Doing Business In Nigeria – Questions Investors Ask

Introduction

Doing business in Nigeria is definitely not something to be taken lightly, but it’s also not rocket science. If you have investments and business plans for Nigeria, it would be smart to have all the necessary information before beginning. There are many questions that investors ask when they are considering doing business in Nigeria. Some common questions are, “Is Nigeria good for doing business?”, “What agency oversees the registration of businesses in Nigeria?”. Let’s take a look at the answers to these questions and how investors should approach doing business in Nigeria.

QUESTIONS INVESTORS ASK

BEFORE STARTING YOUR BUSINESS IN NIGERIA

Starting a business is no easy feat and the most critical part of starting a business is the questions you ask. Below are some of the questions investors ask before starting a business in Nigeria and their answers:

1.     Is Nigeria good for business?

Yes, it is one of the biggest economies in Africa. A land full of opportunities and there are measures put in place for ease of doing business in Nigeria.

2.     Is Nigeria safe for business?

Yes, Nigeria is safe for doing business. Just like any environment, you need to be cautious and avoid risky areas and take appropriate measures to stay and remain safe. But largely Nigeria is a beautiful country.

3.     What are the business opportunities in Nigeria?

There are a lot of business opportunities in Nigeria ranging from manufacturing, agric and agribusiness, FINTECH, restaurant and fast food, retail and consumer, trade and import of general goods and services among others.

4.     What are the profitable businesses to start in Nigeria?

Nigeria has a demand for various goods and services, due to its population size. Nigeria is a business-friendly economy, what you need to do is start a business in an area, work hard towards and make it profitable.

5.     What is the best business to start in Nigeria?

Businesses in tech space, farming, agribusiness, food and cosmetics, fashion, manufacturing, services, and a host of others

BUSINESS REGISTRATION

Business registration is a process that usually takes a few days, but before you start the registration process, you will want to make sure you have all the necessary information. Here are a number of questions you may find yourself asking when you want to register your business:

6.     What agency oversees the registration of businesses in Nigeria?

 CAC (Corporate Affairs Commission)

7.     Who can register a business in Nigeria?

A Nigerian citizen and foreigner

8.     Can a foreigner register a business name?

No, registration of a Business Name is a form of business category that is reserved for only Nigerians

9.     Is there a required share capital for foreign-owned businesses in Nigeria?

Yes, the minimum share capital is 10,000,000 naira

10.  Do I need a business permit as a foreigner to work and carry out business in Nigeria?

Yes, a foreigner needs a business permit

11.  What are the various types of businesses I can register in Nigeria?

The various types or forms of businesses in Nigeria are – Business name, limited liability, partnerships, and incorporated trustees

12.  How long does it take to register a business in Nigeria?

It takes an average of between 1-3 weeks to register a business in Nigeria

13.  What is the benefit of registering a business in Nigeria?

Registering your business in Nigeria creates a legal personality that will help you get access to government grants & investors

14.  How many directors is a company required to have in Nigeria?

A private company is required to have a minimum of one director, however, a company limited by guarantee is required to have a minimum of two directors

15.  Can a partnership be registered?

Yes.

16.  How do I decide the type or form of business I should register in Nigeria?

You need to consider the goal, nature of business, long term plan of your business and most importantly seek professional advice.

17.  When can I register a group of companies in Nigeria?

You must have previously registered at least three companies with CAC to form the group of companies.

Read Also: Starting a Business in Ghana

18.  Are there restrictive and prohibited business names for businesses in Nigeria?

Yes, they include a name already registered or similar to names already registered; names that contain the words ‘Chamber of Commerce’ unless it is a company limited by guarantee; names contrary to public policy or misleading; names that include the word “Federal”, “National”, “Regional”, “State”, “Government”, or any other word which in the opinion of the Commission suggests or is calculated to suggest that it enjoys the patronage of the Government of the Federation or the Government of a State in Nigeria, as the case may be, or any Ministry or Department of Government; “Municipal” or “Chartered” or in the opinion of the Commission suggests, or is calculated to suggest, connection with any municipality or other local authority; contains the word “Co‐operative” or the words “Building Society”; contains the word “Group” or “Holding

19.  How long can I reserve my business name before registration?

60 days

20.  Can I convert my business name registration into a company?

Yes, a business name can be converted into a company limited by shares

21.  What is the minimum authorized share capital in Nigeria?

100,000 naira for private companies but it is advisable to make it 1,000,000 because the fees for registration are the same and not having to go through the stress of an increase in share capital so soon in the business especially when investors make offers in exchange for equity. The minimum authorised share capital is 2,000,000 naira for public companies.

22.  Is a private company permitted to invite the public to subscribe to its shares?

No.

23.  Can foreigners own up to 100% equity in any business in Nigeria?

Yes, except those on the negative list.

24.  What are prohibited business activities on the negative list?

They include – the production of arms, ammunition, etc.; production of and dealing in narcotic drugs and psychotropic substances; production of military and para-military wears and accouterment, including those of the Police and the Customs, Immigration and Prison Services; and such other items as the Federal Executive Council may, from time to time, determine.

25.  How do I sign the registration documents with CAC if I am not physically located in Nigeria?

CAC uses electronic documents, so you need not be around to fill out the forms. The certificate is also electronically generated

26.  What business names are prohibited from being used as business names in Nigeria?

Names containing chamber of commerce except it is a company limited by guarantee, a misleading name, a name identical to the one already registered, a name that conflicts with an existing trademark, a name that can disrupt public peace or national security

27.  What are the requirements for registering a business name in Nigeria

1. Two Proposed names of the Business for reservation and approval.
2. Indicate if you have applied or reserved your business name, if yes provide the availability code
3.  General nature of Business
4. Detailed address of the registered office
5. Detailed address of the head office if different from the registered office
6. Detailed address of branch office if any
7. Telephone number and email address of Business
8. upload passport photograph, signature, and valid ID of the proprietor (s)
9. Name, residential address (indicate if you want your address concealed, note that this comes at an extra fee), service address, occupation, gender, Nationality, date of birth, nationality, email address, phone number of the proprietor (s)

28. What are the requirements for registering an NGO in Nigeria

1. Two proposed names for reservation
2. Indicate if you have applied or reserved your business name, if yes provide the availability code
3. Detailed address of the registered office
4. Detailed address of the head office if different from the registered office
5. Detailed address of branch office if any
6. Aims and objectives of the organization
7. Source of the organisation’s funds
8. Two copies of the organization’s constitution
9. Name, address, and gender of the Trustees (minimum of two trustees)
10. Upload valid ID, passport photograph, and signature of the Trustees
11. Name, address, gender, and Nationality of the Chairman and Secretary
12. Upload valid ID, passport photograph, and signature of the Chairman and secretary
13. Upload Minutes of meetings or resolutions appointing the trustees including lists of members and the voting patterns or you can request a sample

29. What are the requirements for registering a company limited by shares in Nigeria?

1. Two proposed names of the company for reservation and approval
2. Indicate if you have applied or reserved your business name, if, yes provide the availability code
3. General nature of the Business of the company
4. Detailed address of the registered office
5. Detailed address of the head office if different from the registered office
6. Detailed address of branch office if any
7. Telephone number, postal code & Email address of the company.
8. Name, address, phone number, nationality, occupation, gender, and email address of the witnesses
9. Upload passport photograph, Valid ID, and signature of the witness
10. Name, email address, gender, date of birth, service, tax residency, Nationality, occupation, and residential addresses of the shareholders
11. Upload passport photograph, Valid ID, and signatures of the shareholders
12. Name of someone who you want to have significant control of the company (this person must have at least 5% shares of the company)
13. Name, service and residential address, occupation, gender, date of birth, nationality, email address, phone number, and tax residency, of Directors of the company (minimum of one director for a small company)
14. Upload passport photograph, Valid ID, and signature of the DirectorsName, service and residential address, occupation, gender, date of birth, nationality, email address, and phone number of the secretary (if any)
15. Upload passport photograph, Valid ID, and signature of the secretary (if any)The type of shares issued (ordinary or preferential) What kind of shares are issued, is it ₦ 1 to 1 share (if different indicate)Do you want to use the generic Memorandum and Article of Association, yes or no
16. If not, upload yours or we can prepare one for you at an extra fee
17. Letter of no objection for a company limited by guarantee comes at a different cost depending on the industry it is registered in

30. What are the requirements for registering an Incorporated Trustee in Nigeria?

1. Two proposed names for reservation
2. Indicate if you have applied or reserved your business name, if yes provide the availability code
3. Detailed address of the registered office
4. Detailed address of the head office if different from the registered office
5. Detailed address of branch office if any
6. Aims and objectives of the organization
7. Source of the organisation’s funds
8. Two copies of the organization’s constitution
9. Name, address, and gender of the Trustees (minimum of two trustees)Upload valid ID, passport photograph, and signature of the Trustees
10. Name, address, gender, and Nationality of the Chairman and SecretaryUpload valid ID, passport photograph, and signature of the Chairman and secretary
11. Upload Minutes of meetings or resolutions appointing the trustees including lists of members and the voting patterns or you can request a sample

31. What is the cost of registering a business name in Nigeria?

₦  25,000 …get help here

32. What is the cost of registering a company in Nigeria?

₦ 80,000… get help here

33. What is the cost of registering an NGO in Nigeria

₦ 120,000… get help here

34. Can I register my business online in Nigeria?

Yes… get help here

IMMIGRATION

Foreign investors and business owners are often concerned about the immigration process in Nigeria. Here are some of the most commonly asked questions regarding immigration in Nigeria and their answers:

35. What is an Expatriate Quota in Nigeria?

It is a form of approval granted to companies and registered firms to employ the services of expatriates in Nigeria

36. What organization grants expatriate quota and business permits in Nigeria?

The Ministry of Interior grants expatriate quotas

37. What are the requirements for obtaining a Nigerian business visa?

Passport valid for at least 6 months with at least 2 blank visa pages for endorsement

Two (2) recent passport-sized (35x40mm) photographs Return Ticket

Evidence of sufficient funds

Evidence of hotel reservation/host address in Nigeria

38. How long does it take to obtain a Nigeria Business visa?

If you have a business visit to Nigeria, we can help you obtain a visa on arrival in 48 hours.

39. What is the cost of a Nigerian Business visa?

Nigeria visa depends on the nationality of the person….. get help here https://firmusnigeria.com/how-to-obtain-visa-on-arrival-in-nigeria

40. What is the validity period of a business visa?

 90 days

POST-INCORPORATION/BUSINESS REGISTRATION

Investors frequently ask about certain processes they need to go through after registering their business. Some of these are:

41. Is there any other license required after registering my business with CAC?

Yes, this depends on the type of business activity you are carrying out.

42. What are annual returns?

It is a mandatory annual report or business renewal that is required of all business owners to be filed at the CAC office, in Nigeria.

43. Is there a penalty for not filing an annual return?

Yes, the penalty of annual returns includes paying fines, having your business inactive on CAC, having your business struck out of the CAC register, being denied a visa when using your business document to apply

44. When is a business required to file an annual return?

Every business is required to file its annual returns a year after incorporation

45. What is the benefit of filing annual returns?

Filing annual returns helps your business maintain an active status on the CAC portal, it also encourages investors to invest in your business, and ensures your business is not removed from the CAC register.

46. Can CAC revoke the certificate of a business?

Yes, if the CAC discovers that the certificate was obtained through fraudulent means

47. Is my business required to file annual returns even though we have not commenced operations- yes

TAX

One of the most important aspects which every investor should understand is how tax works in Nigeria. The following section will answer some of the most frequently asked questions about tax in Nigeria.

48. What is TIN?

TIN simply means ‘Tax Identification Number

49. What is the purpose of TIN in Nigeria?

 It is needed for payment of taxes and when opening a corporate account in Nigeria

50. What is VAT?

VAT simply means Value Added Tax

51. How do I know if my business is liable to pay VAT?

Payment of VAT is for organisations that carry out business in Nigeria either as a producer, wholesale trader and or supplier of taxable goods and services  

52. Are tax holidays available for foreign-owned businesses in Nigeria?

Yes, if such a company has been registered with the NIPC

53. What is tax ProMax?

 This is a tax administration solution for filing naira-denominated tax returns

54. What is the process of obtaining a Tax Clearance Certificate in Nigeria?

Firstly, register your business with CAC, obtain TIN, and Apply for tax clearance from Federal Inland Revenue Service

BANK ACCOUNT OPENING

It’s easy to open a bank account in Nigeria, and there are several banks that offer affordable opening fees. Here are some questions you may have about opening a bank account in Nigeria:

55. What documents do I need to open a corporate bank account in Nigeria?

CAC documents, TIN, SCUML Certificate, BVN, NIN, utility bill and any other documents the bank may require.

56. What documents do I need to open a personal bank account in Nigeria?

BVN, NIN, utility bill and any other documents the bank may require

57. How long does it take to open a bank account in Nigeria?

There is no specific time, but it can be as fast as possible (2 to 5 days) depending on the verification system.

58. Can a foreigner open and operate a foreign currency account in Nigeria?

Yes, a foreigner can open and operate a foreign currency account in Nigeria.

59. Can a foreigner transfer funds out of Nigeria?

Yes, a foreigner can transfer funds outside Nigeria freely after providing all necessary invoices and transactional documentation to the bank.

60. What is the meaning of SCUML in Nigeria?

SCUML means, Special Control Unit Against Money Laundering

61. Who needs a SCUML certificate- non-designated financial institutions

Conclusion

Nigeria is a country with huge potential for investors. We hope this article has helped you understand some of the laws and customs surrounding business and immigration in Nigeria. Please feel free to ask further questions, as we shall endeavour to get them answered from our various contacts. When it comes to legal services and advisory, we provide the best options for companies planning to do business. Talk to us today