The Nigeria High Commission is delighted to be working once again with Newsdesk Media Group on the second edition of Invest in Nigeria. Nigeria has undergone a major economic transformation, and is now one of the fastest growing economies in Africa. This annual publication is the authoritative guide for those looking to do business in Nigeria, highlighting the vast range of opportunities available to potential foreign direct investors. As well as detailed information on how to invest, the publication provides analysis of each market sector, from transport, agriculture and energy through to mining, defence and healthcare, The Nigeria High Commission would like to call on all businesses, organisations and companies to lend their support to this important annual publication. For further information, please contact Martin Cousens at martin.cousens@newsdeskmedia.com or +44 (0) 20 7650 1600.
The Federal Government of Nigeria has provided many investment
opportunities in many sectors of business. The following are some of the
priority areas identified by the Government. First find out about
incorporating business in Nigeria.
Incorporating a Business Enterprise & Legal Requirements
It is a legal requirement that all business enterprises must be registered
with the Registrar-General of the Corporate Affairs Commission (Registrar
of Companies). It is essential that a foreign investor wishing to set up
business operation in Nigeria should take all steps necessary to obtain
local incorporation of the Nigerian branch or subsidiary. Business
activities may be undertaken in Nigeria as a:
Private or Public limited liability company;
Unlimited liability company; Company limited by guarantee;
Foreign Company (branch or subsidiary of foreign company)
Partnership/Firm;
Sole Proprietorship;
Incorporated trustees;
Representative office.
Some Notable Exemptions to the Legal Requirements
Where exemption from local incorporation is desired, a foreign company may
apply in accordance with Section 56 of the Companies Act, to the National
Council of Ministers for exemption from incorporating a local subsidiary if
such foreign company belongs to one of the following categories:
Foreign companies invited to Nigeria by or with the approval of the
Federal Government of Nigeria to execute any specific individual
project;
Foreign companies which are in Nigeria for the execution of a specific
individual loan project on behalf of a donor country or international
organisation;
Foreign government-owned companies engaged solely in export promotion
activities; and
Engineering consultants and technical experts engaged in any individual
specialist project under contract with any of the governments in the
Federation or any of their agencies or with any other body or person,
where such contract has been approved by the Federal Government.
The application for exemption from disclosing certain details about the
applicant is to be made to the Secretary of the Government of the
Federation (SGF). If successful, the request of the applicant is
granted upon such terms and conditions as the National Council of
Ministers may deem fit.
Representative Offices
Foreign companies may set up representative offices in Nigeria. They only
serve as promotional and liaison office. As a rule, a representative
officer has to be registered with the Corporate Affairs Commission.
Principal Laws Regulating Foreign Investments in Nigeria
The principal laws regulating foreign investments in Nigeria are:
The Nigerian Investment Promotion Commission
Decree No. 16 of 1995 and the Foreign Exchange (Monitoring Miscellaneous
Provisions) Decree No. 17 of 1995.
Deregulation of Equity Structure in Nigeria Enterprises
The Nigerian Enterprises Promotion (Repeal) Decree No.7 of 1995 has
abolished any restrictions, in respect of the limits of foreign share
holding, in Nigeria registered/domiciled enterprises. The only enterprises,
which are still exempted from free and unrestrained foreign participation,
are those involved in:
Production of arms and ammunition;
Production of and dealing in narcotic drugs and psychotropic
substances;
Provisions Relating to Investments
Notable amongst the provision relating to investments are the following:
A non-Nigerian may invest and participate in the operation of any
enterprise in Nigeria;
An enterprise in which foreign participation is permitted, shall
after its incorporation or registration, be registered with the NIPC.
A foreign enterprise may buy the shares of any Nigerian enterprise in
any convertible foreign currency.
A foreign investor in an approved enterprise is guaranteed unconditional
transferability of funds through an authorised dealer, in freely
convertible currency of:
Dividends or profit (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 sale of liquidation of the enterprise or any interest
attributable to the investment.
Priority Areas of Investment
The NIPC issues guidelines and procedures, which specify priority areas for
investments and prescribed incentives and benefits, which are in conformity
with Government policy.
Incentives for Special Investment
For the purpose of promoting identified strategic or major investments, the
NIPC
may in consultation with appropriate Government agencies, negotiate
specific incentive packages for the promotion of investment.
Investment Incentives and Guarantees
The Federal Government has made available tax holidays for pioneer
companies-those producing for export, establishing new industries or
expanding production in sectors vital to the economy. The Government also
grants non-tax incentives to non-pioneer firms. In addition, the
Government offers a number of general and industry-specific incentives.
General incentives
A debit-conversion programme allows foreign companies to obtain an
enhanced exchange rate when they are injecting new equity into
a production project that has been approved by the Central Bank of
Nigeria (CBN).
Small and medium-scale industries are eligible for loans from the Bank
of industry and other development banks.
The Raw Materials Research and Development Council provides grants for
research and development that leads to the greater use of Nigerian raw
materials in domestic industry.
Industry-specific incentives
Agro-industrial ventures benefit from a five-year tax holiday, an
agricultural credit scheme guaranteed by the CBN, subsidised fertilisers
and zero import duties on raw materials used to make livestock feed.
Nigeria Export Processing Zones {Details}
The Nigeria Export Processing Zones Authority was set up under the Nigeria
Export Processing Zones Decree 63 of 1992.
The Authority has the mandate to grant all requisite permits and approvals
for operators within the zones, to the exclusion of other government bodies
and agencies.
Investment Procedures Within the Nigeria Export Processing Zones (EPZ)
Any company, person or group of persons wishing to carry out approved
activity within a zone shall apply to the Nigerian Export Processing
Zones Authority (NEPZA) using the prescribed forms and shall submit
such documents and information in support of the applications. The
forms shall specify the application fees and such other details as the
Authority may stipulate from time to time. A feasibility study in
respect of the investment project, which the applicant wishes to
undertake in the zone, shall be attached as an annex to the application
and shall contain the following among others:
Project description;
Market survey;
Funding proposals;
Financial projections;
Environmental impact statement and control measures.
Application to undertake approved activity in the zone duly received,
shall be considered by the Authority within 30 days of receipt and the
Authority shall notify the applicant in writing of its decisions to
grant the said approval or otherwise. The approval shall be subject to
such terms and conditions as may be imposed by the Authority.
If the application is approved the investor may proceed to carry out
the following:
Apply for company registration
If outright purchase of factory building is desired.
Payment of 10% deposit of the selling price of the standard
factory building within 3 months of approval;
Payment of the balance 90%, 5 month after;
Renting of factory building
Down payment of one-year rent required not exceeding 3 months
after signing the rental contract. Thereafter, rental charges
shall be paid in the first quarter of every year.
Leasing the standard factory
Payment of 40% lease value on approval;
Payment of 30% at the end of the 5th year;
Payment of 30% balance at the end of the 10th year.
Leasing of serviced plots
Down payment of 40% on completion of factory building;
30% at the end of the 5th year;
30% at the end of the 10th year.
Construction must be completed within a period of one year, which can
be extended for another 6 months. A plan of the building shall be
submitted to the Authority for approval. The land lease contract shall
be signed within 2 months after allocation of land. The area occupied
by such building shall be between 60%-70% of the leased land and
construction shall start within 3 months after signing the lease
contract.
With condition(s) in (iii) fulfilled, the investor may proceed to carry
out the following:
Remittance of Investment Capital through banks in the zone and notify
the Authority on arrival.
When the factory building is ready, investor(s) may bring in machinery
for installation and workers employed. Therefore, the Authority shall
be required to carry out pre-inspection, and if found satisfactory,
a certificate to commence production will be issued.
Companies intending to sell the permitted 25% of their total production
in the domestic market will be required to notify the Authority for
necessary documentation and payment of appropriate levies and charges
as applicable.
The Company shall apply to the Authority for assessment of invested
capital for later repatriation purposes. This is applicable to
companies which are 100% foreign owned and those with part foreign
equity participation only.
INVESTMENT REQUIREMENTS
Industries must be guaranteed to be environmentally friendly.
At lease 75% of total products to be exported.
Maximum of 25% of products can be exported to the customs territory on
payment of appropriate levies and duties.
Minimum investment capital outlay is 500,000 US Dollars or its Naira
equivalent.
Types of Industries Permissible in Nigeria Export Processing Zones
-
Electrical and Electronic Products
-
Leather Products
-
Plastic Products
-
Petroleum Products
-
Rubber Products
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Cosmetics
-
Garments
-
Chemical Products
-
Metal Products
-
Educational Materials and Equipment
-
Communication Equipment and Materials
-
Sports Equipment and Materials
-
Machinery
-
Handicraft
-
Optical Instruments and Appliances
-
Medical Kits and Instruments
-
Biscuits and Confectioneries
-
Printed Materials, Office Equipment and Appliances
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Paper Materials-
-
Food Processing
-
Pharmaceutical Products
MANUFACTURING
Areas of industrial investment which receive the bulk of government
industrial incentives include:
Industries which can source their raw materials locally e.g. in the
agro and agro-allied sub-sectors for which there are abundant natural
resources in Nigeria, including food preparation, e.g. fruit drinks,
cereal milling, feed mills and vegetable oil processing;
Industries, which support food production programmes through local
manufacture of chemicals, equipment and light commercial vehicles in
particular, and chemicals as well as petrochemical-based manufacturing
industries in general;
Industries with multiplier effects such as flat sheet mills and
machines tools industry including foundries and engineering industries
for spare parts.
Petrochemical and liquefied natural gas projects;
Investment in research institutes particularly in the area of adaptive
research and commercialisation of local inventions;
Foundry and forges;
Metal fabrication;
Pharmaceutical;
Food processing;
Leather and leather products;
Textiles and wearing apparel;
Non-metallic building materials, e.g. bricks, ceramics and glass.
Mining and Mineral Processing
This sector offers tremendous opportunities for interested investors. The
Federal Government of Nigeria welcomes investor in the following areas:
-
Coal
-
Gemstone cutting and polishing;
-
Gold processing;
-
Mineral benefaction plants for gypsum talc, kaolin, marble, dolomite,
baryte;
-
Mini-sugar production;
-
Lead and zinc;
-
Refractory bricks;
-
Processing of salt from sea water;
-
Small and medium-scale plant for sheet metal production;-
-
Bottled mineral water;
-
Mining of industrial minerals;
-
Telecommunications.
Operating Licenses
Certain enterprises require approvals and/or licences to operate whether
they are owned by Nigerians or not. Examples of the sectors where licences
are needed are banking where a
Central Bank of Nigeria licence is needed,
Insurance where a licence from the National Insurance Commission is
required,
The oil sector where Department of Petroleum Resources licences are
needed and,
The telecommunications sector where licences from the Nigerian
Communications Commission are needed.
The detailed regulations identifying the various licences available and
stating what is required to obtain each of them are numerous. It is
therefore important to check with the relevant body.
Remittances
The old and cumbersome, restrictive exchange control laws have been
repealed by the Government. Foreign investors are free to bring in capital
for investment, and they are free to repatriate both the income and capital
proceeds on such capital.
Monies brought in or taken out may be so dealt with under either of two
schemes:
The Autonomous (now interbank) Foreign Exchange Market (AFEM),
a relatively free market in which both the Central Bank of Nigeria
(CBN) and the Authorised Dealers participate as traders.
Debt Conversion Programme (DCP). Under this scheme the foreign
investor buys Nigeria debt stock with hard currency and then sells the
stock to the CBN in return for naira to be invested in Nigeria. The
CBN benefits by getting Nigeria's foreign debt stock reduced, and the
foreign investor gets an exchange rate better than available on the
AFEM. For details visit CBN website
http://www.cenbank.org
Taxation
Companies income tax rate is 30%. There is an additional education tax of
2% on the income of companies. Withholding tax of 5% is chargeable on
unearned income. For foreign investors, the 10% withholding tax on
dividends is the final tax on dividends. The top personal income tax rate
is 25%.
Value added tax (VAT) is chargeable on goods and services at 5%. The
Capital Gains Tax rate is 10%, and shares in companies are exempt from
capital gains tax. This is a very significant tax relief for investors.
Stamp duty is chargeable on various documents at various flat and ad
valorem rates, depending on the nature of the instrument, up to a maximum
of 2% of the value involved. There are Pay-As-You-Earn income tax
regulations, and various social insurance-type contributions are
compulsory.
There are also a tax holiday and tax allowance incentives for investors.
For example, tax holidays for up to five years may be granted to investors
in the manufacturing and gas utilisation sectors. Companies operating in
Nigeria's export processing zones are exempted from all taxes including
both import and export duties.
Further, import duty relief may be obtained on certain machinery, and there
are tax allowances for using local raw materials in manufacturing, being
a labour-incentive (and therefore employment-generating) business,
expenditure on training, infrastructure, research and development and in
economically disadvantaged areas.
Telephone Number for General Enquiries costs 0.10p per minute, Calls from mobiles and other networks may cost more: 087 1221 0073;
Telephone Number for Visa and Consular costs 0.92p per minute, Calls from mobiles and other networks may cost more: 091 1002 0004;Telephone number for Visa and Consular only. Costs 0.92p per minute, calls from mobiles and other networks may cost more. Fax: +(44) 20 7839 8746 (v0.9.7)
UPDATE ON PASSPORT APPLICATION,COLLECTION, AND FAST TRACK
URGENT NOTICE
We regret to inform all passport applicants who are willing to process the FAST Track application that the service is now suspended until further notice due to Technical Issues. The High Commission implores the applicants, should come on their actual interview date. In the meantime, applicants can check for further updates by the end of the week.
However, High Commission has transited to the use of Point of Sale (POS) in making payments for all services rendered by the High Commission. Henceforth, payments can be made using debit cards for all transactions such as loss of Passport, Fast Track and Emergency Travel Certificates (ETC).
In view of the foregoing, the High Commission would no longer accept postal order for all services rendered by Immigration Section.
Also having observed that a major delay in issuance of passport of applicants is caused significantly by the wrong filling of online form by some applicants, we implore applicants to ensure that they fill the online form correctly, maintaining the same order in the arrangement of names – surname, first name and middle names in their current passports.
In addition, with a view to ease the difficulties being encountered by Nigerians during the process of renewing their passports, especially for applicants coming from outside London, the High Commission wishes to inform that applicants are at liberty to leave behind a pre-paid special delivery self-addressed envelope to enable the Mission mail back their passport.
For applicants with urgent need to travel before their collection date, such applicants could apply for an Emergency Travel Certificate (ETC) or use the fast-track passport service available if they so desire. The High Commission wishes to assure all of its commitment to ensuring effective service delivery, and at the same time to seek the understanding and cooperation of applicants for passports.
Applicants are also constantly reminded to use this official facility and desist from using a third party or touts to request for passport on their behalf. However, all applicants should allow ample time to process their passport whereby passport can be renewed/reissued six(6) month before it expires. Consequently, all applicants are urged not to use the App (myVisit) for their appointment as its no longer valid for appointment booking. Applicants are also advised to come strictly on the interview date printed on passport payment slip.
Thank you.
Immigration Section
Nigeria High Commission
London