent, Nigeria has remained a permanent player amongst other African countries. Accounting for the largest population in Africa, it also uniquely boasts of being the largest economy on the continent. A true outlook on the Nigerian economy brings to the fore its diverse economy despite its heavy reliance on Oil and Gas revenue as a source of income. The country is blessed with an abundance of natural resources with its re-emergent manufacturing sector earmarked as the largest in the continent since 2013 as it produces a large proportion of goods and services for the West African subcontinent, the rise of its technology, real estate, and other diverse industries, it is evident that Nigeria is truly the giant of Africa in many respects. Having drawn the important role Nigeria plays in the economic and developmental growth in Africa, this article seeks to examine the road map, the steps to successfully doing business in Nigeria, while also highlighting challenges potential investors may face and proposing solutions to the same.

The Nigerian Business Landscape

Over the years, Nigeria has made consistent efforts to ensure that she remains a haven for investors: from Executive Orders to policies geared at placing Nigeria on the world map as a lucrative location to do business. It is in this same vein that the Presidential Enabling Business Environment Council (PEBEC) was inaugurated in July 2016 by the President . The council was charged among other tasks to move the country upwards on the ranking of World Bank’s Ease of Doing Business, to eliminate bottlenecks and bureaucratic constraints that limit and frustrate investors from freely engaging in business. The ultimate goal is to make doing business in Nigeria seamless and progressive, this would in turn help build the economy. Nigeria is uniquely positioned to be a favourable investment spot and this can be linked to the following factors:

1. High Population Growth: According to World Bank Data on the world population, Nigeria has an estimate of 202 million people and is projected to even expand further. With a large population comes the discourse as to the ability of the country to provide for the teeming population which mostly comprise of youths. Nigeria has ranked low in this respect. Manufacturing power, the existence of industries and enterprises that can match the needs and demands of her population has also not been able to cater to the massive population growing at a large rate. This uniquely poses a great opportunity for businesses to thrive in meeting the needs of the teeming population with diverse demands ranging from food, shelter, energy, transportation, labour market, etc., the list is limitless. Providing solutions to these needs assures the business of success and profitability.
2. Growing Economy: Nigeria is currently one of the largest free-market economies in Africa. Despite the recession, her economy has steadily increased with real GDP experiencing an increase of 7% per annum. While the country relies heavily on the oil and gas sector as its source of revenue, the non-oil and gas sector has been the force behind the growth of the GDP. The sector provided a 1.55% growth in the first quarter of 2020. From the Bureau’s report , this recorded growth was driven mainly by the Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction.
   The economy is thus diversifying and is becoming more service-oriented, in particular through retail and wholesale trade, real estate, information, and communication.
3. Untapped Resources: As severally stated throughout this article, the Nigerian economy relies largely on oil and gas for its revenue. However, there remains a largely untapped well of resources both natural and human resources.
4. Increasing Consumer Base: Young persons under the age of 25 accounts for a large percent of the Nigerian population with the middle class steadily growing and currently accounting for 23% of the population. This rapid growth creates a gap that the government is not currently equipped to fill. Private investing in the country’s sectors would prove profitable; there is a large market for products and innovative services.

Factors To Consider When Doing Business

There are multiple factors to consider when deciding whether to invest in a country’s business climate or otherwise. Making the choice to invest in a country must come with careful considerations as some of these issues may aid the growth of the business thereby proving favourable or may very well lead to a loss for a potential investor. Thus, it is usually of great importance to conduct thorough due diligence taking into consideration amongst other issues:

1. Legal and Regulatory Framework governing doing business
2. Requisite licenses to be obtained
3. Dispute Resolution
4. Tax Implications

We would then examine each factor as outlined above with the aim of having provided a clear and direct path for potential investors to consider in deciding to start up a business in Nigeria.

1. 1. Legal and Regulatory Framework: The Company and Allied Matters Act governs the business regime and is the reference for the setting up, running and eventual wind up of a business. It provides for steps to take in the incorporation of a company. It also outlines the different types of company and their features, eligibility, the process for registration and rules for operation, this would aid a potential investor in deciding what suitable type to adopt as a vehicle for his investment. The Act also serves as the enabling law for the regulatory body for companies; the Corporate Affairs Commission (CAC). The commission regulates the activities of companies. The Act essentially recognizes the existence of the following business structures:
      
      • Registered Business Name
      • Company Limited by Shares
      • Company Limited by Guarantee
      • Unlimited Company
      • Incorporated Trustees.

Each with its separate features and mode of operation as stipulated under the Act. There are however some similarities/ features that should be highlighted:

• • a company may either be public or private, which then determines the minimum share capital and membership it may take to incorporate the same. A beautiful feature of the company registration system is that the required minimum capital which may be NGN10,000 in the case of a private company or NGN500,000 in the case of a public company need not be paid into an account or to anyone. It is merely a requirement thus, it is referred to as issued share capital.
  • All business organisations as outlined above asides from the Incorporated Trustee require a minimum of 2 persons to be formed. These persons must have attained a minimum of 18 years of age.
  • Although largely different in the documentation required for incorporation, below are a few documents that cut across all companies and organisations:

• • Memorandum and Articles of Association
  • CAC Forms which may differ depending on the choice of organization.
  • Proficiency certificate (where applicable)
  • Means of identification which may be a passport, drivers’ license or National Identity, Card
  • Foreign Certificate of Incorporation and Board resolution for subscription to Nigerian company where a foreign person or entity is involved
  • Residence permit of resident foreigners if foreigners are involved in the process.
  • Evidence of payment to CAC of all fees as is contained on the CAC online platform. It is however important to note that fees to be paid for incorporation are dependent on the volume of shares to be registered as at incorporation.

Other regulatory bodies oversee different aspects of the incorporation of a business organization such as the: National Investment Promotion Commission which was established by the Nigerian Investment Promotion Commission (NIPC) Act. The commission aims to regulate the participation of foreign businesses in the country. The Act provides for foreign nationals acquiring as much as a 100% equity and exercises freedom in undertaking any kind of business in Nigeria save those related to the production of arms, ammunition, narcotics, and related substances and any items indicated on the negative list as defined by the Section 31 of the Act. Section 20 of the Act further stipulates that all enterprises in which foreign participation is existent must apply to the Commission for business registration.

2. Obtaining Requisite Permits and Licenses: Some business organisations require obtaining certain permits and licenses before resuming operations. This is mostly obtainable with foreign participation in businesses. A foreigner seeking to engage in business in Nigeria must obtain a business permit from the Ministry of Interior which grants him/her the freedom to engage in business as provided by the permit. This however does not obviate the requirement of obtaining an Expatriate Quota from the Nigerian Immigration Service. The Immigration Act precludes any person other than a Nigerian citizen from accepting employment without the express consent in writing of the Minister of Interior. This becomes necessary for a company seeking to involve foreigners in the running or membership of the business whether permanently as a business owner or temporary as an employee.The Immigration Service also issues the Combined Expatriate Residence Permit and Aliens Card (CERPAC). This permit aims to grant access to foreigners seeking to work in Nigeria a valid residence/work permit. The permit entitles the holder to live and work in Nigeria. There are other licenses which may be sector-driven that would need to be obtained depending on the sector focus of the business. It is advised that a potential investor visit the One-Stop Investment Center (OSIC) set up under the auspices of the National Investment Promotion Commission (NIPC). The center affords a spread approach to the questions or queries a potential investor may have as it serves as a base for all the agencies that may be needed in the setting up and doing business in Nigeria.
3. Dispute Resolution
   The Nigerian legal system derives its source from the English Common Law which has been largely modified through statutes but still features in application in instances where there exists a lacuna in the local laws/ statutes applicable. Other sources include the Nigerian Customary Law and Islamic Law. The legal system has a firm hierarchical court system starting with the highest court in the land; the Supreme Court which as provided by the Nigerian Constitution holds an original and appellate jurisdiction over civil and criminal matters. The Court of Appeal follows next which in its jurisdiction entertains appeals from the National Industrial Court, Federal and State High Courts, Sharia Courts of Appeal and Customary Courts of Appeal. The Federal High Court sits over matters in its jurisdiction as provided by Section 251 (a) – (s)of the Nigerian Constitution.The next court in the hierarchy is the State High Court which enjoys the jurisdiction to hear and determine both civil and criminal matters. It is often regarded as the court with the widest jurisdiction as its wide ambit covers all proceedings not strictly under the jurisdiction of the Federal High Court and in some cases concurrent matters. The National Industrial Court exercises its jurisdiction over labour and industrial relations matters. Sharia and Customary Courts of Appeal exercise jurisdiction in civil proceedings involving Sharia and customary law respectively. Magistrates’ Courts, District Courts, Area Courts and Customary Courts all have original jurisdiction in civil and criminal matters. There are currently different established dispute resolution systems to aid the speedy and ease of justice dispensation such as Arbitration, Small Claims Court, Multi-Door Court System.
4. Tax Implications
   All businesses in Nigeria must pay tax as provided under the extant Tax Law applicable. There are three tiers of tax authorities which underlines the tax system in Nigeria namely:
   • The Federal Government through the Federal Inland Revenue Service (FIRS) whose jurisdiction covers Companies Income Tax, Tertiary Education Tax, Personal Income Tax for non-residents, Capital Gains Tax, Value Added Tax, Petroleum Profits Tax, Stamp Duties payable on transactions involving corporate bodies.
   • The States and the Federal Capital Territory through their individual State Revenue Services with the responsibility for collecting taxes payable by individual’s resident in their territories. These include Personal Income Tax, Capital Gains Tax, and Stamp Duties on instruments executed by individuals.
   • The Local Governments are responsible for other miscellaneous taxes, levies, and rates, such as tenement rates.

Every established business in Nigeria must be registered with the Federal Inland Revenue Service which would issue it with Tax Clearance Certificates, Tax Identification Number and Value Added Tax numbers. This system would enable the business through its tax identification number to remit its taxes.

These are some of the salient considerations which a potential investor must consider before deciding to do business in Nigeria. The above-outlined features of the Nigerian business climate cuts across most businesses in Nigeria. However, Nigeria constantly makes an effort to improve its overall business system outlook. Over the years, several efforts have been made through review and amendment of old laws and enactment of new laws such as:

• The Federal Competition and Consumer Protection Act (FCCPA) enacted on 30 January 2019 which repealed the existent Consumer Protection Act and the provisions of the Investment and Securities Act relating to merger control and established the Federal Competition and Consumer Protection Commission (FCCPC). The FCCPC is now vested with the powers to approve and regulate mergers which include amalgamations, business combinations, and joint ventures. The body ensures fair and just competition between businesses and protects consumers.
• The Company and Allied Matters Bill 2019 has been passed by both houses of the legislature. The Bill seeks to replace several provisions of the existent law. Some highlights of the bill are
  • Provision for single-member companies and single director companies
  • Provision for company voluntary arrangements and administration that create a framework for company rescue and an efficient exit for non-viable businesses.
  • Operation of Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs)
  • Redefinition of requirements of a small company such that it has a turnover and net asset of not more than NGN120 million and NGN60 million, respectively. This signifies the exemption from some requirements such as audits, the appointment of a company secretary and holding of annual general meetings
  • The use of company seals by Nigerian companies will no longer be mandatory.
  • Replacement of the concept of “authorised share capital” and its replacement by a minimum issued share capital
• The Finance Bill 2019 was signed into law on January 13, 2020, with the following objectives:
  • To help reduce the effect and occurrence of regressive taxation by promoting fiscal equity.
  • To act as a lifeline for small businesses in line with the ongoing Ease of Doing Business Reforms.
  • To increase government revenue by various fiscal measures, including an increase in the rate of Value Added Tax (VAT) from 5% to 7.5%.

Conclusion

Finally, it is worthy of note that Nigeria, as other countries, is not free of challenges that may affect business owners or potential investors. The Nigerian business outlook is one that is ever-improving and amenable to positive changes. Hence its status as Africa’s largest economy. The business registration process has been simplified by the Corporate Affairs Commission making it such that a company can be registered in a week with the process mostly online. Other agencies are adopting the same method, easing up on administrative bottlenecks that frustrate investors. There also exist various incentives that have major impacts on businesses especially foreign-owned businesses. All these place Nigeria as a favourable investors choice in Africa.