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Can a foreigner start a business in Nigeria? Here’s what you’ll need

You don’t have to be Nigerian to start a business in Nigeria. But setting one up as a foreign founder involves a few more steps than registering a standard Nigerian-owned company.

Ismail AhmadCo-founder, Qaba
7 min read

You don’t have to be Nigerian to start a business in Nigeria.

Foreign investors can own businesses in Nigeria, including 100% ownership in most sectors. But setting one up involves a few more steps than registering a standard Nigerian-owned company.

If you’re considering Nigeria as your next market, here’s a simple overview of what to prepare.

01 First, can a foreigner actually own a Nigerian company?

Yes.

Nigeria permits foreign ownership in most sectors, subject to restrictions on certain prohibited or specially regulated activities.

Up to 100%foreign ownership of a Nigerian company, in most sectorsNIPC Act
3 activitiesclosed to every investor, foreign or Nigerian: arms and ammunition; narcotic drugs and psychotropic substances; military and paramilitary wearNIPC Act “negative list”

For most founders, the starting point will be incorporating a Nigerian company with the Corporate Affairs Commission (CAC).

The CAC registration process generally involves choosing and reserving a company name, completing the incorporation application, providing the required company and shareholder information, submitting supporting documents and paying the applicable statutory fees.

Incorporating with the CAC

Pick a step to see what it asks of you

Choose a company name and submit it for availability. Keep two or three alternatives ready in case your first choice is taken or too close to an existing name.

Proposed namesBusiness type

The general sequence; your exact steps depend on your company type and structure.

02 What should you prepare?

Your exact requirements will depend on your business, ownership structure and industry, but you should expect to think about:

  • Your proposed company name
  • What the business will actually do
  • Shareholders and their ownership percentages
  • Directors
  • Valid identification, such as an international passport
  • A Nigerian registered business address
  • Your company’s share capital
  • Beneficial ownership information
  • Any industry-specific licences or approvals

Two of these are easiest to understand by trying them out: who owns what, and how much share capital that means.

Sketch your ownership

Change the shares and who holds them

Significant control
Significant control
Significant control
Significant control
Held from abroadHeld by Nigerians
74%foreign participation
2persons with significant control
100%allocated
  • Register with the Nigerian Investment Promotion Commission after incorporation
  • Get a Business Permit from the Federal Ministry of Interior before operating
  • Minimum share capital of ₦10 million
  • A standard Nigerian-owned company: minimum issued share capital of ₦100,000
  • Declare 2 people holding 5% or more as persons with significant control

A person who holds 5% or more of the shares or voting rights is a person with significant control, and is disclosed to the CAC as a beneficial owner. Shareholders that are companies need evidence of their own registration abroad.

CAC guidance states that identification is required for subscribers, shareholders and directors, and its current checklist places the minimum share capital for a company with foreign participation at ₦10 million.

Minimum share capital, side by side

Each dot is ₦100,000 of share capital

₦10,000,000minimum share capital with foreign participation
100×the minimum for a Nigerian-owned private company
Minimum share capital₦10 million, for scale

Sources: Companies and Allied Matters Act 2020, s. 27(2), for private companies; CAC Operations Checklists for companies with foreign participation. Sector regulators can set higher minimums.

That doesn’t necessarily mean you hand ₦10 million to the government to register the business. Share capital and the actual cost of incorporation are different things.

Share capital

The company’s own money

The value of the shares the company issues to its owners. It belongs to the company and can fund its operations.

Cost of incorporation

What registering costs

The statutory fees for filing with the CAC, plus any professional fees for help with the process.

03 There are additional requirements for foreign-owned businesses.

This is where registering as a foreign founder becomes different from ordinary incorporation.

Businesses with foreign participation are generally required to register with the Nigerian Investment Promotion Commission (NIPC) after incorporation. NIPC currently lists documents such as the CAC Certificate of Incorporation, company constitutional documents, details of directors and shareholding, and relevant evidence relating to foreign investment among its requirements.

Foreign-owned or foreign-participated businesses also typically require a Business Permit from Nigeria’s Federal Ministry of Interior before operating.

And if your company intends to employ foreign nationals in Nigeria, an Expatriate Quota may also be required.

Depending on what you’re building, there may also be additional licences from industry regulators.

Two routes to the same starting line

Compare the registrations each kind of company needs

  1. Incorporate the companyCorporate Affairs CommissionAlways
  2. Register the foreign investmentNigerian Investment Promotion CommissionAfter incorporation
  3. Business PermitFederal Ministry of InteriorBefore operating
  4. Expatriate QuotaFederal Ministry of InteriorIf you employ foreign nationals
  5. Industry licencesThe regulator for your sectorIf your sector is regulated
5registrations to plan for, two of them only in some cases.

04 Questions to answer before you start.

So before starting, it helps to answer a few questions:

  • Who will own the company?
  • Will you be operating from Nigeria or remotely?
  • Will you employ anyone in Nigeria?
  • Will any foreign employees relocate to Nigeria?
  • What industry will the company operate in?
  • Will you be bringing investment capital into Nigeria?

Those answers can materially change what you need.

Answer them here

Your answers build a list of what to look into

Will anyone outside Nigeria own shares?
Where will you run it from?
Will you employ anyone in Nigeria?
Will any foreign employees relocate to Nigeria?
Will you bring investment capital into Nigeria?
6things to look into
  1. CAC incorporationName, application, people, documents and fees
  2. NIPC registrationWith your Certificate of Incorporation and evidence of the foreign investment
  3. Business PermitFrom the Federal Ministry of Interior, before you operate
  4. ₦10 million minimum share capitalSet in the company’s documents at incorporation
  5. A registered address and someone on the groundFor official mail, documents and anything that needs a person present
  6. Employer registrationsPayroll tax and pension for staff you employ in Nigeria
  7. Expatriate QuotaApproval to employ foreign nationals, then visas and residence permits for them
  8. A sector licenceFrom the regulator for your industry
  9. A record of the money coming inAsk the bank that receives it for a Certificate of Capital Importation

A starting point for conversations with the relevant authorities or a qualified professional, not a complete list.

05 Can Qaba handle this for me?

Not yet.

We want to be very clear about that.

Qaba is being built to make starting and running a business in Nigeria dramatically easier, particularly when you’re managing that business from somewhere else.

But today, we do not yet support the complete setup process for foreign-owned Nigerian companies.

There are additional regulatory, investment and immigration requirements involved, and we want to make sure we can support those processes properly before offering them.

What we can do right now is help you understand what you may need to prepare.

Planning to start a Nigerian business?

Start by gathering:

Your preparation checklist

Tick things off as you gather them; this page remembers on this device

0 of 9ready

Once you have those pieces together, it becomes much easier to understand which registrations, permits and licences apply to you.

And yes, supporting founders like you is part of where we’re going with Qaba.

We just aren’t there yet.

If you’re planning to start a Nigerian business as a non-Nigerian, we’d still love to hear from you. Your questions will help us understand what Qaba needs to solve next.

Tell us what you’re planning

References

  1. Corporate Affairs Commission. (2022). Corporate Affairs Commission operations checklists 2022. https://news.cac.gov.ng/wp-content/uploads/2022/05/Corporate-Affairs-Commission-Operations-Checklists-2022.pdf
  2. Companies and Allied Matters Act 2020 (Nigeria).
  3. Corporate Affairs Commission. (2022). Persons with Significant Control Regulations 2022.
  4. Nigerian Investment Promotion Commission Act, Cap. N117, Laws of the Federation of Nigeria 2004.
  5. Nigerian Investment Promotion Commission. (n.d.). Business registration. https://www.nipc.gov.ng
  6. Federal Ministry of Interior. (n.d.). Business permit and expatriate quota. https://interior.gov.ng

This article is intended as general information, not legal, tax or immigration advice. Requirements can vary by company structure and industry, so verify your specific requirements with the relevant Nigerian authorities or a qualified professional before proceeding. The ownership sketch and checklists are illustrations to help you prepare.

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