Nigeria officially the Federal Republic of Nigeria, is a country in West Africa.

It is situated
between the Sahel to the north and the Gulf of Guinea to the south in the Atlantic Ocean. With
a population of over 225 million, it is the most populous country in Africa, and the world's sixth-
most populous country. Nigeria is a federal republic comprising 36 states and the Federal
Capital Territory. The country has a high prevalence of Muslim and Christian people, as well as
some people with Indigenous beliefs. The official language of Nigeria is English, although people
also speak over 500 additional Indigenous languages.
Nigeria is a regional power in Africa and a middle and emerging power in international affairs.
Nigeria's economy is the largest in Africa, the 31st-largest in the world by nominal GDP, and
26th-largest by PPP. Nigeria is often referred to as the Giant of Africa owing to its large
population and economy[19] and is considered to be an emerging market by the World Bank.
However, the country ranks very low in the Human Development Index and remains one of the
most corrupt nations in the world. According to the CIA (2018), over half of the country’s
population lives in extreme poverty. Some economic development has been achieved through
the development of agriculture, telecommunications, and the service industry (CIA, 2018). Even
though the country’s economy is reviving after the latest recession and that certain industry
areas are experiencing rapid development, expanding an international business to Nigeria
would be risky due to poverty and widespread corruption in the region.

Political

The political landscape of Nigeria is relatively stable, with presidential elections running every
four years. There are six main political parties, and currently, the All Progressives Congress is
the largest party (CIA, 2018). Religious tensions are evident in some parts of Nigeria, and there
are two major active terrorist groups: Boko Haram and ISIS-West Africa (CIA, 2018). There are
no legal impediments to foreign ownership of businesses in Nigeria, which opens opportunities
for investment.

Nevertheless, scholars confirm that the issue of corruption in Nigeria is prominent. According to
Mohammed (2013), corruption in Nigeria was initiated as a result of ethnic inequality but soon
spread further, posing challenges to the sustainable development of businesses. This could
affect companies with foreign ownership and create ethical concerns. For instance, if bribery is
necessary to establish retail points in a desirable location, business owners will face the conflict
of supporting corruption versus halting business development.

Economic Condition
The Nigerian economy is characterised by extreme inequality and significant economic
disparities between the North and the South, poor infrastructure, a complex and opaque
regulatory environment, corruption and a fast-growing population. Oil provides the bulk of
Nigeria’s government revenue, and almost all of its foreign exchange earnings. The Companies
and Allied Matters Act (CAMA) and the Petroleum Industries Bill were passed into law in 2021
giving some clarity to the private sector. Both laws have significant possibilities of improving the
ease of doing business in Nigeria.

The economy was hard hit by COVID-19, contracting by 1.8% in 2020. In 2021, the economy
rebounded growing by 2.6% largely as a result of base effects. Should Nigeria’s oil production
have improved over the past year, its economy would have benefited from increasing oil prices
(Nigeria’s bonny light crude oil was listed at $95/bbl as of January 31st 2022). The IMF’s SDR
injection of $3.35 billion however has improved the country’s foreign reserves, giving it ample
support to withstand foreign exchange pressures.
Nevertheless, the impact of the pandemic coupled with inadequate structural reforms to
address underlying macroeconomic weaknesses continue to be a drag on the economy and will
likely push up the unemployment rate (last reported at 33% in the Fourth Quarter of 2020).
Higher inflation pushed roughly 8 million people below the poverty line between 2020 and
2021. Nigeria has been slow to undertaken further reforms agreed with the IMF to ensure that
the exchange rate reflects market fundaments, arguing that the Naira over-valuation is
temporary, but also pointing to a fear of inflation and capital flight if the currency is allowed to
find its market value. In January 2022 there was still a significant differential between the
Investor-Exporter (IEFX window to serve as the defacto market rate N416/USD) window and the
parallel market (N568/USD) with multiple windows existing.
Slow economic growth is of concern. Latest IMF forecasts project that the economy is to grow
by 2.7% in 2022 and is expected to grow between 2.6% and 2.7% over the 2022 to 2026 period,
just barely above population growth estimates, and insufficient to create the scale of jobs
required and to reduce poverty being experienced. Too few jobs are being created for the 3.5
million young Nigerians coming of working age annually, adding to the pool of under or un-
employed.
The large oil sector partly masks weaknesses such as: a very low revenue to GDP ratio (8% of
GDP), low investment (16% of GDP) and weak monetary and exchange rate framework that
work against economic diversification. Inflation is currently at 16%, the result of both food price
pressures and weak monetary policies. Public debt increased sharply from 29% of GDP in 2019
to 34% of GDP in 2020 and is projected to rise to around 43% in the medium term. Liquidity-
based indicators, such as interest payments will continue to constitute a high share of
government revenues, putting Nigeria’s fiscal space at risk and making its low debt-to-GDP ratio
highly vulnerable to macroeconomic shocks.
Of particular concern to investors is the multiple exchange rate system; businesses report
significant FX shortages which are being met by a combination of delayed payments, use of own
FX funds and purchases in the parallel market, where premiums relative to the IEFX exchange
rate have risen to 37% in January 2022. In addition, there is also an estimated $2 to $3 billion
backlog of requests for FX from divestment by foreign portfolio investors (FPI) of Naira assets,
which are being gradually cleared by the CBN. Bureaucratic and burdensome customs
procedures also add significant cost and delays to cross border trade. Energy access remains a
challenge to businesses and households. Power outages are frequent, leading to widespread
use of backup generators which adds significant cost to business operations.
With UK and international support, notable progress is being made in the upskilling of the work
force, particularly in the technology and digital space. Nigeria has a growing tech and creative
industry attracting a young, passionate and talented workforce.

Despite widespread poverty in Nigeria, its economic environment is favorable for new business
ventures. Nigeria is considered to be one of the most fast-growing in West Africa, with a GDP of
510 billion US dollars in 2015 (“Doing business in Nigeria,” 2016). After the recession in 2016,
the country’s economy is recovering. The real GDP growth rate in 2017 was 0.8%, an increase
from the previous year’s value of -1.6% (CIA, 2018).

The high inflation of 16.5% rate contributes to business costs, much like multiple taxations.
Nigeria has several types of federal taxes that apply to companies, including Companies Income
Tax (CIT), Value Added Tax (VAT), and Capital Gains Tax (CGT). However, there are also over 500
state taxes and levies that apply to businesses (Ihugba, Odii, & Njoku, 2013). Multiple taxations
is a negative factor for business, as it increases the costs of operating in Nigeria.

Social and Culture

The main cultural issue to consider when doing business in Nigeria is that the country is home
to many ethnicities, religions, and cultures. Indigenous people, Muslims, and Christians all vary
in terms of their business culture and traditions. Thus, it is critical to find out more about
potential business partners before meeting them. As a general rule, Nigerians do not haste the
negotiations as they want to get to know the potential partners and agree on terms that are
favorable for all parties (“Business etiquette in Nigeria,” n.d.). Addressing Nigerians with their
full title is also preferable to avoid misunderstanding.

Although punctuality is highly valued, Nigerians tend to be relaxed in their attitude to time and
thus can be late to business meetings (“Business etiquette in Nigeria,” n.d.). With regards to
verbal and non-verbal language, Nigerians tend to enter other people’s personal space freely. It
is also important to note that the “thumbs up” should be avoided at all times, as it is considered
to be offensive in Nigeria (“Business etiquette in Nigeria,” n.d.).

Attitudes towards women, education, and work differ a lot depending on people’s cultural
backgrounds. For example, Muslim communities are usually patriarchal, and thus Muslim
people might not expect to see women in high business positions. Education is generally valued
by all business people in the country, but the overall educational attainment level in the
country is poor. As mentioned by the CIA (2018), only 59.6% of people aged 15 and over are
literate. Education is also an important factor in work attitudes, as most people in Nigeria work
in positions that do not require specific qualifications and might expect new businesses to offer
similar job opportunities.

Legal system

The Constitution of Nigeria is the supreme law of the country. There are four distinct legal
systems in Nigeria, which include English law, common law, customary law, and Sharia law:

 English law in Nigeria consists of the collection of British laws from colonial times.
 Common law is the collection of authoritative judicial decisions in the field of civil law
(so-called precedents) that have been handed down in the country concerned - in this
case Nigeria. (This system is mainly found in Anglo-Saxon countries; in continental
Europe, on the other hand, codified and, as far as possible, abstracted civil law
predominates, as in the Code Napoléon in France).[135]
  Customary law is derived from indigenous traditional norms and practices, including the
dispute resolution meetings of pre-colonial Yoruba land secret societies and the Èkpè
and Okónkò of Igboland and Ibibioland.[136]
 Sharia law (also known as Islamic Law) used to be used only in Northern Nigeria, where
Islam is the predominant religion. It is also being used in Lagos State, Oyo State, Kwara
State, Ogun State, and Osun State by Muslims. Muslim penal codes are not the same in
every state and they differentiate in punishment and offences according to religious
affiliation (for example, alcohol consumption and distribution).
The country has a judicial branch, the highest court of which is the Supreme Court of Nigeria

Economic groups
Nigeria is a founding member of the African Union and a member of many international
organizations, including the United Nations, the Commonwealth of Nations, NAM,[22] the
Economic Community of West African States, Organisation of Islamic Cooperation and OPEC. It
is also a member of the informal MINT group of countries and is one of the Next Eleven
economies.
Key Resources
natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc and arable land.
Geographic location 000000

Proposal and recommendation based on attractiveness cost and benefits for

businesses in nigeria

Based on the information above, there are four key benefits of expanding the business
to Nigeria. Firstly, there are no legal impediments of governmental regulations that
prevent foreign ownership, which is beneficial for international companies willing to
explore market opportunities in Nigeria. Secondly, the overall economic development of
the country is promising, as Nigeria was able to return to positive GDP growth shortly
after the recession.

Thirdly, the political environment in the country is stable, despite tensions among
different cultural and religious communities. This means that the government’s
friendliness toward foreign businesses is likely to continue in the long term, which would
have a positive impact on the project’s sustainability.

Nonetheless, there are also some important drawbacks of this opportunity with regards
to possible costs and profitability. More than half of the country’s population lives in
conditions of extreme poverty, which reduces their buying power and thus limits the
potential growth of new businesses. Moreover, Nigeria has a complex system of
taxation and faces high inflation, which is likely to increase the costs of operating in the
country.

Multiple taxations can be a serious issue for large enterprises as it leads to increased
tax expenditure and results in lower profits. Another prominent issue that will affect new
business development is corruption. This problem will make it more difficult for the
business to obtain the required licenses and permits, as well as to receive various
services from the Nigerian government. Corruption also creates ethical concerns
because refusing to pay bribes might make it more difficult to enter the Nigerian market
and achieve profits. Therefore, due to poverty and corruption, as well as increased
business costs, the expansion of operations to Nigeria is not recommended.