What Does Future Of Doing Business Look Like In Nigeria? Practical advice for international attorneys

The regulatory landscape and business growth are evolving across Africa – hear from 4 leading legal practitioners as they share their perspectives on the expansion of business and law across different sectors. Gain advice on to expand into the Nigerian markets and explore joint ventures or business opportunities.

Africa is a fast-growing population, with its workforce about to hit 1 billion people – the world’s largest working workforce by 2024. So what opportunities do these present lawyers and law firms interested in doing business is the content?

We spoke to four leading legal practitioners from Kenya and Nigeria in a panel discussion on doing business in Africa.

We took a deep dive into what the regulatory climate looks like, the state of doing business in Africa, what a foreigner needs to know about doing business in Africa, and the regulatory considerations when it comes to employment, corporate setup, business setup as well as IP protection.

On the panel discussion, we had Joe Amisi and Pauline Kamunya-McAsila from Kenya, and Aderonke and Seun Timi-Koleolu from Nigeria.

This article focuses on the Nigeria perspectives – You can hear from Joe and Pauline and their take on the business law landscape in Kenya and advice for international lawyers wanting to do business there, in this article.

Aderonke is a finance and technology lawyer at Pavestones, where she advises on financial trade, reserve-based lending.

Also from Pavestones is Managing Partner, Seun, who focuses on supporting clients and their commercial goals through the use of strategy and technology.

Pavestones is a modern full-service practice with a particular interest in technology and innovation. So that’s why you’ve heard me talk a little about technology.

They a passion for encouraging innovation in the Nigeria markets. We also have a passion for foreign investments and we support clients who are trying to enter into the Nigerian markets.

Q: what is the state of doing business in Nigeria today and what opportunities are presenting themselves for international attorneys and business owners?

Seun

What’s happening here in Nigeria is a bit different from Kenya. Yes, there is a need for law practices to expand to reach a global market. But in Nigeria, we first have to look at what’s happening in the sectors.

Nigeria was largely a country dependent on oil, so there was a lot happening in the energy sector and a lot of law firms focused on that. There’s now been a move to technology and it cuts across all sectors of the economy.

There’s a lot happening in the tech space and you have the agric sector, education sector, financial sector services. There’s a lot happening in the FinTech space in Nigeria. It is now important in Nigeria for lawyers to have that knowledge, the skillset to advise the businesses in that space.

We also have a lot of foreign investors who are looking into the Nigeria markets and they tend to be focused on the tech companies. I know a company we have in Nigeria that just raised a lot of money in the FinTech space.

When it comes to globalization, there’s been a lot of cross border transactions. We’re partnering with law firms and individuals who are looking to do business in Africa. We’re also sharing, sending work out of Africa to other countries.

It almost feels like there’s no limitation right now. It’s literally becoming a global market.

Law firms that are positioned for that, are the ones that would succeed and flourish.

Aderonke:

Speaking strictly from the Nigerian perspective, the legal space here is a small market. However, we have many lawyers, over 2000 students, graduating from the Nigerian law school every year.

What we’ve come to realize is that perhaps in the next few years, we would have no choice than to start to see lots of mergers, takeovers and the bigger law firms take over the smaller law firms who are doing well.

Unfortunately, some law firms might just disappear because not everybody is embracing technology.

Now from the standpoint of globalization and cross border transactions, I think personally in my over 10 years of experience, I’ve had the opportunity to work with quite a number of law firms across, across the world. Law firms in England, law firms in the United States, simply because Nigeria has also made a deliberate effort to encourage foreign investment.

One of the very important features of this current administration is the fact that they have placed a lot of emphasis on, enabling the business environment, ease of doing business in Nigeria.

I’ve also seen instances where law firms based in England or Europe are looking to partner with law firms in Africa, as well as Nigeria because there’s a synergy. There’s a lot of globalization and we see that partnerships, and working together becoming inevitable.

Q. What is being done to encourage outside foreign investment or business ventures in Nigeria?

Seun:

When you’re coming into the Nigerian market, the entry strategy is important.

It’s important to advisors like us, so we can strategize with you on what’s best for the sector in which your company wants to engage in. You could either come in as a company, limited by liability if it suits you or company limited by guarantee.

It’s also possible for you to enter into partnerships. It’s possible for you to, rather than set up a company, enter into a partnership because it might be tax efficient.

It’s important also that you consider the manner in which you inflow capital into Nigeria. There’s something called a certificate of capital importation.

You need to get your money through authorized dealers into the country so that you can freely repatriate funds out of the country. If you bring in money outside, this it might be difficult to get your profits out of the country. So it’s important that a CCA is obtained. An investor can come in by investing in shares or by granting loans.

It’s also important that you consider if you’re going to have a technical partnership with your offshore parent company. If you enter into a technical partnership with your offshore parent company, you have to get the approval of a regulator.

If you don’t get the approval you will also struggle to repatriate funds out of the country.

There are incentives that our governments have put in place for people who aren’t coming to the agri-sector, manufacturing sector, there’s something called pioneer status, so you get tax holidays of up to about five years.

If you come into a sector, which we consider to be a pioneer sector, the right legal advisor can advise you and direct you on that. A company, who comes into Nigeria without the knowledge might end up paying taxes that were not necessary.

If you’re coming from a country that has a double taxation treaty with Nigeria, that could also reduce your tax exposure.

It’s also important that you understand the regulator of the sector in which you’re coming into. If you’re coming into the food manufacturing sector, pharmaceutical sector, it’s important that you get the approval of a regulator called NAFDAC.

Then there are immigration permits. The central bank of Nigeria regulates the FinTech space, regulates the FinTech and financial services space. A lot of the FinTech companies appreciate legal advice that helps them avoid having to be overly regulated. So what’s happening in the FinTech space is not modern, and they are not suited for a lot of FinTech companies.

Legal advisors have to obviously look through the laws to ensure that tech companies who are coming in, including into the FinTech space, do not seem to be in breach of it, but also not unnecessarily regulated.

So lawyers with solution mindsets, like us at PavesStones, try to help you think around it to do things properly, but as easily and as simply as possible.

Aderonke:

Nigeria encourages one hundred per cent foreign participation. I believe Pauline also mentioned it’s the same principle that applies in Kenya, except of course, in certain highly regulated sectors, like the oil and gas sector, which encourages or requires local contents.

Now, of course, if you’re doing business in the Nigerian oil and gas sector, not only does the law require you to be at least 51% locally owned, the law also requires that you must have local employees.

It is only in exceptional cases where you have proven that it is actually impossible for you to employ Nigerians or no Nigerians with the skills are required. You have to apply for work permits for highly skilled personnel.

Something else important for foreigners who wants to do business in Nigeria is to realize that not every single sector is regulated.

Not every single piece of information is online and not every single piece of information is documented or available to the general public. So engaging local personnel, local lawyers and having practical knowledge of how the markets operate is very important.

For businesses that are bringing in something that is a little novel, such as ride-hailing there are different regulations.

Recently there were a couple of companies that started ride-hailing on motorbikes. Whilst there are multiple bikes generally in Lagos, people hop on motorbikes to get to the nearest destination because there’s often a lot of traffic. But this was new because you could literally just pick up your phone, just like you’re calling an Uber or a cab.

Apparently, they had been regulation that had existed prior but was never enforced. And a lot of these bikes and a lot of these companies were taking it back when legal States decided to enforce that regulation.

Now, I say that it is important to engage regulators from the onset because not only do you know their mindset, it is also possible that you’re able to direct policy.

It is also possible that you’re able to drive policy. It is also possible that you are able to encourage the sector to develop positively. So if you engage regulators from the onset, you’re not only driving policy for the purpose of your business, but generally helping the economy as a whole to grow.

Q. Is there anything that you see on the horizon from the regulatory bodies that may impact global business leaders?

Aderonke:

What is happening in most of Africa, is what is happening in Nigeria. From a regulatory standpoint, there have been some improvements. In summary, we are not where we want to be, but we’re not where we used to be.

One improvement is data protection. Recently the Nigeria data protection regulation 2019 was passed and there has been a level of enforcement.

There has been some level of education so to speak, whereby the regulator needs staff has actually selected the number of DPCs, which are the data protection compliance organizations.

Almost every business in Nigeria uses data, or almost every business across the world uses data. Without data you can’t progress without data, without information, you can’t do anything.

There’s a lot of education about the need to protect personal data and the privacy of personal information. I believe that in the next few years, enforcement will become tougher.

From the standpoint of the regulatory environment for businesses generally, the new Companies and Allied Matters act was enacted in 2020. The overall essence of the act is to promote the ease of doing business in Nigeria.

One of the very important features is that a lot of processes, which we could otherwise not have done online, can now be done online. You can now register a one-man company or register a limited liability partnership.

From a taxation standpoint, there’s also a wider reach. The Nigerian government now seeks to collect tax from online businesses. Whether or not you have a physical presence in Nigeria, provided that your services are targeted outside Nigeria.

Seun:

What is the future? Technology. Our president and government are talking about digitalization and promoting digitally. So the regulators are also having to play catch up.

We now have this draft regulation on cryptocurrency, blockchain technology, there’s even crowdfunding regulation. They are all coming up with something to regulate the quick developments happening in the tech space.

At this point, a tech business coming into Nigeria is dealing with fragmented laws and regulations. People come to us with a wonderful, innovative idea, and then they ask us, so what’s the regulation?

We’re going to have to look at different fragmented laws and put them together and say: “Well, are you doing this? And does it involve that? Or this regulation might apply.”

Similar to what happens in Kenya, you have to go to regulators and ask questions.

So for the future, I expect that we will have regulations that are better suited for the changes happening. To the extent that these changes, I expect them to be quick.

Our government is encouraging foreign investments, encouraging technology and now the regulators are having to play catch up.

If you are interested in getting in touch with Seun or Aderonke from Pavestones and want to explore the options of doing business in the Africa Markets, on behalf of your firm or client, you can do so on NEXL.

Create your profile on the platform, start your FREE trial and then contact them directly using our private attorney communication channel.

Click here to start

Share on facebook
Share on linkedin
Share on twitter
Share on email

You might also like

Uncategorized

FireSide Chat: Business Development

In this exclusive Fireside Chat, our Head of Growth Ben Chiriboga sits down with William McLaughlin, accompanied by attorney, Russell Davidson, to discuss the state of law firm business development; past, present and

Uncategorized

Why The Fortune Is In The Follow Up For Law Firms

HOW NEXL’S CONTACT MANAGER HELPS LAWYERS WITH BUSINESS DEVELOPMENT How many times do you follow up with a new potential client? If you are in professional services, you have probably heard the

Uncategorized

FireSide Chat: Client Psychology

In this exclusive Fireside Chat, our Head of Growth Ben Chiriboga sits down with Expert in Residence, Shari Belitz, to discuss the interesting topic of cognitive biases for lawyers. Shari shared

Subscribe

Stay on the Business of Law Pulse

Be one of the first to get a copy of the 2021 Global Legal Business Development Report

Get your hands on this exclusive intel, benchmark your efforts against the industry and pick up a few ideas and strategies from the experts. 

Learn how we have helped other law firms win more business with less work.

Talk to one of our business development experts and learn how you can increase your firm’s revenue using NEXL.

small_c_popup 1

Let's have a chat

See how you can increase Cross-selling and Client retention at your firm