Nigeria is a sub-Saharan country with a population of over 200 million and a labour force of over 62 million people. With a labour force the size of the United Kingdom, Nigeria provides several investment opportunities to investors as the largest economy in Africa. The Federal Government has continued to maintain a welcoming disposition towards foreign investors, inviting them to invest in the green or brown fields of the Nigerian growing economy.
There has also been a concerted effort by the government to emplace policies and measures to promote and streamline the ease of doing business in Nigeria and remove known obstacles and bottlenecks that hinder the smooth conduct of business by foreign investors in Nigeria. These concerted efforts are primarily responsible for the progress in the World Bank’s ease of doing business ranking, moving 15 sports up in October 2019.
Primarily, in Nigeria, there are two major routes to investment: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).
An investor can invest in Nigeria directly either by setting up a company with or without partnership with Nigerians or owning productive assets of a company. This is generally known as FDI.
Alternatively, an investor can choose to invest by purchasing shares in a Nigerian company, through a stockbroker in the case of a public company and direct allotment or private placement in the case of a private company.
Section 54 of the Companies and Allied Matters Act, Cap C20 LFN 2004 requires every foreign company that seeks to operate in Nigeria to be incorporated. Thus, any investor intending an FDI must be incorporated as a company registered with the Corporate Affairs Commission.
As a means of meeting business capital requirements, Nigerian law permits an investor to import capital required for its business operations and this must be done through an authorized dealer.
One of the benefits of capital importation is that it allows for unconditional transfer of funds in freely convertible currency. It also allows full repatriation of capital, capital gains, dividend and interest received through an authorized dealer.
Further to this, a foreign national who intends to form a company in Nigeria must obtain a Business permit to do so. A Business Permit is a certificate e granted to wholly foreign or joint venture companies intending to do business in Nigeria to enable them bring activities in Nigeria. To qualify for the grant of a Business Permit, the applicant company must have a minimum share capital of N10 million and must demonstrate strong commitment to invest in Nigeria. Failure to obtain Business Permits is an offence and defaulting foreigners may be liable to deportation.
Business Day, July 30, 2020
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