Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
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liquidation. The law protects foreigners against expropriation of their property and assets.
However, enterprises with foreign ownership must obtain a business permit and expatriate
quota (to employ non-Nigerians) from the Ministry of Internal Affairs. Every company with
foreign participation must also register with the Nigerian Investment Promotion Commission
(NIPC). Investors who wish to provide funds from overseas must obtain a Certificate of Capital
Importation from the Nigerian bank that will handle the funds.
Institutions overseeing capital flows
In the processes of establishing a business in Nigeria, investors will encounter a number of
government agencies, including the corporate affairs commission, the immigration services,
the customs service and the federal inland revenue service as well as the ministries of finance
and internal affairs. Investors can deal with these agencies in one place, the One-Stop
Investment Centre, run by the NIPC, which is the main government agency charged with
facilitating foreign investment in Nigeria. The NIPC was established in 1995 to encourage,
promote and co-ordinate investments in Nigeria. Its duties include liaising between investors
and government agencies, and facilitating pre-investment site visits.
The Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) are the
main institutions governing the capital market, while the Central Bank of Nigeria (CBN) is the
most important regulator of capital flows. Although the law permits the free movement of
capital through authorised dealers, changes in the monetary policies of the CBN can affect the
ease of financial flows in and out of the country.
Recent central bank governors have generally favoured market-oriented reforms, but they
have intervened in the markets when they believe that currents of capital flows were
detrimental to the stability of the local currency, the naira. In February 2007 the CBN
restricted foreign investors from buying government bonds with a maturity of under one year,
and in September 2008 it stipulated that proceeds from selling government securities could
only be repatriated after one year. These restrictions affected capital flows and were lifted in
July 2011 by the regulator.
Similarly, in early 2009, the regulator restricted banks’ foreign-exchange operations, limited
banks’ foreign-exchange margins, and restricted foreign-exchange sales by oil firms and
government agencies in efforts to combat currency speculation and stabilise the naira. The
CBN also restricted deposit and lending rates to dampen competition between banks. The
financial limitations were widely criticised, leading the CBN later to reverse these capital
controls.
As part of plans to diversify Nigeria’s oil-dependent economy and boost trade and investment
in Nigeria, the Ministry of Trade and Investment was created in June 2011, led by the former
finance minister Olusegun Aganga. In its first six months the ministry helped pave the way for
new investment commitments in both the oil and the non-oil sector, of some US$31bn,
including US$13bn from international investors, notably from the US, China and Indonesia.
The Bureau of Public Enterprises (BPE) which implements official policy on privatisation and
commercialisation, is another organisation set up to boost non-oil growth. Foreign investors