Nigeria, Africa’s largest economy, has many opportunities for foreign entrepreneurs who want to tap into its fast-growing markets. With a young, tech-savvy population and a growing digital economy, Nigeria continues to attract businesses in various sectors, including technology and finance.

However, starting a business in Nigeria as a foreigner can come with some challenges, from regulatory hurdles to banking and compliance issues. Take a walk through the essential steps to establish your business successfully:

By the end of this guide, you will:

As a foreign entrepreneur going into the Nigerian market, it’d be a bad idea to do so without a navigation guide that works.

Here’s a comprehensive step-by-step process to help you establish your business in Nigeria:

Every business in Nigeria needs to be registered before it can start to operate. The process is regulated by the Corporate Affairs Commission (CAC). There are several steps involved in the process of registering a business in Nigeria as prescribed by the commission:

Step 1: Choose the right business structure

Foreign entrepreneurs need to choose the appropriate legal structure of their company before they begin the process.

LLC (Limited Liability Company) is usually the most used structure for private businesses as it provides against defense liability.

A company is required to register as a PLC (Public Liability Company) if it plans to raise funds via public shares.

The sole proprietorship is only suitable for small-scale businesses but not ideal for foreign investors.

Partnerships and joint ventures is perfect for foreign investors who want to partner with Nigerian investors.

Step 2: Register with the CAC (Corporate Affairs Commission)

Find a suitable business name and reserve the name on the CAC online system. You’ll have to submit incorporation documents, including:

After registering successfully, a Certificate of Incorporation and Company Registration Number (RC Number) will be issued to you.

Step 3: Obtain a Tax Identification Number (TIN)

For taxation to be paid to the FIRS, all businesses must collect tax. TIN registration is necessary to open a corporate bank account and pay taxes.

Step 4: Meet capital requirements

There are some industries, such as banking, telecommunications, and oil & gas, that require minimum capital investments. Foreign investors must verify if there are sector-specific laws within their industry before incorporating.

Learn the best ways to set up a legally compliant business in Nigeria. Next, focus on the financials.

  

If you’re running a foreign-owned business, your first task is to set up a naira or domiciliary (foreign currency) corporate account at a Nigerian bank.

Here’s what you’ll need to get started:

Step 2: Cross-border financial services  

With currency fluctuations being a real concern, many businesses turn to fintech payment solutions like Paystack, Flutterwave, or Remita to handle their transactions more smoothly. Digital banking services let you make international transfers easily and manage multiple currencies without a hitch.

Step 3: Understand foreign exchange regulations  

The Central Bank of Nigeria (CBN) keeps an eye on foreign exchange transactions, especially when it comes to bringing in capital. To repatriate profits and dividends, you’ll need a Certificate of Capital Importation (CCI).

Nigeria offers various tax advantages to encourage foreign investment, such as:

1. Pioneer Status Incentive (PSI)

This grants a tax holiday of 3 to 5 years to enterprises in the sectors, for instance, technology, manufacturing, and agriculture, that the government considers eligible for the tax

2. Double Taxation Agreements (DTAs)

Nigeria has formal agreements with more than 15 countries that serve to reduce the tax implications on international investors.

3. Industry-Specific Tax Benefits

The corporate tax rates are lower than the personal tax rates for other businesses that are coming up or the MSMEs. The new businesses or

Export Incentive Grants (EIG) are given to the companies that export goods.

4. Free Trade Zones (FTZs)

Enterprises in FTZs get advantages of not paying import duty, less taxation, and simpler ways of taking back profits.

Foreign investors and business owners are required to have the necessary visas and permits.

Step 1: Business Visa (Short-term entry)

This is perfect for market probing, conferences, and viability reports. It is valid for 90 days with single entries or multiple entries.

Step 2: Subject to Regularization (STR) visa

The STR visa is necessary for foreigners who intend to run business operations that will last for a long time. This visa should be transformed into a Combined Expatriate Residence Permit and Aliens Card (CERPAC) when you land.

Step 3: Expatriate Quota (hiring of foreign employee)

To employ foreign workers in Nigeria, a company must, first of all, apply for an Expatriate Quota (EQ), as it determines the number of employees who are foreign under the company.

1. Join business and trade networks

Nigeria Employers Consultative Association (NECA) have a collaboration with Nigerian-American Chamber of Commerce to provide a platform for networking

Going to the Lagos Startup Expo or any relevant event of the kind will assist in connecting with the industry.

2. Partner with local experts

Get the assistance of legal and financial consultants to help you navigate the law without any problems. Consider using business accelerators such as Lagos Innovates or Founders Factory to help.

3. Leverage Nigerian talent

Nigeria’s labor force is increasingly skilled in tech, finance, and other creative professions with a high growth rate.

For instance, you can use platforms like Jobberman, LinkedIn, or Andela to source local talent.

Scale faster; get insider strategies from this founder who scaled multi-million dollar businesses in Africa.

With a growing population of over 200 million, abundant natural resources, and increasing digital adoption, the country’s business climate has been much more evolved of late  

However, one of the key steps to starting a business in Nigeria is understanding its key economic sectors, regulatory framework, and market trends  

Several high-growth industries are leading the economic expansion in Nigeria’s diverse economy:

Technology and innovation

Nigeria is home to Africa’s largest startup ecosystem, particularly in fintech, health tech, and edtech.

Of all the 36 Nigerian states, Lagos is the major tech hub, which attracts venture capital and encourages digital innovation.

The government’s Nigeria Startup Act aims to provide regulatory support and incentives for startups.

Oil and gas

Nigeria’s oil and gas sector remains a cornerstone of Nigeria’s economy because it contributes significantly to the GDP and foreign exchange earnings.

The Petroleum Industry Act (PIA) intends to improve regulatory transparency and attract foreign investment within the oil and gas industry.

Agriculture and agritech 

Over 35% of people work in agriculture, which makes it an important provider of food security.

Meanwhile, the rise of agritech startups is improving supply chain efficiency and access to financing.

Initiatives from the government, such as the Anchor Borrowers’ Programme, fund the farmers.

Retail and e-commerce 

Nigeria’s e-commerce market is on an upward trajectory, as it is driven by improving internet penetration and a digital payments landscape. The major platforms in Nigeria, such as Jumia, Konga, and PayPorte, are the dominant players in this space, with SMEs increasingly moving to online platforms.

However, advances in logistics and last-mile delivery have remained critical challenges, within this market.

Manufacturing and trade 

The manufacturing sector is the backbone of industrialization and job creation in Nigeria. Consumer goods, cement, textiles, and pharmaceuticals are the most essential in this industry.

The African Continental Free Trade Area (AfCFTA) helps ease the promotion of intra-regional trade.

Financial services and banking 

Nigeria has one of the most developed banking sectors in Africa, with good adoption of the digital banking system.

The fintech sector is leading a revolution in financial inclusion, thanks to startups like Flutterwave, Paystack, and Opay. In addition, the Central Bank of Nigeria is responsible for regulating the industry and maintaining economic stability.

Despite Nigeria’s pro-business stance, firms must meet legal and regulatory demands to thrive. Some of the establishments to consider are:

Corporate Affairs Commission (CAC) 

The CAC is concerned with registering and incorporating businesses.

The first step in registering a business with the CAC is to decide on the type of business entity. Is it a business name (BN), Private Limited Company (Ltd), or Public Company? When you have decided, you can register online at the CAC portal.

Nigerian Investment Promotion Commission (NIPC) 

The NIPC supports and facilitates foreign investment, including advice on investment incentives.

It also coordinates the Pioneer Status Incentive (PSI), where such industries are granted tax holidays.

Federal Inland Revenue Service (FIRS) 

FIRS takes care of corporate tax, VAT, and personal income tax. Thus, businesses are required to get a Tax Identification Number (TIN) during the registration process.

Central Bank of Nigeria (CBN) 

Nigeria’s CBN is responsible for regulating financial services, monetary policy, and dealing with foreign exchange transactions.

Foreign businesses are required to obey capital importation and forex policies.

National Agency for Food and Drug Administration and Control (NAFDAC) 

Regulates the importation, manufacture, and distribution of food, drugs, cosmetics, and medical devices.

This is necessary for companies that are in the pharmaceutical, food, and health industries (worldbank.org).

Nigerian Customs Service (NCS) 

This body handles import regulations, export regulations, and the tariffs of trade. Businesses must acquire the right permits and clearances before trading internationally.

Expanding into Nigeria is attractive and challenging at the same time for foreign entrepreneurs. There is certainly a great potential for further development and growth.

However, there are several challenges you might face along the line:

Navigating Nigeria’s regulatory landscape can feel stressful. Business registration, tax compliance, and local laws require careful attention to avoid costly delays.

Pro tip: Get involved with local legal advisors and use digital platforms like the CAC online portal.

Nigeria’s diverse culture can lead to miscommunication and misunderstandings in negotiations and strategy.

Pro tip: Build local partnerships and invest in cultural training to bridge the culture and communication gap.

Issues such as unreliable infrastructure and logistics can disrupt your business operations.

Pro tip: Conduct thorough local assessments and establish relationships with reliable service providers ahead of time.
Our email course shares practical strategies from successful market entrants to help you plan for these challenges.

Currency fluctuations and complex banking regulations can impact cash flow and profitability.

Pro tip: Use fintech solutions for multi-currency transactions and consider hedging strategies.
Get free expert advice to help you work around any of such financial challenges.  

The competitive Nigerian market requires a deep understanding of local consumer behaviour and market trends.

Pro tip Invest in comprehensive market research and tailor your value proposition to the industry you intend to invest in. This way, you are one step ahead.

See the competitive strategies that have worked for businesses expanding to Nigeria.

Starting a business in Nigeria as a foreigner can be rewarding in the long run, but in the meantime, it requires you to plan carefully and comply with local regulations. With the right approach and support, you can navigate the process with ease.

Here are some things you can do first: