Doing Business in Nigeria

• Published date: 01 September 2014
• Date: 01 September 2014
• Author: David Shapiro
• DOI: http://doi.org/10.1002/jcaf.21981

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© 2014 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.21981

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David Shapiro

D oing Business in Nigeria

INTRODUCTION AND

OVERVIEW

Investing and operat-

ing a commercial

business in the

Federal Republic of

Nigeria requires under-

standing the culture

and predispositions

of its residents, as well

as accepting risk and

imperfect knowledge.

Though English is the

official language of

Nigeria, and it adheres

generally to accounting

and financial report-

ing standards set by

the London-based

International Accounting Stan-

dards Board (e.g., international

financial reporting standards

[IFRS])—to which convergence

in Nigeria is administered by the

Nigerian Accounting Standards

Board—doing business in Nige-

ria is not for those unwilling to

become informed about its his-

tory and current conflicts affect-

ing its political economy. This

article is not intended as a com-

prehensive treatise but as a sum-

mary outline of salient relevant

issues, including corruption risk,

for commercial enterprises seek-

ing business development inside

Nigeria.

Formerly a colony of the

United Kingdom, Nigeria

gained independence in 1960.

Considered a frontier market or

emerging economy, with a popu-

lation of approximately 177 mil-

lion (composed of a predomi-

nantly Muslim north and mostly

Christian south) on 360,000

square miles (near the combined

footprint of California, Nevada,

and Arizona) located in West

Africa, Nigeria is Africa’s most

populous nation. Under civil-

ian rule since 1999, Nigeria’s

(federal) capital is in Abuja, and

its commercial center is Lagos,

a city of 10 million. Its currency

is the naira, and it is

home to the Nige-

rian Stock Exchange

(based in Lagos).

Lately, Nigeria

has been receiving

approximately $600

million in annual

assistance from the

United States.

Without

addressing spe-

cifically the poten-

tial rate of return

from investment in

Nigeria, this article’s

focus on potential

red flags includes

identification of

circumstances,

relationships, and incidents of

corruption that may affect any

investment therein, thereby

embracing the public, private,

and independent (e.g., not-for-

profit/nongovernmental/civil

society organizations) sectors.

The occurrence of public

sector (i.e., demand-side) cor-

ruption is not novel in Nige-

ria. Though it has committed

to a course of privatization

of government assets (e.g.,

private-sector partnerships),

Nigeria cannot be deemed free

of private-sector (supply-side)

corruption to facilitate unfair

economic advantage. Indeed,

Nigeria has been all over the news lately. Allega-

tions that members of Boko Haram have kid-

napped nearly 300 secondary school girls have

raised serious concerns about living in Nigeria or

conducting business there. But perhaps a more

insidious problem for companies doing busi-

ness there involves corruption risk. The author

of this article is a risk management expert who

has worked in the practice of law and investi-

gations for more than two decades. He warns

that doing business in Nigeria is not for those

unwilling to become informed about its his-

tory and current conflicts affecting its political

economy. He outlines some key issues companies

face there and suggests some countermeasures.

© 2014 Wiley Periodicals, Inc.