Foreign investment in Nigeria may be in the form of foreign direct investment or foreign portfolio investment.

9/23/20222 min read


Foreign investment in Nigeria may be in the form of foreign direct investment or foreign portfolio investment.

According to International Monetary Fund (IMF), Foreign direct investment (FDI) occurs when foreign investors own up to 10% equity of a company. When the foreign investors equity is less than 10%, IMF regards such investment as part of stock portfolio (portfolio investment).

Foreign portfolio investment, which involves investing in stocks and securities of an existing Nigerian company.

Any foreign company intending to do business in Nigeria (except for companies exempted by the President) must be incorporated as a separate entity in Nigeria.

Until incorporation, such foreign company cannot have a place of business in Nigeria, save for the receipt of notices and other documents as matters preliminary to incorporation

The solid minerals in Nigeria range from precious stones to the various industrial minerals for a wide range of industries as construction, pharmaceuticals, food processing, and other forms of manufacturing. Despite the huge resource base of the country, Nigeria has not been able to achieve a high level of economic growth, nor has it been able to attract a high level of private sector investment commensurate with its economic potentials (Anyanwu, 1998). In the assessment of the Nigerian investment environment.

FDI restrictions and constraints in Nigeria

Generally, foreign investors are allowed under the law to wholly own businesses or in partnership with others in Nigeria, except for businesses operating in the areas of:

a. Manufacturing of military/paramilitary uniforms and accoutrements.

b. Production of arms and ammunitions.

c. Production and dealing in narcotic drugs and psychotropic substances

Other items as the Federal Executive Council may from time to time determine

In addition, there are sector-specific restrictions that investors must be aware of:

a. Oil and Gas: The Nigerian Oil and Gas Industry Content Development Act defines a Nigerian Company as a Company registered in Nigeria in accordance with the provisions of the Companies and Allied Matters Act with not less than 51 percent equity shares owned by Nigerians.

It further provides that Nigerian operators and indigenous service companies shall be given first consideration in the award of oil blocks, licenses and works in the sector. Thus, to be competitive in the award of contracts, at least 51 percent equity should be owned by Nigerian investors.

b. Private Security: A foreign investor is prohibited from having an equity stake in a private security company in Nigeria.

c. Engineering: A company and its employees who are engineers engaged in engineering services must be registered with the Council for the Regulation of Engineering in Nigeria (COREN). One requirement for registration is that the company must have Nigerian directors registered with the COREN holding at least 55 percent of the company's shares. Also, expatriate engineers who are granted provisional registration cannot register a 100 percent-owned engineering consulting firm in Nigeria.

d. Broadcasting: For a foreign investor to acquire a broadcasting license in Nigeria, the majority of its equity stake must be owned and operated by Nigerians and must not represent foreign interests.

e. Management Restriction: Private limited companies must have at least two shareholders, two directors and a company secretary. A public company is required by the SEC to have at least five directors (at least one of whom must be an independent director). Also, a Nigerian company looking to employ foreign nationals must obtain expatriate quota approvals before employing them, and are required to file monthly immigration returns stating the utilization of expatriate quotas.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact



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