Doing Business in Nigeria: Basic Entry/Licensing Requirements and Permits in Selected Sectors

By A&E Law Partnership

This handbook is a product of the challenges experienced by potential investors in Nigeria. The key challenge we have witnessed is that there is a gap in accessing relevant information and resource material in key sectors of the country. Access to reference guides is most important, particularly to foreign investors who require an understanding of the sectors they want to invest in prior to coming into the country.

This handbook is therefore intended to serve as a resource material and a reference guide to investors, businessmen and women, Chambers of Commerce, legal practitioners, and anyone interested in knowing the requirements for participation in any of the listed sectors in Nigeria. The handbook makes reference to Nigerian legislation and the relevant sections of the law on permit and licensing requirements within the listed sectors.

This handbook covers the major sectors with attractive investment appeals, and thus, it takes account of a broad spectrum of the sectors in country, such as insurance; aviation; taxation; electronic money transfer/payment systems; registration of courier services and clearing and forwarding agents; maritime, including registration of ships; energy/power; solid minerals; oil and gas, including issues bordering on local content development; entertainment; licensing and censorship; radio; sound; television; cable or satellite station; intellectual property, specifically, the registration of trademark, patents, copyrights, and designs. Theres also telecommunication licenses; environmental standards and regulations that impact upon operating a business in Nigeria; immigration, including obtaining expatriate quotas; residence permits; and licensing and regulation of private guard companies in Nigeria, etc. It must be pointed out that the handbook does not intend to override or remove the need to consult a legal practitioner with an understanding of the Nigerian legal system when appropriate. Nonetheless, the handbook will provide useful information to its audience.

• Language: English
• Publisher: AuthorHouse
• Release date: Nov 28, 2017
• ISBN: 9781546215424

A&E Law Partnership

A&E Law Partnership is a multidisciplinary legal consulting firm with vast experience in developing capacity building, transactional advisory services, institutional assessment, and institutional reforms, PPP, Public Procurement, Public Finance Management and litigation. The firm also has a robust policy practice in Institution systems analyses, synthesizing and structuring, advising and implementing transactions for public and private institutions and for specific projects and initiatives all in line with international best practices and standards. A&E Law Partnership also possess experience in analyzing, supporting and strengthening governance and related management system of governments and public institutions at the Federal and States level, targeted at resolving critical legal, governance and development challenges. It is a corporate member of the Abuja Chamber of Commerce and Industries; the Nigerian-British Chamber of Commerce, Section on Business Law of the Nigerian Bar Association, and registered Capital Market Operators in Nigeria. It is also registered on the National Database of the Particulars, Categorization and Classification of Contractors, Consultants and Service Providers of the Federal Bureau of Public Procurement. For the last 2 years, A&E Law Partnership has published an electronic newsletter titled, Regulation and Investment Review through which it disseminates information on the Business and Regulatory events in Nigeria with about 10,147 subscribers from amongst corporate executives, top government functionaries, public agencies in Nigeria, Nigerian embassies abroad and international development organizations. A & E Law Partnership is a registered law firm with the Corporate Affairs Commission and has its head office at 1st Floor, UACN Building, Central Business Area, Abuja, and other offices in Lagos and Aba, Abia State Nigeria. Further information about the firm can be found on our website www.aandelaw.com while enquiries can be made to [e-mail]

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© 2017 A&E Law Partnership. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system,

or transmitted by any means without the written permission of the author.

Published by AuthorHouse 11/22/2017

ISBN: 978-1-5462-1541-7 (sc)

ISBN: 978-1-5462-1542-4 (e)

Any people depicted in stock imagery provided by Thinkstock are models,

and such images are being used for illustrative purposes only.

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Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

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TABLE OF CONTENTS

COUNTRY INFORMATION

ii. BASIC INFORMATION ON NIGERIA

BACKGROUND

FOREWORD

INTRODUCTION

ACKNOWLEDGEMENT

Chapter 1 INSURANCE

Chapter 2 AVIATION

Chapter 3 TAXATION

Chapter 4 ELECTRONIC MONEY TRANSFER/PAYMENT SYSTEMS

Chapter 5 REGISTRATION OF COURIER SERVICES AND CLEARING AND FORWARDING AGENCIES

Chapter 6 MARITIME

Chapter 7 CABOTAGE

Chapter 8 BANKING

Chapter 9 ENERGY/POWER

Chapter 10 SOLID MINERALS

Chapter 11 OIL AND GAS

Chapter 12 ENTERTAINMENT

Chapter 13 DOING BUSINESS IN THE NIGERIAN CAPITAL MARKET

Chapter 14 INTELLECTUAL PROPERTY

Chapter 15 NAFDAC

Chapter 16 TELECOMMUNICATION LICENSES

Chapter 17 THE ENVIRONMENT

Chapter 18 IMMIGRATION

Chapter 19 SECURITY

Chapter 20 FOREIGN INVESTMENT

DOING BUSINESS IN NIGERIA

BY

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1ST FLOOR, UAC BUILDING,

CENTRAL BUSINESS DISTRICT ABUJA,

FCT NIGERIA

www.aandelaw.com

2017

COUNTRY INFORMATION

MAP OF NIGERIA

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II. BASIC INFORMATION ON NIGERIA

BACKGROUND

Nigeria is located in Sub-Saharan Africa specifically on the West African coastline, bordered by Cameroon on the East, Chad and Niger on the North, Benin Republic on the West, and the Atlantic Ocean on the South. It is the most populous country in Africa with a population of 182.2 million in 2015 going by World Bank estimates, and a growth rate of 2.6%., With over 200 ethnic groups and 500 indigenous languages, Nigeria is a very diverse country. The three major ethnic groups are the Ibo, majorly found in the East, Yoruba in the West and the Hausa/Fulani in the North. Nigeria is made up of 36 states and a Federal Capital Territory (FCT) located in Abuja. It operates a three-tier federal system of government - the Federal (1), state (36) and Local Government, (774 Areas). Prior to the creation of states, Nigeria was administered on regional basis, Western, Eastern, Northern and Midwestern regions. These regions were first divided into 12 states excluding the Midwest region in 1967; later increased to 19 in 1976, 21 in 1987, 30 in 1987 and 36 in 1996. It was the changes in the administrative composition of the country that led to the creation of Abuja as the Federal Capital Territory (FCT) on December 12, 1991, meaning that Lagos State ceased to be the Capital that year, though it still remains Nigeria’s main Commercial Centre.

ECONOMIC OUTLOOK

Nigeria’s Gross Domestic Product (GDP) in 2015 was $486.79 Billion, with an annual GDP growth rate of 2.7 %, but there was a sharp decline in 2016 to -1.7%. Her GDP growth rate currently stands at 1%. This sharp decline is attributable to the rapid fall in oil prices in the International Market. It impacted negatively on government revenue, leading to a weakening of the Naira. Nigeria is one of the world’s largest producers of crude oil, but income from oil sales, has, for a long time been dwindling, thus making the country to accelerate her economic diversification efforts, to such sectors as agriculture, solid minerals and manufacturing to mention some. Nigeria is endowed with abundant mineral and agricultural resources like crude oil, gas, cocoa, palm oil and cashew nuts amongst others

With a country area of about 92377 (1000 Ha), of which 70800 (1000 Ha) is agricultural according to the Food and Agricultural Organisation (FAO), agriculture is considered a potential growth sector. Nigeria has a thriving entertainment industry, christened Nollywood; a vibrant telecommunication sector, Untapped solid minerals and other natural resources scattered across the country. These are some of the economic indices which combine to make Nigeria a destination for Foreign Direct Investment.

FOREWORD

Up to a few years ago, the AfricaRising narrative was preeminent in global investment discourse having taken root at the turn of the millennium. An inevitable crash in commodity prices then revealed the fundamental flaw in the tale. Africa’s fortunes, contrary to the bullish promise of Africa Rising, remained deleteriously tied to fluctuations in global commodity prices. So sudden was the subsequent dismantling of the narrative that dependency theory, the notion of international terms of trade contriving the perennial dependency of poor countries on rich ones, found new proponents.

Yet, Africa undeniably remains a land of vast opportunity and none of its countries more so than Nigeria. Teeming with a young and enthusiastic citizenry as well as good weather and a surfeit of natural resources, Africa’s most populous nation competes only with South Africa as the continent’s most popular draw for foreign investment. There is sometimes the sense, that Nigeria’s potential is undermined by shortcomings that can easily be remedied but for will and application. As a result the current Nigerian government is intensifying efforts to improve the environment for doing business in Nigeria.

The A&E Law Partnership’s Doing Business Guide is in the premises a welcome addition to Nigerian law and business literature. The firm is one of Nigeria’s leading public-sector and corporate law firms. It has deployed the knowledge and experience gained over the years in its core competences to produce a praiseworthy guide to the rules and regulations for doing business in the ‘commanding heights’ of the Nigerian economy.

The Doing Business Guide adopts a sectoral approach, respectively explicating the requirements for operating in insurance, aviation, cabotage, banking, energy and power, solid minerals, telecommunications, entertainment, food and beverages, private security, oil and gas etc. There is also coverage of matters that are applicable across sectors such as immigration, environmental standards, intellectual property and capital markets. A section is devoted to foreign investors, providing an advisory on organizational forms available as well as other subjects of potential interest such as repatriation of profits and tax exemptions.

The Guide is an ambitious project in terms of scope. It does quite a good job, delivering its content in brevity of prose and language that is easily comprehensible. The writers have clearly foresworn the predilection of many a Nigerian lawyer to communicate in terms only decipherable to their fellow ‘learned’ men and women.

The Guide goes a long way towards providing a one-stop-shop of a book on the rules for entry into various sector of the Nigerian economy. Key processes and procedures are outlined in as much detail as possible along with the fees for obtaining licenses and registrations including at the corporate affairs commission (which oversees company registrations). Regulations are dynamic and fees will change so that the A&E Law Partnership must be well aware of the need to constantly update the Guide to keep it relevant. If there is a firm suited to the demands of revision and continuity, the Partnership is it.

The Doing Business Guide is commended to business advisory professionals – lawyers, accountants, bankers, etc. – as well as to investors, entrepreneurs and firms doing or seeking to do business in Nigeria. Students and academics whose disciplines require knowledge of matters within the remit of the Guide will also find it a useful library reference.

Peter Ntephe

PhD (London), MSc (Oxon), LLM (London), MSc (Brunel), LLM (RSUST), LLB (Hons) (Nig.)

London, September 2017

INTRODUCTION

The last decade and half of a democratic government has contributed to Nigeria’s quest for stability and sustainability in economic planning, occasional fluctuations in economic indicators, notwithstanding.

The government has recently begun a renewed drive for Foreign Direct Investment (FDI) and a conducive local environment for the private sector to thrive. This is with a view to attracting and encouraging local and foreign investors into the country. With reiterations by the government through its various agencies to enhance the Ease-of-Doing business in Nigeria, it is envisaged that more local and foreign investors would explore Nigeria.

Our broad objectives at A & E Law Partnership, supports government efforts to improve the ease of doing business in Nigeria, this is also why investment and business law is part of our forte. From our observation, there is no single compendium on basic investment prerequisites on the various sectors of the Nigerian economy. Beyond that, we realise the need to take a sector by sector approach that addresses specific sector information needs of investors, rather than a broad and generalized approach that addresses broad economic indicators.

The summary purpose of this publication therefore, is to avail existing or potential investors, foreign and or local, the basic entry requirements for doing business in different sectors of the Nigerian economy. It is an effort at presenting to a global audience, a critical, yet enlightening result of an environmental scan of select sectors of the Nigerian economy. It focuses on the minimum requirements that must be met by prospective investors before they can be licensed to operate in different sectors in Nigeria.

The guide systematically reviews the regulatory framework for each of the selected sectors, and distils basic entry requirements. It also provides appropriate references for further reading. It must however be stated that as at the time of preparing this work, certain sectors of the Nigerian economy were undergoing reforms; some regulations were still in the works while some others were at the pilot phase.

The sectors and associated subject matters specifically dealt with in this publication include:

Insurance; Aviation; Taxation; Electronic Money Transfer/Payment Systems; Registration of Courier Services and Clearing and Forwarding Agents; Maritime, including Registration of Ships, Legal requirements under the Nigerian Cabotage Act, Cabotage Licence Registration; Banking, including Licensing of Microfinance Banks and Commercial Banks. Others are Energy/Power; Solid Minerals; Oil and Gas, including Issues Bordering on Local Content Development; Entertainment, Licensing and Censorship; Radio, Sound, Television, Cable or Satellite Station; Operating in the Nigerian Capital Market as Broker/Dealer, Fund or Portfolio Manager, Corporate Investment Adviser; Intellectual Property, specifically, the Registration of Trademark, Patents, Copyrights, and Designs.

Others are Food and Beverages Registration with NAFDAC; Telecommunication Licenses; Environmental Standards and Regulations that impact upon operating a Business in Nigeria; Immigration, including obtaining Expatriate Quotas, Residence Permits etc as well as the Licensing and Regulation of Private Guard Companies in Nigeria.

WHO WOULD NEED THIS BOOK?

The handbook is intended to serve as a resource material and a veritable reference guide to investors, the Chambers of Commerce, legal practitioners, and indeed anyone interested in knowing the requirements for participation in any of the listed sectors. It also contains the titles and sections of the statutes providing for the requirements and licenses. It is however not exhaustive in that it does not cover all the sectors of the Nigerian economy, and should not be taken as legal advice offered by A & E Law Partnership or in any way remove the need to consult a lawyer in appropriate cases.

Care has been taken to avoid information overload, so that the publication maintains the character of a true handbook and not another textbook. The Authors recognize the huge opportunities that exist in Nigeria and the need to assist investors to tap into the huge potentials in Nigeria.

In conclusion, I commend every local and foreign investor, including potential ones to the words of the richest man in Africa, Aliko Dangote, who once said; If you give me $5 Million dollars today, I will invest everything in Nigeria. I have not seen any country where you can make money like in Nigeria, and I say it to anyone who cares to listen. The opportunities are so tremendous

I cannot agree any less.

Chibuzo Ekwekwuo,

Managing Partner

ACKNOWLEDGEMENT

This book has been an effort to provide guidance for local and international investors and the public in several areas of the Nigerian economy in which our staff have acquired work experience or have been otherwise engaged. This is the end result of the efforts of our personnel to report on our firms’ scrutiny of regulatory and licensing regimes in various sectors of our national economy.

Contributors to this book have included Uchechi Dibiaezue (Mrs), Godwin Chigbu, Chienye Obiajulu (Mrs) and Chukwuma Chinaka, Chief Steve Ahaneku, our Principal Partner and myself, Chibuzo Ekwekwuo the Managing Partner of A&E Law Partnership.

The effort to put this book together was led by Uchechi Dibiaezue (Mrs) with close guidance of Chief Steve Ahaneku our Principal Partner, to these colleagues the firm owes huge gratitude.

To our copy editor, Idika Onyeukwu, and graphic artist, Sam Esezobor, we express our deep gratitude.

Finally our gratitude goes to the unseen hand above, from whom all good things flow.

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CHAPTER ONE

INSURANCE

1.1 SUMMARY OUTLOOK

With its Financial System Stability (FSS) as major instrument, the current government in Nigeria envisages the insurance sector becoming one of world’s 15 largest come 2020.

Transformation and revamping activities are ongoing under the close supervision of the Central Bank of Nigeria (CBN), in close consultation with the Nigerian Insurance Commission (NAICOM), the idea being to enhance insurance’s overall contribution to the Gross Domestic Product (GDP).

These are boosting stakeholder enthusiasm for insurance sector autonomy as well as envisaged empowerment of the NAICOM to enforce operators’ compliance with various existing insurance laws.

Also, in its 2017