It is an indisputable and unvarnished fact that a country cannot thrive economically without foreign investment ‘protection’, which is essential to the achievement of business objectives and economic viability of any economy. A foreigner desirous of investing in Nigeria has two options: to either choose Foreign Portfolio Investment (FPI), which involves investing in stocks and securities of an existing Nigerian company or embrace Foreign Direct Investment (FDI), which involves establishing a business enterprise and acquisition of business assets in Nigeria. But whichever option a foreigner chooses, the law makes copious provisions translating into some form of protection for the foreigner in Nigeria.
It is important to note that the Companies and Allied Matters Act, 2020, provides that every foreign company intending to carry on business in Nigeria (except for companies exempted by the Minister) must be incorporated as a separate entity in Nigeria. Until incorporation, such a foreign company cannot have a place of business in Nigeria, except for the receipt of notices and other documents as matters preliminary to incorporation.
The development, growth of international business relations and the importance of foreign investment to the Nigerian economy, have made the country put in place some foreign business protection laws and investment incentives related to taxes, exports and other sectors aimed at improving FDI and FPI in Nigeria.
Silhouetted against the backdrop of the foregoing, therefore, the kernel of this article will be on the applicable laws and incentives put in place for the protection of foreign investors in Nigeria.
THE REGULATORY FRAMEWORK OF FOREIGN INVESTMENT IN NIGERIA
There are several laws and rules regulating foreign investment in Nigeria. The primary legislation governing foreign investment in Nigeria are as follows:
- The Nigeria Investment Promotion Commission Act: is the apex regulator for foreign investment in Nigeria. It is mandated to encourage, promote and coordinate investments in Nigeria.
- Investment and Securities Act (ISA): empowers the Securities and Exchange Commission with the responsibility of regulating investment and securities, keeping and maintaining a register of foreign portfolio investments amongst others;
- National Office for Technology Acquisition and Promotion (NOTAP) Act: established the National Office for Technology Acquisition and Promotion (NOTAP) and it is responsible for registering contracts/agreements that relate to the transfer and acquisition of foreign technology.
- Foreign Exchange (Monitoring and Miscellaneous Provisions) (FEMMA) Act: is the primary legislation for foreign exchange transactions in Nigeria. The Act establishes an Autonomous Foreign Exchange Market where transactions in foreign exchange are conducted, monitored, and supervised.
- Central Bank of Nigeria Act (CBN Act): It is the apex regulatory body for banks and financial institutions as well the regulatory body responsible for the management of monetary, foreign exchange and foreign currency reserve of Nigeria.
PROTECTION UNDER THE I999 CONSTITUTION
The Nigerian Constitution guarantees that the foreign investor enjoys fair and equitable treatment like nationals and he or she enjoys the same rights granted by the law to Nigerians under similar conditions. This means that a foreign investor has a right to life, a right to respect for the dignity of his person, he or she has right to personal liberty, right to fair hearing, right to private and family life, right to freedom of thought, amongst other rights enshrined in the constitution.
PROTECTION UNDER THE NIGERIA INVESTMENT PROMOTION COMMISSION ACT
Foreign investors may invest and participate in the operation of any enterprise in Nigeria. Foreign companies have an option to buy shares of any Nigerian enterprise in any convertible currency. The purchase of the share of any Nigerian enterprise is to be completed through the Nigerian Stock Exchange.
Section 24 of the NIPC Act provides for free transferability of capital and returns. It provides that every foreign investor is guaranteed unconditional transferability of funds through an authorized dealer, in a freely convertible currency.
Foreign investors are protected against nationalization and expropriation. Nationalization is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state while expropriation is the act of a government claiming privately owned property to be used for the benefit of the overall public.
The Act provides that no enterprise shall be nationalized or expropriated by any government of the Federation; and 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 person. Where in the national interest, the Federal Government acquires any enterprise, there must be:
- payment of fair and adequate compensation,
- a right of access to the courts for the determination of the investor’s interest or right and the amount of compensation to which he is entitled.
It should be noted that any compensation payable is to be paid without undue delay and authorization for its repatriation in convertible currency where applicable be issued.
A foreign investor is granted the option of recourse to international arbitration for the settlement of disputes. It provides that where a dispute arises between an investor and any Government of the Federation with respect to any foreign enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement. Where a dispute is not settled amicably through mutual discussions, that dispute may at the option of the aggrieved party submit to arbitration within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties. In a dispute where there is a disagreement on the mode of settlement of disputes to be adopted, the International Centre for Settlement of Investment Disputes shall apply.
To further encourage foreign participation in businesses in Nigeria, the NIPC in conjunction with Federal Inland Revenue Service (FIRS) has come up with a Compendium of Investment Incentives in Nigeria published according to Section 4(1) of the NIPC Act which requires NIPC to ‘provide and disseminate up-to- date information available to investors in Nigeria. The Compendium is a compilation of the fiscal incentives in Nigerian tax laws and sector-wide fiscal concessions that have been duly approved by the Federal Government.
INTRODUCTION OF INVESTOR VISA UNDER THE IMMIGRATION REGULATION 2017 AND NEW VISA POLICY, 2020
The Immigration Act, 2017, regulates and controls the entry, exit, and employment of foreigners in Nigeria. To encourage foreign investment in Nigeria, Section 5(7) of the Immigration Regulation of 2017 provides for the issuance of a special type of visa called the Investor Visa for a foreign national who has imported an annual minimum threshold of capital into the country. The New Visa Policy 2020 built on this provision and expanded it for ease of implementation. According to the policy, foreigners can apply for an investor visa at the Embassy and the visa, if granted, is valid for five (5) years, with different entries and can be renewed. A foreigner holding this visa is allowed to invest and reside in Nigeria.
CAPITAL REPATRIATION UNDER FOREIGN EXCHANGE (MONITORING AND MISCELLANEOUS PROVISIONS) (FEMMA)
The FEMMA provides that any person may invest in any enterprise or security with foreign currency or capital imported through an authorized dealer either by transfer, cheques or other negotiable instruments who will issue a Certificate of Capital Importation to the foreign investor. Sub-section (4) of the same section provides that foreign currency imported into Nigeria and invested is guaranteed unconditional transfer of funds in freely convertible currency of any such monies arising from an investment made in Nigeria, relating to dividends and profits, payments in respect of loan servicing, and remittances of the proceeds of sale or liquidation of the enterprise or any interest accruing to the investment made. This means that a foreign investor can bring in capital into the country to finance investment through capital importation and can repatriate back 100% percent of profits to his/her home country without hindrance. The repatriation is communicated by an Authorised Dealer to the Central Bank which is to furnish same to the Minister of Finance.
PROTECTION UNDER THE ARBITRATION AND CONCILIATION ACT
The provision of the Arbitration and Conciliation Act avails foreign investors the opportunity to determine the mode of settling disputes that may arise out of their investments without resort to litigation in domestic courts. The Act provides a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and conciliation. It also makes applicable the Convention on the Recognition and Enforcement of Foreign Awards to any award made in Nigeria in any contracting State arising out of international commercial arbitration provided that such contracting state has reciprocal legislation recognizing the enforcement of arbitral awards made in Nigeria.  An arbitral award irrespective of the country in which it is made is binding and enforceable upon a written application to the court.
TAX RELIEF UNDER THE COMPANIES INCOME TAX ACT
Nigeria is a member of the Commonwealth, and, as part of its independent policy to foster the relationship among other commonwealth nations, it provides tax relief for profits earned in Commonwealth countries that are also liable to tax in Nigeria.
Section 44(2) of the Companies Income Tax Act, provides that If any company, other than a Nigerian company which has paid, by deduction or otherwise, or is liable to pay, tax under this Act for any year of assessment on any part of its profits, proves to the satisfaction of the Service that it has paid, by deduction or otherwise, or is liable to pay, Commonwealth income tax for that year of assessment in respect of the same part of its profits, it shall be entitled to relief from tax paid or payable by it under this Act on that part of its profits at a rate thereon to be determined as follows-
- if the Commonwealth rate of tax does not exceed the rate of tax under this Act, the rate at which relief is to be given shall be one half of the Commonwealth rate of tax;
- if the Commonwealth rate of tax exceeds the rate of tax under this Act, the rate at which relief is to be given shall be equal to the amount by which the rate of tax under this Act exceeds one-half of the Commonwealth rate of tax.
The import of this section is that any commonwealth member seeking to invest in Nigeria is relieved from paying tax on profits made as long as they pay the Commonwealth tax rate.
Section 23(1) of the Act exempts any profits of a company other than a Nigerian company which, but for this paragraph, would be chargeable to tax by reason solely of their being brought into or received in Nigeria and the profits of the interest on deposits accounts of a foreign non-resident country from tax.
EXPORT PROCESSING ZONE INCENTIVES
Foreign investors who invest in businesses within an export zone are eligible to remit profits and dividends earned in the zone and repatriate foreign capital investment at any time with capital appreciation of the investments. They also enjoy 100% foreign ownership of investment, rent-free land at the construction stage, waiver on all import and export licenses.
It should be noted that enterprises operating within an export processing zone including foreign companies and individuals are exempted from all Federal, State and Local Governments taxes, levies and rates. There is a waiver on all expatriate quotas for companies operating in the zone as the act provides that foreign managers and qualified persons may be employed by companies operating the Zone. They are also entitled to Duty-free, tax on import of raw materials for goods to be exported.
TAX RELIEF UNDER THE INDUSTRIAL DEVELOPMENT INCOME TAX RELIEF ACT
The Industrial Development Income Tax Relief Act provides tax relief for foreign investors on the basis of Pioneer Status for the first period of 3-5 years or exemption from tax to encourage the investors.  For industries located in poor local government areas of the Federation, they enjoy a 7 (seven) year tax holiday. Industries that currently qualify for this tax holiday include rubber plantation and processing, real estate development and utilities, manufacture of cement, pharmaceutical, iron and steel from iron ore, gas cylinders, solar energy powered equipment, gadgets, and maintenance of aircraft and Telecommunications.
Pioneer Status Certificate is issued by NIPC to the effect that the company is exempted from payment of tax for three years, which can be extended for a period of one year and thereafter another one year, or for one period of two years.
If a pioneer company pays dividends during the pioneer period, such dividend is not liable to tax in the hand of the shareholder.In an event where a pioneer company records loss during the pioneer period it can be carried forward to offset future profits after the tax-exempt period.
TAX RELIEF ON RESEARCH AND DEVELOPMENT
To encourage industrial technology, industries that carry out research and development to make profits enjoy 20% investment tax credit of expenses. Where the research is long-term, it will be regarded as a capital expenditure and will be written off against profit.
RURAL INVESTMENT ALLOWANCE
This form of incentive is granted to foreign industries that provide basic facilities that should have been provided by the Government such as tarred roads, water, and electricity located at least 20 kilometers away from such industries.  Twenty percent (20%) of the cost of providing these infrastructural facilities, where they do not exist, is tax-deductible.
INVESTMENT TAX RELIEF
This incentive is similar to rural investment allowance, but only available for a maximum of three years for companies without pioneer status.
LOCAL RAW MATERIALS UTILISATION:
Foreign investors who attain the minimum local raw material sourcing and utilisation are entitled to enjoy a tax credit of 20% for five years.
LABOUR INTENSIVE MODE OF PRODUCTION
Foreign industries with high labour/capital ratio are entitled to tax concessions. These are industries with plants, equipment and machinery, which essentially are operated with minimal automation. The rate is graduated in such a way that an industry employing 1,000 persons or more will enjoy 15% tax concession, while an industry employing 200 will enjoy 7% and those employing 100 will enjoy 6%.
Also, foreign Industries that set up in-plant training facilities enjoy 2% tax concession for a period of five years. 
LEGAL PROTECTION UNDER AGREEMENTS/CONVENTIONS
Nigeria is a signatory and party to many bilateral, multilateral treaties, conventions, and trade agreements bothering on foreign investment in Nigeria. The aim of this is primarily to encourage investment in Nigeria and protect foreign investors.
DOUBLE TAXATION AGREEMENTS
The agreement makes provisions for the elimination of double taxation with respect to taxes on income and capital gains. Section 41 of the Capital Gains Tax Act provides that any arrangement set out in an order made under Section 38 of the Personal Income Tax Act and Section 45 Companies Income Tax Act so far as they provide (in whatever terms) for relief from tax chargeable in Nigeria on capital gains by virtue of this section, have effect in relation to Capital Gain Tax. This means that foreigners that are members of countries parties to the agreement enjoy tax relief on capital gains tax.
AFRICAN CONTINENTAL FREE TRADE AGREEMENT
The Continental Free Trade Agreement ratified by the Federal Executive Council on 11th October, 2020 will establish a single market for goods and services across 54 countries, allow for the free movement of business travelers and investments, and create a unified customs union to streamline trade and attract long-term investment.
ECOWAS TRADE LIBERALIZATION SCHEME
ECOWAS Treaty is a multilateral agreement executed by 15 countries in West Africa to promote and facilitate trade within the region.
This Scheme provides for:
- abolition of customs duties levied on imports and exports of goods produced and moving among member states; and
- abolition of non-tariff barriers among members states to facilitate free movement of goods and services across member states
The treaty provides for Community Enterprise to be accorded favorable treatment with regards to incentives and advantages and shall not be nationalized or expropriated by the government of any member state except for valid reasons of public interest, and subject to the payment of prompt and adequate compensation.
INVESTMENT PROMOTION AND PROTECTION AGREEMENT
An investment promotion and protection agreement (IPPA) seeks reciprocal promotion and protection of investments by individuals and companies in the territories of participating States. An IPPA provides the baseline minimum protections for foreign investments. Nigeria has concluded and signed IPPAs with the UK; France; Netherlands; Pakistan; Canada; Romania etc. The objective of the IPPA is to replicate the assurances in the NIPC Act, encourage reciprocal treatment of investors in each country that is a party to the agreement. For E.g., investors from a Contracting Country: will not have their investments expropriated without prompt and adequate compensation, will not be subject to treatment lower than the minimum standard established in customary international law, and in most circumstances, will be free to invest capital and repatriate their investments and returns.
Nigeria is a signatory to a number of conventions entered into for the purposes of encouraging and protecting foreign direct investment in Nigeria.
One of the conventions Nigeria is a signatory to is the Convention for the Settlement of Investment Disputes between States and Nationals of Other States (otherwise known as ICSID Convention) which came into force on 14 October 1966. The International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act implements the Washington Convention in Nigeria. The (ICSID) as an arbitral institution under the World Bank Group is a fully integrated, self-contained arbitration enterprise that provides standard arbitration clauses, arbitration procedures rules, arrangements for venues, financial arrangements, and administrative support including the appointment of arbitrators to parties. It primarily provides for the settlement of investment disputes between investors and sovereign host states.
Another convention Nigeria is a signatory to is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (otherwise known as the New York Convention) which mandates domestic courts in signatory countries to give effect to arbitration agreements, and to also recognize and enforce valid arbitral awards given in other signatory states.
FOREIGN INVESTMENT RESTRICTIONS
Notwithstanding the fact that Nigeria encourages foreign investment allowing either a foreigner to wholly own businesses or in partnership with others in Nigeria, there are certain restrictions to this provision.
Sections 17 & 18 NIPC Act allows ownership of investment by any national or foreign investor in any enterprise except enterprises with activities listed on the ‘Negative List’
The ‘Negative List’ includes:
- production of arms, ammunition, etc;
- production of and dealing in narcotic drugs and psychotropic substances;
- production of military and para-military wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services; and
- such other items as the Federal Executive Council may, from time to time, determine
In view of the above, it is clear that the Nigerian Government is committed to improving the business climate and foreign participation in the Nigerian economy. The magnanimous incentives and investor protections improves the attraction for anybody aiming to realize the opportunities offered by doing business in Nigeria.
It is therefore advisable that any foreigner seeking to invest in Nigeria takes advantage of this protection and incentives made available by our laws.
 Section 78(1) of Companies and Allied Matters Act 2020
 Section 4 of Nigeria Investment Promotion Commission (NIPC) Act Cap N117, LFN 2004
 Section 13 (l) Investment and Securities Act 2007
 Section 1 and 4 of the National Office for Technology Acquisition and Promotion Act Cap N62 LFN 2004
 Section 1 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act Cap F34 LFN 2004
 Section 36 of the Central Bank of Nigeria Act 2007
 Chapter IV of the 1999 Constitution of the Federal Republic of Nigeria (as amended)
 Section 18 NIPC Act
 Section 21 NIPC Act
 Section 25 of the NIPC Act
 Section 26 of the NIPC Act
 Section 15 Foreign Exchange Monitoring and Miscellaneous Provision Act Cap F34 LFN 2004
 Section 54 Arbitration and Conciliation Act Cap A18 LFN 2004
 Section 51 Arbitration and Conciliation Act
 Section 18 of the Nigeria Export Processing Zones Authority (NEPZA) Act, Cap. N107 LFN, 2004
 Section 8 NEPZA Act
 Section 10 of the Industrial Development Income Tax Relief Act (IDITRA) Cap. 84 LFN 2004
 Section 17(3) IDITRA
 Compendium of Investment Incentives in Nigeria available at https://www.nipc.gov.ng/
 Section 34 Of Companies Income Tax Act Cap C21, LFN 2004
 Compendium of Investment Incentives in Nigeria available at https://www.nipc.gov.ng/
 Section 54 Arbitration and Conciliation Act Cap A18 LFN 2004