Nigeria: Business Environment, Risks, and Market Opportunities

Country overview:

IOA has focused considerable in-depth research and has undertaken consulting services on Nigeria to form a data-based understanding of the Giant of Africa. Our economists note that the populous country has historically Africa’s largest economy, Nigeria saw its nominal GDP revised downward in 2024 following significant naira devaluations and a rebasing of national accounts. Although domestic nominal GDP rose in naira terms, dollar-denominated estimates declined sharply, leading the IMF to place Nigeria’s 2024 economy behind Algeria, Egypt, and South Africa in size. The government is showing interest in the mining sector as a means to diversify the economy away from reliance on the energy sector. The manufacturing sector has become Africa’s largest after policies and investments targeted industrial growth. The grassroots success of the entertainment industry resulted from imaginative Nollywood filmmakers meeting the preferences of domestic and African audiences.

IOA analysts have characterised the economy as dual in nature: a modern, oil-based economy and financial sector; and a traditional agricultural and trade-based economy, involving the majority of Nigerians. This duality is responsible for income disparities, poverty and unemployment. Economic freedom needs improvement, which will require a diminishment of the power of the wealthy elite.

Tips on doing business in Nigeria:

Starting a business:

• Nigeria’s legal guidelines around business and property ownership are broadly in line with regional norms. Foreign investors are allowed 100% ownership of locally incorporated companies provided they can provide an initial share capital of US$6k. Foreign individuals and entities can acquire real estate in Nigeria by obtaining a Certificate of Occupancy from the relevant state government, though local law forbids direct foreign ownership of local land
• Registering a local company can be initiated by reserving one’s unique company name with the Corporate Affairs Commission (CAC). Name reservation and incorporation are fully online via CAC’s i-CRP portal (with AI-assisted checks); e-certificates are standard
• Wholly foreign owned companies are required to obtain a business permit from the Federal Ministry of Interiors as well as be registered with the Nigerian Investment Promotion Commission
  (Read more at: https://www.nipc.gov.ng/why-invest-in-nigeria/)

Doing business:

• Nigeria’s large population, growing economy, and logistics connections with the wider region render it an essential destination for West African investors. Local authorities are keen to diversify away from oil and gas and offer a host of incentives for foreign investors to start local operations
• Corporate tax rates in the country are generally between 20-30%, though a host of incentive schemes can push these rates down considerably. For example, a tax concession for five years at 15% is granted to a company or foreign investor with 1000 employees
• Numerous benefits are also provided to foreign companies willing to set up operations in the country’s Free Trade Zones including waivers of import and export licences, 100% repatriation of capital, profits and dividends and duty-free imports of capital goods

Culture and society:

• Nigeria business culture is generally quite hierarchical, with deference given to education and seniority over work experience
• The pace of business is generally slower than what is customary in other markets, including South Africa and other more developed economies. Local businesses prefer cash over electronic payments
• The northern parts of the country are majority Muslim and care should be taken not to cause religious offense in these areas. The country is known for its security risks including robberies, kidnapping and fraud as well as militant activity. Foreigners should really avoid travel in the delta state region and northern regions whenever possible