Nigeria Market Entry

Nigeria Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The most common distribution of goods is manufacturer – importer – wholesale – retail – customer. The main distribution channels run through the port in Europe to the port of Lagos and from there it is distributed across the country. Air traffic goes to Abuja Airport. Port Harcourt or Kano. A large part of the goods arrives in Nigeria via the port of Cotonou (Benin), or Lomé (Togo) or Tema (Ghana). A foreign company that wants to operate directly in Nigeria must be registered here. Therefore, the best strategy to enter the local market is with the help of a local already established registered agent/distributor who operates either on an “ad hoc” commission basis or on a long-term contractual basis. Due to the diversity of Nigeria, in some cases it is desirable to have a different representative in each region (Kaduna, Kano for the North, Abuja for the Central, Lagos for the Southeast, Port Harcourt for South East). A creditworthy and reliable importer/distributor is a key person – you need to maintain personal and direct relationships with him as often as possible. Goods that need service are better sold through an authorized dealer. Exporters to Nigeria need to understand the country’s customary business practices (including barriers), cultural differences, and complex formal and informal distribution channels. Marketing can be done locally with the help of specialized companies. In Nigeria, the most successful companies are those that can demonstrate or show their goods. The Nigerian customer likes to try out the purchased goods (this applies especially to machines, cars…). If he does not have the opportunity to do so, he insists on a pre-shipping inspection of the goods at the manufacturer. If a Nigerian customer takes out a loan to buy goods, it is usually at a high interest rate. He must be informed in good time of any delay in the shipment. In Nigeria, there is a great demand for luxury branded goods, on the other hand, there is a huge market for simple and cheap everyday products and fast moving goods. Importing goods into Nigeria is quite a long and complicated process. At the beginning of 2006, there was a fundamental change in the import process, when the system of inspections in the country of destination (Destination Inspection) was introduced. This inspection has been carried out by the Nigerian Customs Service since mid-2013. Check smber for agriculture and fishing facts of Nigeria.

An importer of goods into Nigeria must complete the following formalities:

  • process form M (Form “M”) through an authorized bank
  • the shipment must bear the name of the product, country of origin, specifications, date of manufacture, number, standards that the goods meet, food, pharmaceuticals and chemicals, then expiration date and composition. • all electronic devices and tools must contain instructions
  • hardware and software must be 2000 compatible
  • plant material must have a phytosanitary inspection certificate • imported goods must be labeled in English, the system used must be metric • manufactured products and materials must be certified by the Standard Organization of Nigeria (SON), chemicals, drugs and foodstuffs then by the National Agency for Food and Drugs Administration and Control (NAFDAC).

From January 2015, the so-called Common External Tariff of ECOWAS began to apply, which introduces five customs zones according to the type of goods. Detailed information on customs rates: www.customs.gov.ng.

Protection of the domestic market: Under the pretext of protecting domestic production, the government applies various tariff and administrative protection measures preventing imports from abroad. From time to time it very rudely intervenes in the pricing policy of foreign companies operating in the Nigerian market.

Other problems:

  • Problematic, expensive and lengthy registration of products by the Nigerian state organizations SON AND NAFDAC, lack of a clear list of products for which registration is mandatory. • Application of special tariffs aimed at protecting domestic producers – in some cases, high tariffs amount to a ban on the import of goods (see above)
  • “Sudden and unjustified fluctuations” in applied import tariffs • Lengthy and problematic customs procedures – especially in the Lagos ports of Tincan and Apapa (there are numerous cases where the customs officer artificially and arbitrarily increases the price of imported goods)
  • “Nigeria Content Act” – discrimination in favor of local producers and service providers • Licensing of imports of selected types of goods (petroleum products, cement) only for Nigerian companies. The above factors are compounded by pervasive and deep-rooted corruption, the reduction of which is a generational problem in Nigeria, and weak enforcement of the law.

Forms and conditions of operation on the market

Foreign companies cannot open a branch in Nigeria, they must register in the country. Companies that want to operate other than through a local partner, distributor, or agent must establish a representative office. The most common form is a limited liability company (Ltd). The rules for setting up a company are codified in the Companies and Allied Matters Act of 1990 as amended by 2004 (more information; WIPO). The first step in establishing a company is its registration with the Corporate Affairs Commission (similar to the commercial register). The Commercial Registry is central to the entire federation and is based in Lagos. In addition to filling out the relevant application (in which the list of members of the “Board of Directors” must be listed), it is necessary to prepare the so-called Memorandum and Articles of Association. Furthermore, a company stamp must be produced and registered, register with the tax office (Federal Income Revenue Service, State tax office), register the company headquarters with the State Department of Commerce. Registration is a relatively expensive matter, the amount of the fee depends on the invested capital (More information – Doing Business). It is always necessary to verify the proposed company name with the CAC in advance, so that two companies with an identical name are not registered. Although the CAC states that it is possible to register a company online, the entire procedure (including the drafting of a partnership agreement, etc.) is better entrusted to a specialized legal office. After registering with the CAC, the foreign investor shall also register with the Nigeria Investment Promotion Commission; NIPC Guide. A local partner or company representative will ensure this much more easily,

Marketing and communication

It goes without saying that a company interested in penetrating the local market has quality promotional materials in English. During personal business meetings, it is appropriate to give a small gift to a partner, it is also expected that significant partners and important persons are presented (with a reasonably larger gift) on the occasion of Christmas/New Year. Nigeria’s diversity should be kept in mind when preparing an advertising strategy (a more conservative approach should be taken in the Muslim north). A large number of daily newspapers are published in Nigeria, including those specializing in business and economics. Imported products are commonly advertised in the daily press. Advertising spots are common on radio and television. Large-scale billboards are abundant in larger cities. There are a large number of companies operating in Nigeria that specialize in advertising campaigns. Of course, other paths must be chosen in the field of supply of investment units. Here, direct contacts with state administrative bodies and relevant ministries have had the greatest effect so far, so the right level and contacts of the local partner are absolutely essential. It is very convenient to participate in local exhibitions and fairs, especially in Lagos, where there are many specialized events. Their effect for the acquisition and promotion of goods is high. However, some fairs in other cities are more like a fair (without significant specialization or commodity differentiation). Regarding the content, it is therefore recommended not to use taboo topics – religious and ethnic differences, sexual innuendos (homosexuality is a crime) and similar provocative materials. Intellectual Property Protection Issues Rights must be registered locally and enforced according to local laws. The trademark owner should register it in Nigeria with the Ministry of Trade, Industry and Investment. Nigeria is a member of WIPO (World Intellectual Property Organization), also a signatory to the Universal Copyright Convention, the Berne Convention and the Paris Convention. As a WTO member, Nigeria is a signatory to the TRIPS Agreement. The protection of intellectual property is governed by the Trade Marks Act 1965, the Patents Act 1970 and the Copyright Act 2004. Customs officers have the right to confiscate counterfeits. Despite active participation in these international conventions and the Nigerian government’s interest in protecting intellectual property rights, very little has so far been done to stop the production, distribution and sale of pirated music recordings, videotapes, computer software and books within Nigeria. The country is literally flooded with fakes and pirated copies of practically all branded goods (mostly from China). TERRITORIAL SUMMARY – NIGERIA https://www.

Issues of intellectual property protection

Rights must be registered locally and enforced under local laws. The trademark owner should register it in Nigeria with the Ministry of Trade, Industry and Investment. Nigeria is a member of WIPO (World Intellectual Property Organization), also a signatory to the Universal Copyright Convention, the Berne Convention and the Paris Convention. As a WTO member, Nigeria is a signatory to the TRIPS Agreement. The protection of intellectual property is governed by the Trade Marks Act 1965, the Patents Act 1970 and the Copyright Act 2004. Customs officers have the right to confiscate counterfeits. Despite active participation in these international conventions and the Nigerian government’s interest in protecting intellectual property rights, very little has so far been done to stop the production, distribution and sale of pirated music recordings, videotapes, computer software and books within Nigeria. The country is literally flooded with fakes and pirated copies of practically all branded goods (mostly from China). Practical enforcement of laws is not consistent, judicial and other enforcement of rights is slow and ineffective. Nevertheless, it can generally be stated that these rights are somewhat better protected in Nigeria than is usual in the conditions of West African countries. In the case of goods subject to intellectual property protection, we recommend adequate contractual treatment and measures used by the company in other countries with insufficient protection of these rights against their infringement than is usual in the conditions of West African countries. In the case of goods subject to intellectual property protection, we recommend adequate contractual treatment and measures used by the company in other countries with insufficient protection of these rights against their infringement than is usual in the conditions of West African countries. In the case of goods subject to intellectual property protection, we recommend adequate contractual treatment and measures used by the company in other countries with insufficient protection of these rights against their infringement

Public procurement market

Participation in contract tenders requires long-term monitoring of the situation with necessary lobbying of the relevant central authorities and provision of relevant information even before the official announcement of tender conditions. This is not possible without constant presence and contacts. Officially, public procurement is governed by the Public Procurement Act 2007, government procurement is overseen by the Bureau of Public Procurement. Federal and state governments buy through their Tender Boards, made up of senior officials and consultants (including foreign ones). Public contracts of federal authorities are published in the daily press and in Tenders magazine. The deadline for submitting an application for a published tender is usually short, which makes it difficult for entities with inside information (two to three weeks after publication in the press, but a maximum of 2 months). Tenders are also associated with the payment of a non-refundable entry fee (minimum about 400 USD, normally about 1250 USD, for large orders of an investment nature up to 10,000 USD). As part of the fight against corruption, the government established the Bureau of Public Procurement at the office of the president, which supervises the selection of contracts (overestimating the prices of contracts is one of the most common practices). Participation in contract tenders requires long-term monitoring of the situation with the necessary preliminary lobbying of the relevant central authorities and the provision of relevant information even before the official announcement of tender conditions. This is practically impossible without preparation, field research, knowledge of competition and conditions, and constant presence in the local market. One of the conditions for participation is registration with the CAC and confirmation of payment of FIRS taxes. More information about the announced tenders on the BPP website; in Lagos. Every piece of information about the published tender must be checked very carefully, luring for lucrative orders is one of the main methods of “419” fraud. Contracts financed by one of the international organizations are published well in advance, but rather in foreign sources.

Payment terms, payment ethics and resolution of commercial disputes

Nigeria has a complex legal system composed of common law (mostly based on British law), Muslim law and customary law. The vast majority of commercial law is governed by common law). Commercial disputes are settled by civil courts. Disputes with the government are resolved by the Federal High Court. Courts are few, lack equipment and are underfunded. There is therefore a lot of room for corruption and the enforceability of decisions is low. A court decision is not always fair or impartial, a foreigner will always be at a disadvantage against a local entity. Creditors have virtually no protection, debts often remain unpaid (even when there is a court order). There are usually high costs associated with dispute resolution. According to the World Bank, Nigeria ranks 140th (out of 189) on trade agreement enforceability, 40 steps are needed, the average time for a court decision is 447 days and the costs amount to approximately 32% of the contract value. Therefore, the wording of the commercial contract, which must be prepared with a lawyer familiar with local law, is of fundamental importance for the prevention and resolution of commercial disputes. A commercial out-of-court settlement is always preferable. Nigerian law allows the enforcement of foreign court decisions, but it must always be decided by a local court. The payment terms do not differ from the standard ones, it depends on what the parties agree on. In most cases, local banks are categorized with grade A/A+, i.e. they have international standards. Although the due date of invoices is set by law and is 14 days, however, you definitely cannot rely on it, it is better to calculate that the money will be paid within 3-6 months. Therefore, the wording of the commercial contract, which must be prepared with a lawyer familiar with local law, is of fundamental importance for the prevention and resolution of commercial disputes. A commercial out-of-court settlement is always preferable. Nigerian law allows the enforcement of foreign court decisions, but it must always be decided by a local court. The payment terms do not differ from the standard ones, it depends on what the parties agree on. In most cases, local banks are categorized with grade A/A+, i.e. they have international standards. Although the due date of invoices is set by law and is 14 days, however, you definitely cannot rely on it, it is better to calculate that the money will be paid within 3-6 months. Therefore, the wording of the commercial contract, which must be prepared with a lawyer familiar with local law, is of fundamental importance for the prevention and resolution of commercial disputes. A commercial out-of-court settlement is always preferable. Nigerian law allows the enforcement of foreign court decisions, but it must always be decided by a local court. The payment terms do not differ from the standard ones, it depends on what the parties agree on. In most cases, local banks are categorized with grade A/A+, i.e. they have international standards. Although the due date of invoices is set by law and is 14 days, however, you definitely cannot rely on it, it is better to calculate that the money will be paid within 3-6 months. but it must always be decided by the local court. The payment terms do not differ from the standard ones, it depends on what the parties agree on. In most cases, local banks are categorized with grade A/A+, i.e. they have international standards. Although the due date of invoices is set by law and is 14 days, however, you definitely cannot rely on it, it is better to calculate that the money will be paid within 3-6 months. but it must always be decided by the local court. The payment terms do not differ from the standard ones, it depends on what the parties agree on. In most cases, local banks are categorized with grade A/A+, i.e. they have international standards. Although the due date of invoices is set by law and is 14 days, however, you definitely cannot rely on it, it is better to calculate that the money will be paid within 3-6 months.

Visas, fees, specific conditions for traveling to the territory

Nigeria opened its embassy in Prague in 2012, which is also competent to issue visas:

address: Na Čihadle 917/32,

Prague 6

tel.: Phone 220 561 165

email: [email protected]

website: www.nigeriaembassyprague.org

Consular and visa section office hours: for applying for a visa for travel to Nigeria:

Mon-Wed, from 9 a.m. to 12 p.m

A visa must be applied for well in advance (more information on visas). Passport validity – 6 months after return. The chain of good hotels is growing fast, but the prices are high. If you are interested in staying in a hotel of European standard, we recommend that you make a reservation well in advance when traveling to Abuja or Lagos, as the hotels here tend to be busy. Even a confirmed reservation is not a guarantee that it actually happened – a written proof of the reservation must be taken with you in this case. A person (or entrepreneur) who decides to travel to Nigeria should have a serious partner with knowledge of the situation, who will, for example, help with booking accommodation and, in particular, with ensuring reliable transport already from the airport (in case of movement, we fundamentally recommend using taxis only properly marked registered taxi-cars). Moving around the cities (especially in some mainland districts of Lagos) is not recommended at night (even by registered taxis) due to the risk of mugging. The price in Lagos airport – center is around 7000 Naira. There are many options for air connections between the Czech Republic and Nigeria. British Airways, Lufthansa, KLM, Alitalia, Iberia, Air France fly to Lagos and Abuja from Europe. For economic reasons, Turkish Airlines or Egypt Air, which flies to Vienna, are often used. The gateways to the country are 2 main airports – Lagos Murtala Mohammed International Airport and Abuja Nnamdi Azikiwe Airport. International connections also land in Port Harcourt and Kano. When transferring to/from a domestic connection(s) at the Murtala Mohammed Airport in Lagos, it is necessary to transfer to another terminal and although the domestic airport is not far away, during rush hour, the transfer with crossing and check-in can take 1-2 hours. The best mode of domestic transport is air transport. A number of local companies operate in the country. (Arik Air, MedView, Aero Contractors, Peace Air, Dana Air….). The vehicle can be rented right at the airport or you can use taxi services, by agreement, even for a longer period. No need to deal with insurance.

Credit card payments are possible everywhere in hotels and restaurants. But it’s good to have cash with you, sometimes the payment terminals don’t work, and it’s also useful when paying for a taxi. There is also an exchange office right at the airport or you can exchange money at the hotel.

Nigeria is a tropical country with many dangerous tropical diseases (e.g. Lassa fever, Dengue..). Nigeria managed to handle the impending Ebola epidemic on its own, and the disease is currently free. Therefore, before traveling to the countries of sub-Saharan Africa, every traveler should visit a specialist doctor – a specialist in tropical diseases (in Prague, for example, the Clinic of Geographical Medicine at the Royal Vinohrady Hospital or the Center for Travel Medicine), where you can receive all mandatory and recommended vaccinations – against yellow fever (mandatory ), jaundice type A and B, typhoid, meningitis, cholera and tetanus. It is recommended to have antibodies against TB and polio checked before the trip and, if necessary, supplement these vaccinations as well. There is no vaccination against malaria yet, during a short-term visit, the doctor will recommend appropriate prophylactics. At the appearance of the slightest symptoms of any disease (malaria does not always have to be manifested by a high fever – symptoms include tingling of the fingers, headache and joint pain to feelings of fatigue, scratchy throat, flu-like feeling) it is highly desirable to visit the nearest hospital and have a malaria test done. This is very simple (taking a blood sample from the pad of the finger on the hand) and fast – it takes about 15 minutes, including blood analysis (for a payment of about CZK 400). Medicines for ongoing malaria are available over the counter in Nigeria and are very effective – the disease subsides within two to three days. However, it is important not to let the disease develop (the incubation period of malaria is 4 to 8 days). Due to the incubation period, malaria can manifest itself only after returning to the homeland, and there are often problems with its occurrence and therefore treatment in the Czech Republic. It is therefore desirable for the traveler to buy one pack of anti-malarial drugs in Nigeria and take them back with him to the Czech Republic. Unfortunately, there is still no cure for dengue fever and some other diseases.

In connection with the great cultural and religious diversity of Nigeria, there are occasional ethnic clashes in some areas where the presence of a foreigner in a place may not be appropriate. Therefore, before traveling to a specific area, we recommend that you monitor the news for some time to see if there has been a worsening of the security situation there, or consult with the Ministry of Foreign Affairs of the Czech Republic or the embassy in Abuja. The “Delta” region (an oil-mining area comprising 6 Nigerian states – basically the entire south-east of the country) has always been classified as a risk area, where until around 2009 there were frequent kidnappings of foreign workers with the aim of demanding a ransom.. In the north of the country, on the other hand, classic crime is lower than in the south. The biggest security threat is the rapid increase in the activities (bomb attacks, gun attacks, kidnapping of foreigners…) of the Muslim radical movement known as Boko Haram. ZÚ recommends not traveling at all to the states of Borno, Yobe, Jigawa, Gombe and Adamawa. Before traveling to other northern states (Bauchi, Kano, Kaduna, Katsina) it is strongly recommended to contact the Abuja Police Department to inquire about the political situation and security. We recommend travelers to voluntarily register in the Drozd system.

Employment of citizens from the Czech Republic

How to get a work permit and who provides it, salaries, minimum wage (if any), social and health care and its provision.

Fairs and events

Major fairs and exhibitions planned for 2020-2021: Functional Fabric Fair, NIAA West Africa Expo, Cosmetics and Hair Exhibition Nigeria, Lagos Motor Fair, Food and Beverage West Africa, Mega Clima West Africa, Plastic Print Pack Nigeria, Agrofood Nigeria, Lagos Fashion Fair, Power Nigeria, Medic West Africa, and Buildmacex Nigeria. Major fairs and exhibitions planned for 2022: Equipment & Manufacturing West, Lagos Motor Fair, Mega Clima Nigeria, Food & Beverage West Africa, Lagos Fashion Fair, Nigeria Energy, medic West Africa, Surface & Coatings West Africa, Buildmacex Nigeria, Agrofood Nigeria, Plastprintpack Nigeria, Mother and Child Expo, Cosmex Nigeria, Cosmetics and Hair Exhibition Nigeria. More at www.tradefairdates.com

Nigeria Market Entry