The Canadian presence in Nigeria has seen a huge increase – from 23 Canadian companies in 2012 to 95 Canadian companies in 2015 – with credit for that growth due largely to efforts by Canada’s Trade Commissioner Service.
Canadian companies are active in many areas, such as the oil and gas industry, ICT, services, power and agriculture. Retail opportunities are also growing in step with consumer buying power. Today, major multinational players, like Nestle and Procter and Gamble, have plants in Nigeria.
Explore your possibilities through these connections:
Regional Manager – Africa,
International Business Development Group,
Export Development Canada
Where are Nigeria’s key opportunities and who is vying for them?
While Nigeria is primarily an oil and gas country, the government has been working to create opportunities in a number of sectors. The country needs power, so there is potential for anything related to power, including renewable energy sources. There is a lot of competition from local and foreign companies. In addition to China, the UK, the U.S. and France, we also see emerging countries like India, Turkey and Brazil pushing into Nigeria. What works in our favour is that Canadian businesses have a good reputation and the fact that we came to Nigeria to share our knowledge, and are not perceived as being there purely for business.
What challenges should companies prepare to face?
Nigeria’s power supply is not reliable and all businesses need backup plans for power generation; most use generators. Currency fluctuation is another challenge. It’s important to consult with your banker or financial partner to limit that risk.
What else should Canadian businesses know?
A personal relationship is the first key asset for building business connections. That’s why direct representation in the country is so important. Nigerians can be less formal when they do business – they like to have fun, so you can expect some hunour. As in Africa in general, your appearance really counts, so dress professionally. Your age and experience also matter and will affect how your offer will be considered.
Afolabi: Barristers & Solicitors
What should foreign businesses know about Nigeria’s regulatory environment?
There are many opportunities for potential investors or businesses willing to undertake the work and figure out how to be successful in this environment. A number of considerations concern incorporation. It’s not essential to have a Nigerian national on the board or as a shareholder, but it is advisable in some cases. There is a special set of regulations for the oil and gas sector, for example. The “local content development bill,” which aims to improve utilization of Nigerian human, material resources and services, means companies need an on-the-ground partner and have to work with local suppliers and local staff. There are also other legal details that are different in Nigeria, such as a flat tax rate of 30%, stamp duty payable at incorporation and regulations regarding expatriates.
What noteworthy developments in the legal landscape should businesses know about?
Nigeria’s new president has made the fight against corruption a key priority. That is very positive – it also means you have to properly vet your partners on the ground to make sure you don’t end up in a situation where they could harm your business interests. We advise not entering into an agreement with a partner until you have undertaken a vetting process. This is a service our firm can offer, and there are also entities that check whether potential business partners have a record of being involved in negative events or activities.
What are some challenges Canadian companies can face?
There could be a disparity in expectations, especially when it comes to how speedily you can get things done. The time for becoming incorporated, for example, can be as short as a few hours to a day in Canada. In Nigeria, it could take a month, even two months, so the key is to be patient. At the same time, it’s important to be aware that new laws can come up that may affect you and your business. Being actively involved as a stakeholder can help you foresee further downstream development in your particular market and industry. It’s also important to be aware of Nigeria’s governance structure. It’s a presidential system, and you also have governors and the constituents they are responsible for. You may be dealing with multiple legislatures, but this is also a chance to advocate your position with the different levels of government. Businesses can also benefit from government incentives that are available for doing business in certain regions.
Privacy Counsel, TRACE International
What are the top risks companies are exposed to when it comes to corruption in Nigeria?
Ranking 172nd out of 200 on the TRACE Bribery Risk Matrix, Africa’s largest economy presents a considerable challenge for businesses with respect to avoiding bribery. Day-to-day demands by low-level officials and entrenched rent-seeking at the highest levels of government are both common.
As oil exports continue to account for the great majority of the government’s revenue, high-ranking politicians within the government’s procurement process are those most easily able to seek out patronage. Corruption and congestion are also significant issues at Nigerian ports, which can be cumbersome and highly bureaucratic. One analysis done by the Maritime Anti-Corruption Network determined that a staggering 142 signatures were needed to clear cargo in the port of Lagos alone. However, recent presidential reforms at local ports may result in simplified customs paperwork, providing needed transparency and reducing demands for bribes from corrupt officials.
How can companies identify and address red flags for corruption specific to Nigeria?
Red flags can be identified through strong preventative and detective internal controls, and by training local employees and intermediaries on identifying and responding to bribe demands. Companies will find that ordinary Nigerians are natural allies and will support their efforts as they, too, suffer from the high levels of corruption in the country.
Success requires considerable commitment and advance planning. Companies should have strong internal procedures aimed at identifying impropriety early on; robust investigative teams to ferret out suspicious behaviour; and a strong commitment to implement remedial measures to address any red flags and gaps.
Recent Developments in Nigeria
There is new optimism for doing business in Nigeria thanks to the decisive actions taken by Nigeria’s current president Muhammadu Buhari and his vice president Yemi Osinbajo, who have been waging an uncompromising anti-graft war since winning the election in 2015. Both the United States and the European Union have committed significant resources to support this fight. The resulting progress has been real: companies have reported that by investing heavily in compliance resources, setting a strong ethical tone, and using creativity in developing anti-bribery strategies, they can indeed do business in Nigeria without paying bribes.
Where do you see opportunities for growth?
There are many opportunities for exports into a market as large as Nigeria. With a growing population of 170 million who like to eat bread, you might wonder why the U.S. is the only country exporting wheat to Nigeria, for example. But companies interested in exporting to this part of Africa have to be well informed about regulations, legal frameworks and financial aspects, such as how to receive guaranteed payment for goods.
What do exporters need to know about Nigeria?
For products going into Nigeria, it’s important to make sure they are not currently on the import prohibition list, or will likely be on the list in the next couple of years. Each country prohibits certain imports based on its priorities. But in Nigeria, there are currently a number of things on the list that you wouldn’t think could be prohibited, such as pork products, wheat flower or bagged cement. It’s important to know what kind of service or product can enter the country. The second concern is quality. Products need to conform to the Standards Organization of Nigeria (SON), as well as relevant industry specifications. If not, they might get shipped back from the port.
What kind of help do Canadian companies look for?
The companies I work with are looking to find buyers for their products, or they look for businesses they could acquire in Nigeria. Others are looking for industry partners. The success of Canadian companies looking to export to Nigeria often depends on how well their contacts know the market and are able to make connections or broker deals.
StreSERT Services Limited
How difficult is it to source qualified staff in Nigeria?
The opportunities for sourcing qualified staff members in Nigeria depend on the organization’s ability to attract them, as well as its business needs: the roles, specification and relevance to the attainment of business objectives. The Nigerian labour market is huge and there are many qualified people in the various fields. Recruitment consultants are on the ground to assist in this regard.
Any human resource strategies Canadian companies should consider?
Important human resource strategies to consider in Nigeria include a focus on achieving business and HR goals, and stimulating dialogue among top executives to shape the HR strategy. We also advise on designing and implementing training and people programs to attract, develop and retain staff. Other aspects concern aligning the compensation strategy and reward system around general business goals to ensure the required performance of employees, and running a succession plan program for the entire organization to ensure the smooth transition of know-how.
What other advice can you offer Canadian companies looking to set up a business in Nigeria?
Companies looking to set up a business in Nigeria must consider carrying out a feasibility study to determine what business types are [more likely] to succeed. In regard to the legal framework for business activities, a foreign investor wishing to set up business operation in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary and ensure the business is registered with the Registrar-General of the Corporate Affairs Commission – the registrar of companies in Nigeria. Pre-operational activities should include a survey to provide on-the-ground intelligence, obtain information on living expenses, accommodation, schools, compensation, security, etc. It is advisable to engage the services of a local consultant to execute this exercise – some of this information is very relevant prior to arrival.
Export Development Canada does not endorse or favour any organizations listed above and is not responsible for the actions of those parties.
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