VZCZCXRO8446
PP RUEHMA RUEHPA
DE RUEHUJA #0088/01 0160645
ZNR UUUUU ZZH
P 160645Z JAN 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 5029
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHOS/AMCONSUL LAGOS 0652
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCPCIM/CIMS NTDB WASHDC

UNCLAS SECTION 01 OF 11 ABUJA 000088 
 
SIPDIS 
 
DEPARTMENT FOR EB/IFD/OIA 
DEPARTMENT PASS TO USTR AGAMA 
TREASURY FOR PETERS, IERONIMO, HALL 
DOC FOR 3317/ITA/OA/KBURRESS AND 
3130/USFC/OIO/ANESA/DHARRIS 
 
E.O. 12598: N/A 
TAGS: EINV ETRD EFIN ECON OPIC KTDB USTR NI
SUBJECT: NIGERIA: 2009 INVESTMENT CLIMATE STATEMENT 
 
REF: STATE 123907 
 
¶1.  The following information is Nigeria's 2009 Investment Climate 
Statement. 
 
Overview 
-------- 
 
¶2.  With an estimated population of over 140 million, Nigeria is 
Africa's most populous nation.  It offers investors a low-cost labor 
pool, abundant natural resources, and potentially the largest 
domestic market in sub-Saharan Africa.  Despite these advantages, 
much of that market potential is unrealized.  Impediments to 
investment include inadequate infrastructure, corruption, an 
inefficient property registration system, an inconsistent regulatory 
environment, restrictive trade policies, and slow and ineffective 
courts and dispute resolution mechanisms. 
 
¶3.  To succeed, investors must understand the Nigerian business 
environment and engage in problem solving with local staff, Nigerian 
partners and government officials.  Potential investors must cope 
with poorly maintained infrastructure and arbitrary policy changes. 
Security is of special concern due to high crime and repeated cases 
of hostage taking and attacks on oil installations in the oil-rich 
Niger Delta region.  Inadequate law enforcement compounds the 
country's high crime rate, and sporadic outbreaks of communal 
violence due to ethnic and religious conflicts continue. 
 
¶4.  Military rule ended with the inauguration of a civilian 
administration in May 1999. Nigeria conducted its third general 
elections in April 2007 resulting in a civilian to civilian hand 
over of power from former President Olusegun Obasanjo to President 
Umar Musa Yar'Adua.  The elections were however, characterized by 
gross irregularities.  A large number of the electoral victories in 
the April 2007 general elections are currently being challenged in 
various electoral tribunals and courts in the country.  Results of 
the presidential election were challenged as well, with the Supreme 
Court ruling in December 2008 to uphold President Yar'Adua's 
election.  The courts have overturned the announced results in a few 
cases, including some governorship results, and at least forced 
re-runs in a few others. 
 
¶5.  The Nigerian government (GON) embarked on a reform program in 
late 2003 christened the National Economic Empowerment and 
Development Strategy (NEEDS).  The present administration of 
President Yar'Adua has assured that the economic reforms will be 
sustained.  Yar'Adua's economic vision is embedded in his "Seven 
Point Agenda" focusing on power and energy, food security and 
agriculture, wealth creation and employment, mass transportation, 
land reform, security, and education system.  However, an economic 
blueprint for achieving these objectives has not been drafted by the 
GON.  Freedom of expression and of the press is observed, in most 
cases, though most publications practice self-censorship regarding 
sensitive issues.  There was, however one incident this year when 
several of the senior editors of a newspaper were arrested 
reportedly in response to a story about the President's health; one 
private TV station was briefly closed over a similar story.  In 
addition, two editors of online publications were detained (not 
clear in response to which story) but not charged, and soon 
released.   Nonetheless, human rights violations have been reduced 
from the time of military rule, although the country's human rights 
record remains poor.  Controls over foreign investment have been 
loosened, and earlier decrees inhibiting competition or conferring 
monopoly powers on public enterprises have been repealed or amended. 
 Despite these actions, policymakers' protectionist bent remains 
strong.   Trade policy is inconsistent, and the GON prohibits the 
importation of many goods, ostensibly to foster domestic 
production. 
 
Openness to Foreign Investment 
------------------------------ 
 
¶6.  The GON continues to solicit foreign investment and has 
implemented various reforms towards attracting it. 
 
¶7.  Legal Framework: With a few exceptions, the Nigerian Investment 
Promotion Commission (NIPC) Decree of 1995 allows 100% foreign 
ownership of firms outside the petroleum sector, where investment is 
limited to existing joint ventures or new production-sharing 
agreements.  Industries considered crucial to national security, 
such as firearms, ammunition, and military and paramilitary apparel, 
are reserved for domestic investors.  Foreign investors must 
register with the NIPC after incorporation under the Companies and 
 
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Allied Matters Decree of 1990.  The decree prohibits the 
nationalization or expropriation of foreign enterprises except in 
cases of national interest. 
 
¶8.  Nigerian laws apply equally to domestic and foreign investors. 
These include the Securities and Exchange Act of 1999, the Foreign 
Exchange Act of 1995, the Money Laundering Act of 2003, the Banking 
and Other Financial Institutions Act of 1991, and the National 
Office of Technology Acquisition and Promotion Act of 1979. 
 
¶9.  Privatization: The Privatization and Commercialization Act of 
1999 established the National Council on Privatization, the 
policymaking body overseeing the privatization of state-owned 
enterprises (SOEs), and the Bureau of Public Enterprises (BPE), to 
implement the program.  BPE has focused on privatization of key 
sectors, including telecommunications and power, calls for core 
investors to acquire controlling shares in formerly state-owned 
enterprises.  The GON repealed or amended decrees that inhibited 
competition or conferred monopoly powers on parastatal firms.  From 
1999 to 2007, BPE raised over $4 billion by privatizing and 
concessioning more than 140 enterprises, including cement 
manufacturing firms, banks, hotels, and vehicle assembly plants. 
Since President Yar'Adua's inauguration no large or substantive SOEs 
have been privatized.  The Infrastructure Concession Regulatory 
Commission (ICRC) was inaugurated in 2008 with the goal of 
identifying greenfield infrastructures for concessioning. 
 
¶10.  With the passage of the Power Sector Reform Bill in 2005, a 
power sector regulator, the Nigerian Electricity Regulatory 
Commission (NERC) was created with responsibility for tariff 
regulation and economic and technical regulation of the electricity 
supply industry.  Since its inception, the NERC has issued twenty 
nine licenses to independent power producers in the electricity 
industry.  By the end of 2008 three IPP plants were operational.  A 
major hurdle facing the IPPs is the insufficient supply of natural 
gas to power the plants. 
 
¶11.  The privatization of Nigeria's Power Holding Company of Nigeria 
through the Electric Power Sector Reform Act of 2005 (PHCN -- 
formerly the National Electric Power Authority or NEPA) has moved 
slowly.  The eventual privatization of the successor companies was 
frustrated by the lack of interest by potential investors due to the 
deplorable state of power sector infrastructure.  In May 2008 the 
GON established a coordinating office at PHCN headquarters; a Board 
of Directors, headed by the Minister of Energy for Power; and 
appointed a vice chairman to jointly oversee the rehabilitation of 
the power infrastructure and provide proper transfer of employees, 
assets, liabilities, rights and obligations of the holding company 
to the various successor companies.  At this writing, the GON has 
decided not to divest all generation, and to maintain ownership of 
the National Transmission Grid. 
 
¶12.  The GON has substantially opened Nigeria's telecommunications 
sector.  The Telecommunications Act of 2001 authorizes the Nigerian 
Communications Commission (NCC) to issue licenses to existing and 
prospective service providers.  Five enterprises, including Etisalat 
which commenced operations in 2008 and NITEL, have licenses. 
Globacom won mobile, fixed, and international gateway licenses as 
Nigeria's second national operator in mid-2002.  According to the 
NCC, the estimated total number of phone lines (both mobile and 
fixed line) in Nigeria at the end of September 2008 was 57.07 
million with a teledensity of 40.77.  This is an improvement from 
the December 2007 figure of 41.97 million lines and teledensity of 
29.98.  In July 2007, three carriers in the 800MHz spectrum band 
were awarded to Visafone Communications in a competitive auction 
process that included GiCell Wireless Limited, Multilinks 
Telecommunication Limited, and TC Africa Telecoms Network Limited. 
Also in March 2007, four licenses for a 10MHz lot in the 2GHz 
spectrum were issued to Alheri Engineering Co. Limited, Celtel 
Nigeria Limited, Globacom Limited, and MTN Nigeria Communications 
Limited. 
 
¶13.  The NCC commenced the unified licensing regime in May 2006, 
awarding the first batch of unified licenses to four 
telecommunication service providers.  The unified license permits 
telecommunications companies to offer services across the board in 
telecommunications, including fixed line, wireless, data services, 
etc.  This marks the end of the five-year exclusivity incentive 
granted the mobile telephone licensees in 2001. 
 
¶14.  Telecommunications deregulation has led to the issuance of 
licenses for fixed wireless networks, internet services, and VSAT 
(very small aperture terminal) satellite telecommunications 
 
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equipment services.  However, the GON's hefty fees and 
infrastructure deficiencies such as inadequate power supply slow the 
impact and implementation of these technologies. 
 
Conversion and Transfer Policies 
-------------------------------- 
 
¶15.  The Foreign Exchange Monitoring Decree of 1995 opened Nigeria's 
foreign exchange market.  In February 2006, in accordance with its 
plan to liberalize the foreign exchange market, Nigeria adopted a 
Wholesale Dutch Auction System (WDAS) which gives banks more control 
of the foreign exchange market, though the Central Bank still 
retains its supervisory role over the market. 
 
¶16.  Foreign companies and individuals can hold non-naira 
denominated accounts in domestic banks.  Account holders have 
unlimited use of their funds, and foreign investors are allowed 
unfettered repatriation of capital.  For naira denominated accounts 
there is a $4,000 quarterly Personal Travel Allowance for foreign 
exchange and a $5,000 quarterly Business Travel Allowance per 
individual.  Foreign exchange for travel is usually issued in cash 
by commercial banks while some authorized dealers also issue 
pre-paid credit cards that can be used on ATM machines worldwide. 
Purchase of foreign exchange for business purposes such as importing 
equipment and raw materials, and also paying school fees abroad has 
to be routed through authorized dealers i.e., banks.  This can only 
be done with proper documentation such as filling out the Form M, 
presenting copies of the certificate of incorporation of the company 
etc. 
 
¶17.  The NIPC guarantees investors unrestricted transfer of 
dividends (net a 10% withholding tax).  Companies must provide 
evidence of income earned and taxes paid before receiving 
remittances.  Money transfers usually take not more than 48 hours if 
the necessary documentation is provided.  All transfers are required 
by law to be made through banks, because banks are the only licensed 
foreign exchange agents. 
 
Expropriation and Compensation 
------------------------------ 
 
¶18.  The GON has not expropriated or nationalized foreign assets 
since the late 1970s. 
 
Dispute Settlement 
------------------ 
 
¶19.  Investment Disputes:  Nigeria's civil courts handle disputes 
between corporate bodies and the GON as well as between Nigerian 
businesses and foreign investors.  The courts occasionally rule 
against the GON; however, the settlements in these cases are not 
always expeditiously paid.  Nigerian law allows the enforcement of 
foreign judgments after proper hearings in Nigerian courts. 
Plaintiffs receive monetary judgments in the currency specified in 
their claims. 
 
¶20.  Legal System: Nigeria has a complex three-tiered legal system 
composed of English common law, Islamic law, and Nigerian customary 
law.  Most business transactions are governed by "common law" as 
modified by statutes to meet local demands and conditions.  At the 
pinnacle of the judicial system is the Supreme Court, which has 
original and appellate jurisdiction in specific constitutional, 
civil, and criminal matters as prescribed by Nigeria's constitution. 
  The Federal High Court has jurisdiction over revenue matters, 
admiralty law, banking, foreign exchange, other currency and 
monetary or fiscal matters, and lawsuits to which the federal 
government or any of its agencies are party.  The Nigerian court 
system has too few court facilities, lacks computerized document 
processing systems, and poorly remunerates judges and other court 
officials, all of which encourages corruption and undermines 
enforcement.  Debtors and creditors rarely have recourse to 
Nigeria's pre-independence bankruptcy law.  In the Nigerian business 
culture, businessmen generally do not seek bankruptcy protection. 
Even in cases where creditors obtain a judgment against defendants, 
claims often go unpaid. 
 
¶21.  The public increasingly resorts to the court system and is more 
willing to litigate and seek redress.  However, use of the courts 
does not automatically imply fair or impartial judgments.  In the 
World Bank's publication, Doing Business 2009, which surveyed 181 
countries including Nigeria, it reported that GON efforts have led 
to some improvements in the way business is conducted, especially in 
dealing with construction permits, but more needs to be done. 
 
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Regarding the enforcement of contracts Nigeria was ranked 90 out of 
181 countries surveyed, a slight improvement compared with its 
ranking of 93 out of 178 countries in 2008.   In addition, the 
report revealed that contract enforcement required 39 procedures and 
457 days, the cost of which averaged 32 %of the value of the 
contract; in comparison to contract enforcement in OECD countries 
that required 30.8 procedures, spanning 462.7 days at a cost of 
18.9% of the claim; and sub-Saharan African countries that require 
39.4 procedures, 659.7 days, and 48.9% of the claim. 
 
¶22.  Alternative Dispute Resolution:  The Arbitration and 
Conciliation Act of 1988 (the Arbitration Act) provides for a 
unified and straightforward legal framework for the fair and 
efficient settlement of commercial disputes by arbitration and 
conciliation.  The Act established internationally competitive 
arbitration mechanisms, fixed proceeding schedules, provided for the 
application of the UNCITRAL (United Nations Commission on 
International Trade Law) arbitration rules or any other 
international arbitration rule acceptable to the parties, and made 
the Convention on the Recognition and Enforcement of Arbitral Awards 
(New York Convention) applicable to contract enforcement, based on 
reciprocity.  The Act allows parties to challenge arbitrators and 
provides that an arbitration tribunal shall ensure that the parties 
are accorded equal treatment, and that each party has full 
opportunity to present its case. 
 
Performance Requirements/Incentives 
----------------------------------- 
 
¶23.  Nigeria regulates investment in line with the World Trade 
Organization's Trade-Related Investment Measures (TRIMS) Agreement. 
Foreign companies operate successfully in Nigeria's service sector, 
including telecommunications, accounting, insurance, banking, and 
advertising.  The Securities and Exchange Act of 1988, amended in 
1999 and renamed the Investment and Securities Act, forbids 
monopolies, insider trading, and unfair practices in securities 
dealings. 
 
¶24.  To meet performance requirements, foreign investors must 
register with the Nigerian Investment Promotion Commission, 
incorporate as a limited liability company (private or public) with 
the Corporate Affairs Commission, procure appropriate business 
permits, and (when applicable) register with the Securities and 
Exchange Commission.  Manufacturing companies are sometimes required 
to meet local content requirements.  Expatriate personnel do not 
require work permits, but they are subject to "needs quotas" 
requiring them to obtain residence permits that allow salary 
remittances abroad.  Larger quotas are allowed for professions 
deemed in short supply, such as deepwater oilfield divers.  U.S. 
companies often report problems obtaining quota permits. 
 
¶25.  The GON maintains many different and overlapping incentive 
schemes.  The Industrial Development/Income Tax Relief Act No. 22 of 
1971, amended in 1988, provides incentives to pioneer industries 
deemed beneficial to Nigeria's economic development and to 
labor-intensive industries, such as apparel.  Companies that receive 
pioneer status may benefit from a nonrenewable 100% tax holiday of 
five years (seven years if the company is located in an economically 
disadvantaged area).  Industries that use 60 to 80% of local raw 
materials in production may benefit from a 30% tax concession for 
five years, and investments employing labor-intensive modes of 
production may enjoy a 15% tax concession for five years. 
Additional incentives exist for the natural gas sector, including 
allowances for capital investments and tax-deductible interest on 
loans.  The GON encourages foreign investment in agriculture, mining 
and mineral extraction (non-oil), oil and gas, and the export 
sector.  In practice, these incentive programs meet with varying 
degrees of success. 
 
¶26.  Technology Transfer Requirements: The National Office of 
Industrial Property Act of 1979 established the National Office of 
Technology Acquisition and Promotion (NOTAP) to facilitate the 
acquisition, development, and promotion of foreign and indigenous 
technologies.  NOTAP registers commercial contracts and agreements 
dealing with the transfer of foreign technology and ensures that 
investors possess licenses to use trademarks and patented inventions 
and meet other requirements before sending remittances abroad.  In 
cooperation with the Ministry of Finance, NOTAP administers 120% tax 
deductions for research and development expenses if carried out in 
Nigeria and 140% deductions for research and development using local 
raw materials. 
 
¶27.  NOTAP recently shifted its focus from regulatory control and 
 
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technology transfer to promotion and development.  With the 
assistance of the World Intellectual Property Organization, NOTAP 
has established a patent information and documentation center for 
the dissemination of technological information to end-users.  The 
office has a mandate to commercialize institutional research and 
development with industry. 
 
¶28.  Import Policies:  Tariffs provide the GON its (distant) second 
largest source of revenue after crude oil exports.  Frequent policy 
changes and uneven duty collection make importing difficult and 
expensive and create severe bottlenecks.  Nigeria's dependence on 
imports aggravates the situation.  In September 2008, the GON 
announced a new tariff policy beginning in 2008 to2012, which marked 
its second attempt at harmonizing its tariff with its West African 
neighbors under the ECOWAS Common Economic Tariff (CET) regime, 
which include five tariff bands. 
 
¶29.  The new tariff policy reduces the number of banned tradable 
imports from 44 to 26 items, and there is a reduction in tariff on a 
wide range of items.  The GON also reduced the applicable duty rate 
on the fifth tariff band from 50% to 35%.  Tradable imports that 
remain banned in the new tariff policy include frozen poultry, pork, 
beef,  cassava, pasta, fruit juice in retail packs, toothpicks, 
soaps and detergents,  refined vegetable oil,  beer and 
non-alcoholic beverages , some textiles, and plastics.  ECOWAS CET 
negotiations were expected to have been concluded by January 2008, 
but this was not achieved.  It is hoped that with the reduction of 
the tariff on the 5th tariff band proposed by Nigeria from 50% to 
35%, there will be progress in the negotiations.  The fifth tariff 
band covers mostly luxury goods. 
 
¶30.  The Nigerian Customs Service (NCS) and the Nigerian Ports 
Authority (NPA) have exclusive jurisdiction over customs services 
and port operations.  Nigerian law allows importers to clear goods 
on their own, but most importers employ clearing and forwarding 
agents. 
 
¶31.  Many importers under-invoice shipments and engage in currency 
arbitrage to minimize tariffs and lower their landed costs.  Others 
ship their goods to ports in neighboring countries, after which they 
are transported overland.  The GON began a destination inspection 
regime in January 2006, which had earlier been shelved on four 
different occasions since 2002.  Under the destination inspection 
scheme, goods destined for Nigeria's ports would be inspected at the 
point of entry rather than at the point of shipment.  Guidelines for 
the new scheme were announced, and three companies were awarded a 
seven-year contract to act as inspection agents at Nigeria's 
seaports, border posts, and airports.  The companies are Cotecna, 
SGS, and Global Scan.  The exclusive contract will expire by 2012, 
if Nigerian Customs officials have completed training on the new 
scheme and on the handling of the scanning machines, which would be 
handed over to the NCS at the expiration of the contract. 
 
¶32.  Shippers report that efforts to modernize and professionalize 
the NCS and the NPA have reduced port congestion and clearance times 
including mandatory 48 hour clearance, particularly at Lagos' Apapa 
Port, which handles over 40% of Nigeria's trade.  This is 
particularly the case for container traffic.  Nevertheless, bribery 
of customs and port officials remains commonplace, and smuggled 
goods routinely enter Nigeria's seaports and cross its land borders. 
 
 
¶33.  Export Incentives: Most export incentives have been abolished, 
though the government is reviewing reinstating some selected 
incentives. 
 
¶34.  Although highly underused, the Nigerian Export-Import Bank 
provides commercial bank guarantees and direct lending to facilitate 
export sector growth.  The bank's Foreign Input Facility provides 
normal commercial terms of three to five years (or longer) for the 
importation of machinery and raw materials used for generating 
exports. 
 
¶35.  Agencies meant to promote industrial exports, remain burdened 
by uneven management, vaguely defined policy guidelines, and 
corruption.  Nigeria's high production costs because of inadequate 
infrastructure also leave Nigerian exporters at a disadvantage. 
 
¶36.  Government Procurement:  The GON awards contracts under an 
open-tender system, advertising tenders in Nigerian newspapers and 
opening them to domestic and foreign companies.  Procurement has 
become slightly more transparent, but corruption persists in the 
awarding of government contracts. 
 
ABUJA 00000088  006 OF 011 
 
 
 
¶37.  Procurement for capital projects is often subject to 
over-invoicing, which permits improper payments to private and 
public sector officials.  Many U.S. companies claim they are 
disadvantaged in obtaining GON contracts, even when they appear to 
have the best bids in technical and financial terms.  Unsuccessful 
U.S. bidders sometimes allege collusion between foreign competitors 
and key GON officials. 
 
¶38.  The Bureau of Public Procurement, the successor agency to the 
Budget Monitoring and Price Intelligence Unit (BMPIU) after the 
enactment of the public procurement legislation in May 2007 acts as 
a clearinghouse for government contracts and procurement, and 
monitors the implementation of projects to ensure compliance with 
contract terms and budgetary restrictions.  Procurements above N50 
million (about $380,000) are subject to full "due process," as the 
process is called.  It is expected that the public procurement 
legislation would also be passed at the lower tiers of government. 
 
¶39.  Visa Requirements:  Investors sometimes encounter difficulties 
acquiring entry visas and residency permits.  Foreigners must obtain 
entry visas from Nigerian embassies or consulates abroad, seek 
expatriate position authorization from the Nigerian Investment 
Promotion Commission, and request residency permits from the 
Nigerian Immigration Service.  Investors report that this cumbersome 
process can take from two to 24 months and cost from $1,000 to 
$3,000 in facilitation fees. 
 
Right to Private Ownership and Establishment 
------------------------------------- 
 
¶40.  In accordance with the NIPC Decree of 1995, the GON supports 
competitive business practices and protects private property. 
 
Protection of Property Rights 
--------------------------- 
 
¶41.  The GON recognizes secured interests in property, such as 
mortgages.   The recording of security instruments and their 
enforcement are subject to the same inefficiencies as those in the 
judicial system.  In the World Bank's publication, Doing Business 
2009, Nigeria was ranked 176 of the 181 countries surveyed for 
registering property, requiring 14 procedures and 82 days at a cost 
of 21.9% of the property value.  According to the report, property 
registration in OECD countries requires an average of 4.7 
procedures, 30.3 days, and a cost of 4.5% of property values, while 
in sub-Saharan African countries it requires an average of 6.8 
procedures, 95.6 days, and a cost of 10.5% of property value. 
 
¶42.  Fee simple property rights are rare.  Most property is 
long-term leases with certificates of occupancy acting as title 
deeds.  Transfers are complex and must usually go through state 
governor's offices.  In Abuja, the Federal Capital Territory 
government cancelled and began a process of reregistering all 
property allotments, refusing to renew those it deemed not in 
accordance with the city's master plan.  Buildings on these 
properties have frequently been demolished, even in the face of 
court injunctions.  Therefore acquiring and maintaining rights to 
real property are a major challenge. 
 
¶43.  Nigeria is a member of the World Intellectual Property 
Organization (WIPO) and a signatory to the Universal Copyright 
Convention, the Berne Convention, and the Paris Convention (Lisbon 
text).  The Patents and Design Decree of 1970 governs the 
registration of patents, and the Registry of Trademarks, Patents and 
Designs in the Ministry of Commerce and Industry is responsible for 
registering patents, trademarks, and designs.  Once conferred, a 
patent conveys exclusive rights to make, import, sell, or use a 
product or apply a process.  The Trademarks Act of 1965 gives 
trademark holders exclusive rights to use registered trademarks for 
a specific product or class of products.  The Copyright Decree of 
1988, subsequently amended in 1992 and 1994 and later codified as 
the Copyright Act Chapter C 28 Laws of the Federation of Nigeria2004 
is based on WIPO standards and U.S. copyright law, and makes it a 
crime to export, import, reproduce, exhibit, perform, or sell any 
work without the permission of the copyright owner.  However under 
the Copyright Act, owners of copyrights do not register their works, 
rather, they notify the Nigerian Copyright Commission.  Nigeria's 
copyright statutes also include the National Film and Video Censors 
Board Act and the Nigerian Film Policy Law of 1993. 
 
¶44.  In 1999 amendments to the Copyright Decree incorporate 
trade-related aspects of intellectual property rights (TRIPS) 
 
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protection for copyrights, except provisions to protect geographical 
indications and undisclosed business information.  Among the various 
GON agencies there is confusion regarding proposed legislation which 
is expected to put all intellectual property agencies under a single 
and uniform authority.  Concomitantly a private bill that would 
establish an Industrial Property Commission is being considered by 
the National Assembly.  This private bill would amend the Patents 
and Design Decree to make comprehensive provisions for the 
registration and proprietorship of patents and designs, amend the 
Trademarks Act to improve existing legislation relating to the 
recording, publishing, and enforcement of trademarks, and provide 
protection for plant varieties (including biotechnology) and animal 
breeds.  However, there are also competing plans by the Ministry of 
Commerce and Industry and the Ministry of Justice to send similar 
bills to the National Assembly for consideration.  This is ongoing 
division has lasted since at least 2006. 
 
¶45.  The GON has signed the WIPO Internet treaties but has yet to 
ratify them.  The Nigerian Copyright Commission claims, however, 
that it is already implementing the terms of the treaties. 
 
¶46.  Patent and trademark enforcement remains weak, and judicial 
procedures are slow and subject to corruption.  Relevant Nigerian 
institutions suffer from low moraQ, poor training, and limited 
resources.  A key deficiency is inadequate appreciation of the 
benefits of IPR protection among regulatory officials, distributor 
networks, and consumers.  The over-stretched and under-trained 
Nigerian police have little understanding of intellectual property 
rights.  The new tariff policy released in September 2008 empowers 
the Nigerian Customs Service (NCS) to seize pirated works and 
prosecute offenders.  Though the NCS has received some 
WIPO-sponsored and USG-sponsored training, it admits that the 
technical capacity of its officers need to be enhanced for it to be 
able to combat piracy effectively. 
 
¶47.  Companies do not often seek trademark or patent protection, the 
enforcement mechanisms of which they consider ineffective. 
Nonetheless, recent efforts to curtail abuse have yielded spotty 
resulQ.  The Nigerian police and the Nigerian Copyright Commission 
in conjunction with the Economic and Financial Crimes Commission 
have raided compact disc replicating plants, enterprises producing 
and selling pirated software and videos, and a number of businesses 
have filed high-profile charges against IPR violators. 
 
¶48.  Most raids involving copyright, patent, or trademark 
infringement appear to target small rather than large and 
well-connected pirates.  Very few cases have been successfully 
prosecuted.  Most cases are settled out of court, if at all.  Those 
adjudicated in court are handled primarily by the Federal High 
Court, whose judges are generally familiar with intellectual 
property rights law. 
 
Transparency of the Regulatory System 
-------------------------------- 
 
¶49.  Nigeria's legal, accounting, and regulatory systems are 
consistent with international norms, but enforcement is uneven. 
There are sometimes opportunities for public comment and input into 
proposed regulations. 
 
¶50.  Professional organizations set standards for the provision of 
professional services: e.g., accounting, law, medicine, engineering, 
and advertising.  These standards are usually consistent with 
international norms.  No legal barriers prevent entry into this 
sector. 
 
¶51.  Taxation:  In general, Nigeria's tax laws do not impede 
investment, but the imposition and administration of taxes is highly 
uneven and lacks transparency.  Tax evasion is common, and 
individuals and businesses often collude with relevant officials to 
avoid paying taxes.  Nigeria has signed double taxation agreements 
with several countries, including Great Britain, France, the 
Philippines and Japan.  The GON imposes a 7.5% tax rate on 
dividends, interest, rent, and royalties when paid to a bona-fide 
beneficiary under a tax treaty. 
 
¶52.  Multiple taxes are a problem for businesses at state and local 
levels.  Companies within concurrent state and local jurisdictions 
may be expected to pay several taxes and levies. 
 
Efficient Capital Markets and Portfolio Investment 
------------------------------------- 
 
 
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¶53.  The Nigerian Investment Promotion Commission Decree of 1995 
liberalized Nigeria's foreign investment regime, which has 
facilitated access to credit instruments provided by financial 
institutions.  Foreign investors who have incorporated their 
companies in Nigeria have equal access to all financial instruments. 
 Some investors consider the capital market, specifically the 
Nigerian Stock Exchange (NSE), a financing option, given commercial 
banks' high lending rates and short maturities of debt instruments. 
 
¶54.  Trading on the NSE witnessed significant declines in value 
since March 2008 due to a combination of factors which includes the 
freeze on margin loans by local banks, and panic by inexperienced 
investors resulting in huge sales of shares, and the exit of foreign 
portfolio investors and hedge funds due to economic and financial 
crisis in their home countries.  Market capitalization opened at 
over 10 trillion naira at the beginning of 2008, but closed at 6.7 
trillion naira on December 5, 2008.  The Nigerian Stock Exchange All 
Shares Index opened 2008 at about 58,000 points but fell to 30,653 
points on December 5, 2008.  The exchange operates nine branches 
nationwide, and the volume of shares listed continues to rise due to 
new companies listing their shares on the stock exchange.  The 
introduction of the contributory pension system in late 2005, GON's 
divestment of equity in parastatal companies as well as initial 
public offerings (IPOs) and issuances of additional shares by listed 
companies have contributed to the exchange's growth.  The NSE 
continues to expand its membership and investor pool.  Currently, 
214 equities are listed on the exchange. 
 
¶55.  Government debt instruments are available.  Since the inception 
of the civilian government in 1999, the federal government has 
issued bonds of various maturities ranging from 2 to 20 years aimed 
at restructuring its domestic debt portfolio from short-term to 
medium and long-term instruments.  Five state governments issued 
bonds to finance development projects; however, other states have 
shelved their plan to raise funds from the capital market in light 
of the global financial crisis and the stock market decline.  The 
Nigerian Securities and Exchange Commission (SEC) has issued 
stringent guidelines for states that wish to raise funds on capital 
markets, such as a credit assessment conducted by a recognized 
credit rating agency.  The credit rating agencies recognized by the 
SEC are Agusto and Co., and Global Credit Rating (GCR) of South 
Africa. 
 
¶56.  Banking System:  As of December 2008, twenty-four commercial 
banks were operating in Nigeria.  In 2007, Standard Bank of South 
Africa, through its Nigerian subsidiary, Stanbic Bank, acquired 
majority interest in IBTC Chartered Bank.  This led to the merger of 
both Stanbic Bank and IBTC Chartered Bank.  A merger between Bank 
PHB and Spring Bank will be completed in 2009.  Industry experts 
speculate another round of consolidation in the short term through 
mergers and acquisitions. 
 
¶57.  Health of the Banking System:  In October 2008 the Central Bank 
Governor and Nigerian Deposit Insurance Corporation announced that 
all Nigerian banks were healthy despite the global financial crisis. 
 Private sector experts expressed less optimistic opinions and 
questioned the accuracy of the CBN and NDIC announcements. 
 
Political Violence 
------------------ 
 
¶58.  Social unrest, religious and ethnic strife, and crime affect 
many parts of Nigeria.  In the oil-rich Niger Delta region, decades 
of official neglect, persistent poverty, as well as dislocations and 
environmental damage caused by energy projects have aggravated 
socioeconomic unrest.  Sabotage and vandalism of pipelines and other 
installations and kidnapping of Nigerian and expatriate oil workers 
are regular occurrences.  Many of these criminal activities are 
designed to extort cash from foreign operators. 
 
¶59.  The Niger Delta Development Commission (NDDC) has a mandate to 
implement social and economic development projects in the Delta 
region, but the NDDC has been ineffective.  State and local 
governments offer few social services and Niger Delta residents 
continue to seek direct payments and other assistance from oil 
companies.  Some have implemented their own socioeconomic 
development programs to assist local communities, but many 
communities consider the company programs inadequate.  In 2009, the 
federal government established the Ministry for the Niger Delta, to 
oversee Niger Delta development projects.  The position of Minister 
was filled in December 2009; however, the Ministry had not yet begun 
its official functions at year's end. 
 
 
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¶60.  In November 2008 an alleged manipulation of local government 
elections resulted in civil disturbance in the north-central city of 
Jos culminating in the loss of over 400 lives.  In February 2006, 
riots targeting Christians in response to the publication in Denmark 
of cartoons considered to disparage the Prophet Muhammad took place 
in the north-eastern city of Maiduguri with reprisal attacks against 
Muslims in the south-eastern city of Onitsha.  The violence led to 
the death of over thirty people.  Vigilante groups in various parts 
of the country have exacerbated violence. 
 
Corruption 
---------- 
 
¶61.  Domestic and foreign observers recognize corruption as a 
serious obstacle to economic growth and poverty reduction.  Nigeria 
has received some positive news on the corruption front. 
Transparency International in 2008 noted Nigeria's improvement from 
being the 18th most corrupt country to 58th in its Corruption 
Perceptions Index.  Moreover, in its overall corruption rankings 
with the least corrupt country rated as number one, Nigeria improved 
from 147 to 121 in 2008.  Despite improvements in the Transparency 
International rankings, reassignment of large numbers of key 
personnel in the Economic and Financial Crimes Commission (EFCC) and 
a lack of progress on high-level corruption cases have brought into 
question the government's commitment to fighting corruption. 
 
¶62.  The Corrupt Practices and Other Related Offences Act of 2001 
established an Independent Corrupt Practices and Other Related 
Offences Commission (ICPC) to prosecute individuals, government 
officials, and businesses accused of corruption.  Over 19 offenses 
are punishable under the Act, including accepting or giving 
gratification, fraudulent acquisition of property, and concealment 
of fraud.  Nigerian law stipulates that giving and receiving bribes 
are criminal offences and, as such, are not tax deductible.  Despite 
the legislation, ICPC investigations have resulted in less than 
fifteen convictions since 2001, and corruption remains endemic. 
 
¶63.  The Economic and Financial Crimes Commission was established to 
prosecute individuals involved in financial crimes and other acts of 
economic sabotage.  The EFCC has been most successful in prosecuting 
low-level internet scam operators.  Some high profile convictions 
have taken place, such as the prosecution of the former governor of 
Bayelsa State, and the former Inspector General of Police; however, 
the sentences handed down have been relatively light.  However, 
there are renewed doubts regarding the seriousness of the EFCC to 
arrest and prosecute corrupt public officials since the change in 
its leadership in December 2007 and redeployment of personnel in 
July 2008.  In May 2007, Nigeria was admitted into the Egmont Group 
of Financial Intelligence Units (FIUs).  The Paris-based Financial 
Action Task Force removed Nigeria from its list of Non-Cooperative 
Countries and Territories in June 2006.  The resignation of the 
first Director of Nigeria's Financial Intelligence Unit in November 
2008 has contributed to concerns over the direction of Nigeria's 
battle with corruption.  Nigeria is a pilot participant in the 
Extractive Industry Transparency Initiative, which seeks to ensure 
audits of Nigeria's oil accounts.  Nigeria is a signatory to the UN 
Anticorruption Convention, but has yet to ratify it. 
 
Bilateral Investment Agreements 
------------------------------- 
 
¶64.  Investment Agreements:  While a Trade and Investment Framework 
Agreement (TIFA) has been signed with the United States, a bilateral 
investment treaty (BIT) is not in place.  The President of Nigeria, 
however, has expressed interest in negotiating a BIT with the U.S. 
Nigeria has bilateral investment agreements with the United Kingdom, 
Germany, Belgium, South Africa, Italy, Argentina, Egypt, South 
Korea, China, Jamaica, Sweden, Switzerland, Turkey, Uganda, France, 
Taiwan, Netherlands and Romania. 
 
OPIC and Other Investment Insurance Programs 
------------------------------- 
 
¶65.  The U.S. Overseas Private Investment Corporation offers all its 
products to U.S. investors in Nigeria. 
 
Labor 
----- 
 
¶66.  Over the past decade, Nigeria's skilled labor pool has declined 
as vocational and university educational standards have plummeted, 
mainly because of poor funding.  Given the low employment capacity 
of Nigeria's formal sector, over half of all Nigerians work in the 
 
ABUJA 00000088  010 OF 011 
 
 
informal sector and agriculture.  In the formal sector, companies 
involved in businesses such as banking and insurance possess an 
adequately skilled workforce (often trained abroad, in private 
institutions, or at the better-funded universities).  In the 
manufacturing sector, workers often require additional training and 
supervision, but there are too few supervisory personnel to ensure 
that this is done well.  Labor-management relations in some sectors, 
especially in the country's profitable oil and gas industries, are 
strained. 
 
¶67.  The Right of Association:  Nigeria's constitution guarantees 
the rights of free assembly and association and protects workers' 
rights to form or belong to trade unions.  Several statutory laws 
nonetheless restrict the rights of workers to associate or 
disassociate with labor organizations.  Since the establishment of 
the single trade federation system in 1978, non-management senior 
staff has been prohibited from joining government-recognized trade 
unions.  Although the Trade Union Congress and the Congress of Free 
Trade Unions are regarded as influential labor federations, the two 
senior staff associations are denied seats on Nigeria's National 
Labor Advisory Council (NLAC).  A bill to amend the law is working 
its way through the National Assembly. 
 
¶68.  Nigeria's single central labor federation, the Nigeria Labour 
Congress (NLC), comprises twenty-nine industrial unions.  According 
to figures provided by the NLC, total union membership at the end of 
2002 was 4 million.  Less than 10% of the total work force is 
unionized, and except for a few workers engaged in commercial food 
processing, those in the agricultural sector, which employs the bulk 
of the work force, are not organized. 
 
¶69.  Collective Bargaining:  Collective bargaining occurred 
throughout the public sector and the organized private sector in 
2007 and 2008, but public sector employees have become increasingly 
concerned about the GON's commitment to the collective bargaining 
process in resolving conflicts.  According to the NLC, the GON's 
failure to implement agreements threatens to "devalue the enviable 
record of dialogue, consultation, and mutual trust that has 
characterized the relationship between the GON and the NLC since 
1999." 
 
¶70.  Collective bargaining in the petroleum industry is relatively 
efficient compared to other sectors.  Except for a longstanding 
unresolved dispute over the industry's use of contract labor, issues 
pertaining to salaries, benefits, health and safety, and working 
conditions tend generally to be resolved quickly through 
negotiations.  Organized labor's efforts to address broad political 
issues, however, have resulted in industrial actions, such as 
general strikes over fuel prices that continue to affect industry 
produQivity. 
 
¶71.  Workers under collective bargaining agreements cannot 
participate in strikes unless their unions comply with the 
requirements of the law, which includes provisions for mandatory 
mediation and referral of disputes to the GON.  The law provides the 
GON the option of referring matters to a labor conciliator, an 
arbitration panel, a board of inquiry, or the National Industrial 
Court (NIC).  Although the law forbids employers from granting 
general wage increases to workers without prior government approval, 
the law is not often enforced.  Strikes in both the private and 
public sectors occur frequently. 
 
¶72.  The Nigerian labor minister may refer unresolved disputes to 
the Industrial Arbitration Panel (IAP) and the NIC.  Union officials 
question the effectiveness and independence of the NIC in view of 
its refusal to resolve disputes stemming from the GON's failure to 
fulfill contract provisions for public sector employees.  Union 
leaders criticize the arbitration system's dependence on the labor 
minister's referrals. 
 
¶73.  Child Labor:  Nigeria has ratified the International Labor 
Organization (ILO) convention on the elimination of the worst forms 
of child labor.  The 1974 Labor Decree and the 1979 Constitution 
prohibit forced or compulsory labor and restrict the employment of 
children under the age of 15 to home-based agricultural or domestic 
work for no more than eight hours per day.  The Decree allows the 
apprenticeship of youths as of the age of 13 under specific 
conditions. 
 
¶74.  Despite this, Nigeria's weak economy has forced many children 
into commercial activities to enhance family income.  The 2005 
UNICEF State of the World's Children report estimates that 39% of 
children aged five to 14 were involved in child labor (not 
 
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necessarily exploitative) in Nigeria. Similarly, a 2003 study 
conducted by the Nigerian National Bureau of Statistics in 
conjunction with the ILO estimated as many as 15 million children 
were working in Nigeria, with as many as 40% of them at risk of 
being trafficked for forced labor. 
 
¶75.  Acceptable Conditions of Work:  Nigeria's 1974 Labor Decree 
provides for a 40-hour workweek, two to four weeks of annual leave, 
and overtime and holiday pay for all workers except agricultural and 
domestic.  No law prohibits compulsory overtime.  The Decree 
establishes general health and safety provisions, some of which are 
specific to young or female workers, and requires the factory 
division of the Ministry of Labor and Employment to inspect 
factories for compliance with health and safety standards. 
Under-funding and limited resources undermine the agency's oversight 
capacity, and construction sites and other non-factory work sites 
are often ignored.  Nigeria's labor law requires employers to 
compensate injured workers and dependent survivors of laborers 
killed in industrial accidents, but the Labor Ministry has been 
ineffective in identifying violators and has failed to implement ILO 
recommendations to update its inspection program and reporting of 
accidents. 
 
¶76.  During 2007 the ministry conducted 110 child labor inspections, 
410 regular labor inspections, and four comprehensive inspections. 
In 2006 the ministry also trained approximately 120 labor inspection 
officers on child labor laws; trained 80 officers to perform 
inspections in high-risk activities in agriculture, mining, and the 
informal sector; and trained 20 officers to perform rapid assessment 
surveys in these critical sectors. 
 
Foreign Trade Zones/Free Trade Zones 
----------------------------------- 
 
¶77.  To attract export-oriented investment, the GON established the 
Nigerian Export Processing Zone Authority (NEPZA) in 1992.  NEPZA 
allows duty-free import of all equipment and raw materials into its 
zones.  Up to 25% of production in an export processing zone may be 
sold domestically upon payment of applicable duties.  Investors in 
the zones are exempt from foreign exchange regulations and taxes and 
may freely repatriate capital. 
 
¶78.  Of the five export processing zones established under NEPZA, 
just two, in Calabar and Onne, function properly.  In 2001, both 
were converted into free trade zones, thereby freeing them from the 
export requirement.  As a result, investment is quickly moving into 
Calabar, almost exclusively in industries that add value to imports. 
 Another free trade zone, the Tinapa Free Trade Zone owned by the 
Cross River state government was commissioned during the first 
quarter of 2007, and several shops and bank branches are operating 
there.  Oil and gas companies use the Onne free port zone as a 
bonded warehouse for supplies and equipment and for the export of 
liquefied natural gas.  Recently, the GON has encouraged private 
sector participation and partnership with the federal government and 
state and local governments under the free zones scheme.  This has 
resulted in the establishment of specialized zones, such as Lekki 
and Olokola which are under construction. 
 
Foreign Direct Investment 
------------------------- 
 
¶79.  According to data from the United Nations World Investment 
Report of 2008, in 2007 the stock of foreign direct investment (FDI) 
in Nigeria was estimated at $62.79 billion, which accounted for 
37.6% of GDP.  Total FDI Inflow was $12.45 billion in 2007 and 
accounted for 69.6% of gross fixed capital formation.  The $12.45 
billion FDI inflow is mostly concentrated in the oil industry.  This 
figure represents 80% of total FDI in West Africa and 23.5% of total 
FDI in Africa (including North Africa) and places Nigeria as the top 
recipient of FDI in Africa.  Some FDI is channeled into 
telecommunications and manufacturing, but the total remains small 
relative to oil sector investment. 
 
¶80.  This cable was coordinated with ConGen Lagos. 
 
PIASCIK