Foreign Investment Requirements and Protection

Principal Laws on Foreign Investments

The principal laws regulating foreign investments are, the Nigerian Investment Promotion Commission Decree No.16 of 1995 and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree No.17 of 1995, now incorporated as Acts of the National Assembly. 

Deregulation of Equity Structure in Nigeria Enterprises 

Effectively, the Nigerian Enterprises Promotion (Repeal) Decree No. 7 of 1995 has abolished any restrictions, in respect of the limits of foreign shareholding, in Nigeria registered/domiciled enterprises. The only enterprises which are still exempted from free and unrestrained foreign participation are those involved in:

  • Production of arms and ammunition
  • production of and dealing in narcotic drugs and psycothropic substances;

The Nigerian Investment Promotion Commission Decree No. 16, 1995 (NIPC Decree) 

This decree established the Nigerian Investment Promotion Commission (NIPC) as the successor to Industrial Development Coordination Committee (IDCC) 

Functions and Powers 

The Nigerian Investment Promotion Commission (NIPC) is an Agency of the Federal Government with perpetual succession and a common seal which is specially established, among other things, to: 

  1. Co-ordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria
  2. Initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors
  3. Promote investments in and outside Nigeria through effective promotional means
  4. Collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital and advise on request, the availability, chance or suitability of partners in joint-venture projects
  5. Register and keep records of all enterprises to which the NIPC legislation applies
  6. Identify specific projects and invite interested investors for participation in those projects
  7. Initiate, organise and participate in promotional activities such as exhibitions, conferences and seminars for the stimulation of investments
  8. Maintain liaison between investors and Ministries, government departments and agencies, institutional lenders and other authorities concerned with investments
  9. Provide and disseminate up-to-date information on incentives available to investors
  10. Assist incoming and existing investors by providing support services; 
  11. Evaluate the impact of the Commission on investment in Nigeria and recommend appropriate remedies and additional incentives
  12. Advise the Federal Government on policy matters, including fiscal measures designed to promote the industrialisation of Nigeria or the general development of the economy
  13. Perform such other functions as are supplementary or incidental to the attainment of the objectives of NIPC Decree. 

Provisions Relating to Investments 

Notable amongst the provisions relating to investments are the following: 

  • A non-Nigerian may invest and participate in the operation of any enterprise in Nigeria
  • An enterprise in which foreign participation is permitted, shall after its incorporation or registration, be registered with the NIPC.
  • A foreign enterprise may buy the shares of any Nigerian enterprise in any convertible foreign currency.
  • A foreign investor in an approved enterprise is guaranteed unconditional transferability of funds through an authorised dealer, in freely convertible currency of
    1. dividends or profit (net of taxes) attributable to the investment
    2. payments in respect of loan servicing where a foreign loan has been obtained
    3. the remittance of proceeds (net of all taxes) and other obligations in the event of sale or liquidation of the enterprise or any interest attributable to the investment. 

Priority Areas of Investment 

The NIPC issues guidelines and procedures which specify priority areas of investment and prescribed incentives and benefits which are in conformity with Government policy. 

Incentives For Special Investment 

For the purpose of promoting identified strategic or major investment, the NIPC may in consultation with appropriate Government agencies, negotiate specific incentive packages for the promotion of investment 

Investment Protection Assurance 

The NIPC Decree provides that: 

  1. No enterprise shall be nationalised or expropriated by any Government of the Federation
  2. No person who owns, whether wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other persons. 

There will be no acquisition of an enterprise by the Federal Government unless the acquisition is in the national interest or for a public purpose under a law which makes provision for:

  1. Payment of fair and adequate compensation
  2. A right of access to the courts for the determination of the investor’s interest of right and the amount of compensation to which he is entitled. 

Compensation shall be paid without undue delay, and authorisation given for its repatriation in convertible currency where applicable. 

Apart from the investment guarantee assurances of the NIPC Decree, countries are welcome to execute and enter into bilateral Investment Promotion and Protection Agreements (IPPA) with the Nigerian government. Several countries have thus concluded such agreements with Nigeria.