The Nigerian Market became the Biggest African American Market after the 2013 GDP rebasing exercise. The petroleum industry accounts for over 90 percent of the Nation’s Total export earnings. Nigeria is the thirteenth biggest producer of crude petroleum, reaching 2.4million bbl/ day in 2013.
There’s also an enormous service industry supporting the oil and gas value chain and a substantial market and population for services and goods. Inflation rate was 8.5 percent as at first quarter of 2015; under the Central Bank of Nigeria (CBN) annual estimate of 8.7percent and well within the national government’s target of keeping a single digit figure. The CBN sets the benchmark rate of interest in the kind of a Monetary Policy Rate (MPR) that was 13 percent as at the end of June 2015.
Considerations for doing business in Nigeria via an Employer of Record
Foreign Direct Investment
There’s significant foreign direct investment flow into all significant sectors of the market. New sources of FDI are usually from America, the United Kingdom, the Republic of South Africa, India, China, Canada and France. Under the Double Tax Treaty arrangement enforced, trade between India and Nigeria has increased to US$19.5 billion in 2013. For capital investments, the United States, Canada, France and China are the principal sources with China contributing actively to capital and infrastructure projects.
The NBS (Nigerian Bureau of Statistics) and NPC (National Population Commission) published an unemployment rate of 24 percent in 2013. With the latest workforce reclassification in 2014, the Nigerian Labour force forecasted 73 million unemployed individuals, with unemployment rate at 6.4percent and labour underutilisation rate 17.9% (NBS).
The entire value chain of the Nigerian power industry from electricity generation to distribution is nearly fully privatized. Two agreements are signed between the CBN, key players in the industry, Deposit Money Banks (DMBs) and the National Electricity Regulatory Commission (NERC) in December 2014 to provide financial support to electricity generation companies (GENCOs) and distribution companies (DISCOs) throughout the Nigerian Electricity Market Stabilisation Facility (NEMSF).
There are four primary GSM networks in Nigeria: Airtel, MTN, Globacom and Etisalat. Other operators supplying code division multiple access (CDMA) comprise Visafone and Starcomms. There were 196 million “non unique” subscribers of GSM and CDMA in April 2015. With the increasing internet penetration, there’s huge potential for growth of IT and telecom services.
The economic objectives of the government Would Be to, among other things, curb inflation, stabilise the exchange rate, improve balance of trade, and drive economic development through complete or partial ownership of companies by foreign investors is allowed. Investors can import funds and freely repatriate both the funds and the returns on investment upon satisfaction of exchange control requirements.
Additionally, there are specific ownership restrictions and/or licenses that will be required in
regulated sectors such as: Banking, Oil and Gas, Broadcasting, Mining, Telecommunications,
Aviation and Insurance.