How To Start A Foreign-Owned Business In Nigeria
Over the last decade, foreign organisations have become increasingly interested in the Nigerian market. According to the office of the United States Representative, foreign direct investment stock from the United States into Nigeria was $5.8 billion in 2017. Furthermore, having top organisations like Uber, Bolt and Boston Consulting Group establishing their presence in the country, has drawn much-needed attention to the many untapped opportunities present in the Nigerian market.
Nigeria boasts of being the 31st-largest economy in the world by GDP (397,472 million US$) and it is also the 22nd-largest consumer market of the world by household final consumption expenditure (330,043 million of US$). These, among other things, make it an ideal location for top multinationals who wish to tap into the many opportunities that come with growing economies.
For organisations looking to establish a presence in Nigeria, this article will highlight the steps involved in successfully setting up a business in Nigeria.
Step One: Register your Company.
The very first step for foreign organisations intending to establish a presence in Nigeria is to register the company with the “Corporate Affairs Commission“ (CAC). For foreign-owned companies, the minimum share capital is ten million naira N10,000,000. The process takes between two to four weeks.
Step Two: Register with FIRS and State IRS.
Following the incorporation of the Nigerian subsidiary of your organisation, the next step is to register with the Federal Inland Revenue Service (FIRS) and the state Inland Revenue Service. This will make it possible to get your Tax Identification Number (TIN) which will be useful when remitting tax returns. Value Added Tax (VAT) on goods and services are remitted to the FIRS, while the State IRS gets the Pay As You Earn taxes (PAYE). The process for tax registration takes between 1 to 2 weeks.
Step Three: Open Domiciliary Bank Account and Obtain Certificate of Capital Importation
After getting your TIN, your organisation is required to open a Domiciliary Bank Account with a Commercial Bank in Nigeria. This is the account that the minimum share capital of N10,000,000 required by the CAC (see step one) will be paid into. Upon opening the account, you will be given a Certificate of Capital Importation. This document certifies that the funds have been remitted into the bank account. The Certificate of Capital Importation will also prove useful when the company wishes to repatriate its profits beyond the shores of Nigeria. The timeline for opening the account and getting the documents required is wholly dependent on the commercial bank where the account will be opened.
Step Four: Register with the Nigerian Investment Promotion Commission(NIPC)
The NIPC is responsible for registering foreign investments in Nigeria. It also acts as a liaison between the government and investors (foreign and non-foreign). Foreign companies who are setting up Nigerian subsidiaries should obtain Business Permit and Expatriate Quota from the Nigerian Investment Promotion Commission (NIPC) and the Federal Ministry of Internal Affairs. The business permit and expatriate quota will enable your company to apply for work permits for its foreign workers.
Step Five: Obtain all relevant licenses and permissions
The final step is to ensure that your organisation obtains relevant licenses and permissions from the relevant authorities. Ensure that your employment contracts and work manuals comply with the requirements under the Labour Act to avoid future legal liabilities.
Expand into the Nigerian Market with an Experienced Market Entry Partner
While the process of setting up a foreign-owned business in Nigeria might seem tedious, having the right partner who will assist you with navigating the murky waters of the Nigerian business environment, will ensure a smooth and successful entry.
Workforce Group has over the years, assisted multinationals and foreign-owned companies in successfully establishing their presence in Nigeria. We leverage our internal capabilities to support your business objectives while connecting you with our tested & trusted partners to help make your entry into the Nigerian market smooth and successful.
If you would like to start a business in Nigeria today, contact us to learn more about how our market entry services can provide a successful transition into the Nigerian market for your organisation.