VZCZCXYZ0000
RR RUEHWEB

DE RUEHUJA #0064/01 0211749
ZNR UUUUU ZZH
R 211208Z JAN 10
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC 0023
INFO RUCPCIM/CIM NTDB WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHOS/AMCONSUL LAGOS 0020
RUEHUJA/AMEMBASSY ABUJA

UNCLAS ABUJA 000064 
 
SIPDIS 
STATE FOR EEB/IFD/OIA DAVID J. AHN AND THOMAS J. WALSH 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC NI
SUBJECT: NIGERIA: 2010 INVESTMENT CLIMATE STATEMENT 
 
REF: 10 STATE 124006 
 
¶1.  Nigeria is Africa's most populous nation with an estimated 
population of over 150 million.  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. 
 
 
 
¶2.  Potential investors will need to understand the Nigerian 
business environment and engage in problem-solving with local 
staff, Nigerian partners, and government officials.  There were at 
least three prominent cases in 2009 where the judicial system or 
law enforcement agencies were manipulated by local companies or 
government officials in order to exert undue pressure on U.S. 
companies and individuals for commercial or personal advantage.  In 
all three cases, arrest warrants were issued and senior officials 
of the U.S. companies were detained with the understanding that the 
cases would be dropped if certain conditions were met. 
 
 
 
¶3.  Potential investors will also need to cope with poorly 
maintained power, road, and port infrastructure, and arbitrary 
policy changes, such as the reversal of privatization efforts in 
the power and downstream oil and gas sectors.  Security is of 
special concern due to high rates of violent crime.  Kidnapping for 
ransom has expanded beyond the Niger Delta where it originated to 
roughly half of Nigeria's states.  Attacks on oil installations and 
the associated kidnappings of oil workers in the oil-rich Niger 
Delta region have significantly declined since the implementation 
of a government amnesty, but tensions remain because promises made 
for the post-amnesty period have not yet been implemented. 
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 last general 
election in April 2007, resulting in a civilian-to-civilian 
hand-over of power from former President Olusegun Obasanjo to 
President Umar Musa Yar'Adua.  However, the elections were 
characterized by significant irregularities and many of the results 
were challenged in electoral tribunals and courts.  The 
presidential election outcome was challenged as well, with the 
Supreme Court in December 2008 upholding President Yar'Adua's 
election.  The courts overturned the announced results in six of 
the 36 governors' races, are still responding to appeals in five 
additional cases, and forced re-runs in others. 
 
 
 
¶5.  The Nigerian government (GON) embarked on a medium-term 
economic reform program in late 2003 called the National Economic 
Empowerment and Development Strategy (NEEDS) for 2003-2007.  NEEDS 
focused on privatization, good governance, macroeconomic stability, 
anti-corruption, and public service reforms.  NEEDS has been 
modified to incorporate President Yar'Adua's "Seven Point Agenda," 
which focuses on power and energy, food security and agriculture, 
wealth creation and employment, mass transportation, land reform, 
security, and education system.  An economic reform document called 
"Vision 20:2020" has been presented to the Federal Executive 
Council (the Cabinet) and is expected to be unveiled soon to the 
public.  Vision 20:2020 programs aim to make Nigeria one of the top 
twenty economies in the world by the year 2020. 
 
 
 
¶6.  The GON also plans to reform how oil and gas business is 
conducted in Nigeria.  In a bid to achieve this, the GON has 
introduced the Petroleum Industry Bill (PIB) that would change 
existing contracts and increase the GON's share of oil and gas 
revenues from mandated joint ventures.  Stakeholders in the sector, 
including oil and gas production and service companies, have been 
advocating changes in the fiscal and non-fiscal terms of the PIB to 
make it more attractive to private sector investment.  Both houses 
of the National Assembly have passed the PIB, which is expected to 
be submitted to the National Assembly for a final reading in early 
 
¶2010. 
 
 
 
¶7.  Freedom of expression and of the press is broadly observed, 
although most publications practice self-censorship regarding 
sensitive issues.  Human rights violations have been reduced from 
the time of military rule, but the country's overall human rights 
record remains poor.  Controls over foreign investment have been 
loosened, and military government decrees inhibiting competition or 
conferring monopoly powers on public enterprises have been repealed 
or amended.  The policymakers' protectionist bent remains strong 
despite these actions.  Trade policy is inconsistent and the GON 
prohibits the importation of many goods, ostensibly to foster 
domestic production.  In a bid to further support domestic 
production, the GON has introduced the Local Content Bill (LCB) 
that would require oil and gas production and service companies to 
use local resources for the delivery of services that are currently 
sourced from outside the country.  Concerns about the LCB include 
its restrictive trade practices in violation of WTO agreements as 
well as transfer of technology requirements that would violate a 
company's intellectual property rights.  Both houses of the 
National Assembly have passed the LCB, which is expected to be 
submitted to the National Assembly for a final reading in early 
¶2010. 
 
 
 
Nigeria's Selected Indices and Rankings 
 
--------------------------------------------- ----- 
 
 
 
¶8.  The following table indicates Nigeria's ranking according to 
various metrics of transparency and good governance in 2009: 
 
 
 
Measure   Index/Ranking 
 
 
 
Transparency International Corruption Index - 130 
 
Heritage Economic Freedom Index - 117 (World); 19 (Region) 
 
World Bank Doing Business Index - 125 
 
MCC Govt. Effectiveness - 35% 
 
MCC Rule of Law - 22% 
 
MCC Control of Corruption - 29% 
 
MCC Fiscal Policy - 84% 
 
MCC Trade Policy - 29% 
 
MCC Regulatory Quality - 42% 
 
MCC Business Start-up - 43% 
 
MCC Land Rights Access - 11% 
 
MCC Natural Resources Management - 23% 
 
 
 
Openness to Foreign Investment 
 
---------------------------------------- 
 
 
 
¶9.  The GON continues to solicit foreign investment and has 
implemented various reforms to attract it. 
 
 
 
¶10.  Legal Framework: With a few exceptions, the Nigerian 
Investment Promotion Commission (NIPC) Decree of 1995 allows 
100-percent foreign ownership of firms outside the petroleum 
sector, where investment is limited to existing joint ventures or 
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 Allied Matters Decree of 1990.  The decree prohibits 
the nationalization or expropriation of foreign enterprises except 
in cases of national interest. 
 
 
 
¶11.  Nigerian laws apply equally to domestic and foreign investors. 
These include the Central Bank of Nigeria Act of 2007, the Money 
Laundering Act of 2003, the Securities and Exchange Act of 1999, 
the Foreign Exchange Act of 1995, the Banking and Other Financial 
Institutions Act of 1991, and the National Office of Technology 
Acquisition and Promotion Act of 1979. 
 
 
 
¶12.  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 focuses on the privatization of key 
sectors, including telecommunications and power, and 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 date, BPE raised over $4 billion by privatizing and 
concessioning more than 140 enterprises, including cement 
manufacturing firms, banks, hotels, a petrochemical plant, aviation 
cargo handling companies, and vehicle assembly plants.  No 
substantive SOE has been privatized Since President Yar'Adua's 
inauguration in 2007.  The Infrastructure Concession Regulatory 
Commission (ICRC) was inaugurated in 2008 with the goal of 
identifying greenfield infrastructures for concessioning.  The 
Lagos-Ibadan Expressway, a major highway in the southwestern part 
of the country, was concessioned to Bi-Courtney Highway Services 
under a Design-Build-Operate-Transfer scheme for 25 years.  The GON 
also plans to use a Public-Private-Partnership Framework for future 
infrastructure provision. 
 
 
 
¶13.  The passage of the Power Sector Reform Bill in 2005 created 
the Nigerian Electricity Regulatory Commission (NERC), a power 
regulator with responsibility for tariff regulation and economic 
and technical regulation of the electricity supply industry.  The 
NERC has issued twenty nine licenses to independent power producers 
in the electricity industry since its inception.  Three IPP plants 
were operational by the end of 2009.  Major hurdles facing the IPPs 
are the failure to fully implement the Electric Power Sector Reform 
Act of 2005 and the insufficient supply of natural gas to power the 
plants. 
 
 
 
¶14.  The expected privatization of the Power Holding Company of 
Nigeria (PHCN) through the Electric Power Sector Reform Act of 2005 
appears to no longer be a priority.  The GON is rehabilitating 
existing power infrastructure and is investing in new power 
projects, with the aim to meet the GON's 6,000 Megawatts (MW) 
target by the end of 2009 and 10,000 MW target by the end of 2011. 
The 2009 goal was missed with only 3,600 MW generated at the end of 
the year.  Nigeria also needs an effective transmission and 
distribution system since its current grid is in need of repair and 
upgrade. 
 
 
 
¶15.  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.  Nigeria's state-owned 
telecommunications operator, Nigerian Telecommunications Limited 
(NITEL) and five private companies, including Etisalat, which 
commenced operations in 2008, have licenses.  Globacom won mobile, 
fixed, and international gateway licenses as Nigeria's second 
national telecommunications 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 2009 was 70.3 
million with a teledensity of 50.24.  This is an improvement from 
the September 2008 figure of 57.07 million lines and a teledensity 
of 40.77.  Licenses for the 2.3GHz spectrum, which were awarded 
through a competitive bidding process in May 2009, were cancelled 
due to alleged administrative procedures that were not adhered to 
 
by the NCC.  A fresh bidding round will be initiated by the NCC and 
full details are expected soon.  Three carriers in the 800MHz 
spectrum band were awarded to Visafone Communications in a 
competitive auction process in July 2007 that included Visafone 
Communications, GiCell Wireless Limited, Multilinks 
Telecommunication Limited, and TC Africa Telecoms Network Limited. 
Four licenses for a 10MHz lot in the 2GHz spectrum were also issued 
to Alheri Engineering Co. Limited, Celtel Nigeria Limited, Globacom 
Limited, and MTN Nigeria Communications Limited in March 2007. 
 
 
 
¶16.  The NCC commenced the unified licensing regime in May 2006, 
awarding the first batch of unified licenses to four 
telecommunications 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. 
 
 
 
¶17.  Telecommunications deregulation has led to the issuance of 
licenses for fixed wireless networks, internet services, and VSAT 
(very small aperture terminal) satellite telecommunications 
equipment services.  However, the GON's hefty fees and 
infrastructure deficiencies such as inadequate power supply slow 
the impact and implementation of these technologies. 
 
 
 
¶18.  The ICT sector should receive a boost in May 2010 when two 
broadband cables, from Glo and MainOne, are expected to land in 
Lagos.  Current bandwidth in Nigeria is through the SAT-3 cable of 
350 gigabits.  The Glo and MainOne cables will increase the 
broadband capacity by 2.6 terabits for a total of almost 3.0 
terabits for the entire country. 
 
 
 
¶19.  Glo-One is an initiative of Globacom Limited.  MainOne will 
offer a 1.92 terabit facility that will provide the largest 
bandwidth in the region.  Glo-One is expected to be commissioned in 
early 2010, while Main One is scheduled for commissioning in June 
¶2010.  Both projects will provide broadband data and internet 
capacity, which will increase the country's Internet density and 
capacity.  They will likewise break NITEL's fiber-optic-cable 
quasi-monopoly and will reduce the cost of broadband to one-tenth 
of the current cost.  Damage to the SAT-3 cable, Nigeria's only 
link to the global communications system, in July 2009 affected 70 
percent of the country's bandwidth and crippled bank services and 
Internet access nationwide. 
 
 
 
Conversion and Transfer Policies 
 
----------------------------------------- 
 
 
 
¶20.  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).  The WDAS provides 
greater control of the foreign exchange market, although the 
Central Bank still retains its supervisory role over the market. 
 
 
 
¶21.  Foreign companies and individuals can hold 
non-naira-denominated accounts in domestic banks.  Account holders 
have unlimited use of these funds, and foreign investors are 
allowed unfettered repatriation of capital.  There is a $4,000 
quarterly Personal Travel Allowance for foreign exchange and a 
$5,000 quarterly Business Travel Allowance per individual for 
naira-denominated accounts.  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 for paying 
school fees abroad, must be routed through banks, Nigeria's only 
licensed foreign exchange agents.  This can only be done with 
proper documentation, such as filling out the Form M and presenting 
copies of the certificate of incorporation of the company. 
 
¶22.  The NIPC guarantees investors unrestricted transfer of 
dividends (net a 10 percent 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. 
 
 
 
Expropriation and Compensation 
 
----------------------------------------- 
 
 
 
¶23.  The GON has not expropriated or nationalized foreign assets 
since the late 1970s. 
 
 
 
 
 
Dispute Settlement 
 
------------------------- 
 
 
 
¶24.  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. 
 
 
 
¶25.  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.  Claims often go unpaid, even in cases where creditors 
obtain a judgment against defendants. 
 
 
 
¶26.  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 2010, which 
surveyed 183 countries, Nigeria was ranked 94 out of 183 countries 
on the enforcement of contracts, compared with its 2009 ranking of 
92 out of 181 countries surveyed.  In addition, the report revealed 
that contract enforcement required 39 procedures and an average of 
457 days, the cost of which averaged 32 percent of the value of the 
contract, compared to contract enforcement in OECD countries that 
required 30.6 procedures, spanning an average of 462.4 days at a 
cost of 19.2 percent of the cost of the contract, and sub-Saharan 
African countries that required 39.2 procedures, an average of 
643.9 days, and 49.3 percent of the claim. 
 
 
 
¶27.  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, established 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 
 
--------------------------------------------- -- 
 
 
 
¶28.  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 and 
renamed the Investment and Securities Act in 1999, forbids 
monopolies, insider trading, and unfair practices in securities 
dealings. 
 
 
 
¶29.  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 register with the Securities and Exchange Commission 
(when applicable).  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. 
 
 
 
¶30.  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 non-renewable, 
100-percent tax holiday of five years (seven years if the company 
is located in an economically disadvantaged area).  Industries that 
use 60 to 80 percent of local raw materials in production may 
benefit from a 30-percent tax concession for five years, and 
investments employing labor-intensive modes of production may enjoy 
a 15-percent 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. 
 
 
 
¶31.  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-percent tax deductions for research and development 
expenses if carried out in Nigeria and 140-percent tax deductions 
for research and development using local raw materials. 
 
 
 
¶32.  NOTAP has shifted its focus from regulatory control and 
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. 
 
 
 
¶33.  Import Policies:  Tariffs provide the GON its second largest 
source of revenue after crude oil exports.  The GON issued the 
2008-2012 Common External Tariff (CET) Book that harmonizes its 
tariffs with its West African neighbors under the Economic 
Community of West African States (ECOWAS) Common Economic Tariff 
(CET), in September 2008.  The CET has five tariff bands and import 
duties were reduced on a number of items, such as rice, cigars, and 
manufactured tobacco.  The five CET tariff bands are: zero duty on 
capital goods, machinery, and essential drugs not produced locally; 
five percent on imported raw materials; ten percent on intermediate 
goods; 20 percent on finished goods; and 35 percent on luxury goods 
and in certain sectors that the GON wants to protect.  The fifth 
band proposed by the GON has been accepted by ECOWAS member 
countries as part of the CET, but each member country can include 
products it deems appropriate.  The reduction in the number of 
tariff bands has been accompanied by an increase in the number of 
import taxes in recent years.  The 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.  Items that remain 
banned 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. 
 
 
 
¶34.  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.  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 been 
shelved on four occasions between 2002 and 2005.  Under the 
destination inspection scheme, all imports are inspected upon 
arrival into Nigeria, rather than at the ports of origin. 
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 NCS 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. 
 
 
 
¶35.  Shippers report that efforts to modernize and professionalize 
the NCS and the NPA have reduced port congestion and clearance 
times.  These efforts include an ongoing program to achieve the 
stated goal of 48-hour cargo clearance, particularly at Lagos' 
Apapa Port, which handles over 40 percent of Nigeria's trade. 
Nevertheless, bribery of customs and port officials is common, and 
smuggled goods routinely enter Nigeria's seaports and cross its 
land borders.  Efficient functioning of concessioned container 
terminals has significantly reduced container ship wait times, but 
the final release of containers still can take four weeks or longer 
due to delays in NCS container-processing and clearing. 
 
 
 
¶36.  Export Incentives: Most export incentives have been abolished. 
However, the Nigerian Export Promotion Council continues to 
implement the Export Expansion Grant scheme to improve non-oil 
export performance.  The Nigerian Export-Import Bank provides 
commercial bank guarantees and direct lending to facilitate export 
sector growth, although these practices are underused.  The 
Nigerian Export-Import 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.  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. 
 
¶37.  Government Procurement:  The GON awards contracts under an 
open-tender system, advertising tenders in Nigerian newspapers and 
a "tenders" journal, and opening the tenders to domestic and 
foreign companies.  Procurement has become slightly more 
transparent, but corruption persists in the awarding of government 
contracts.  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 $333,333) are subject to full "due process," as the 
process is called.  An amendment to the public procurement 
legislation is being considered by the National Assembly.  The 
proposed amendment contains provisions for decentralizing 
government procurement and increasing the procurement authorization 
limits for ministries, departments, and agencies, unlike the 
earlier legislation which centralized government procurement.  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 (NIPC), 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 
2010, Nigeria was ranked 178 of the 183 countries surveyed for 
registering property, requiring 13 procedures and an average of 82 
days at a cost of 20.9 percent of the property value.  According to 
the report, property registration in OECD countries requires an 
average of 4.7 procedures, an average of 25 days, and a cost of 4.6 
percent of property values, while in sub-Saharan African countries 
it requires an average of 6.8 procedures, and average of 80.7 days, 
and a cost of 9.9 percent of property value. 
 
 
 
¶42.  Fee simple property rights are rare.  Most property consists 
of 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 
 
property allotments have frequently been demolished, even in the 
face of court injunctions.  Therefore, acquiring and maintaining 
rights to real property is 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 Nigeria 
2004 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 
(NCC).  Nigeria's copyright statutes also include the National Film 
and Video Censors Board Act and the Nigerian Film Policy Law of 
¶1993. 
 
 
 
¶44.  The Copyright Decree was amended in 1999 to incorporate 
trade-related aspects of intellectual property rights (TRIPS) 
protection for copyrights, except provisions to protect 
geographical indications and undisclosed business information. 
There is confusion among the various GON agencies 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 
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 ongoing division has lasted since at least 
¶2006.  The GON has signed the WIPO Internet treaties but has yet to 
ratify them.  However, the NCC claims that it is already 
implementing the terms of the treaties. 
 
 
 
¶45.  Patent and trademark enforcement remains weak, and judicial 
procedures as well as application of enforcement measures are slow 
and subject to corruption.  Relevant Nigerian institutions suffer 
from 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 
needs to be enhanced for it to be able to combat piracy 
effectively. 
 
 
 
¶46.  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 some 
results.  The Nigerian police and the NCC in conjunction with the 
Economic and Financial Crimes Commission have raided compact disc 
replicating plants and enterprises producing and selling pirated 
software and videos.  A number of businesses have also filed 
high-profile charges against IPR violators.  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 
 
--------------------------------------------- ---- 
 
 
 
¶47.  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.  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. 
 
 
 
¶48.  Taxation:  Nigeria's tax laws generally 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 the United Kingdom, France, the 
Philippines and Japan.  The GON imposes a 7.5-percent tax rate on 
dividends, interest, rent, and royalties when paid to a bona-fide 
beneficiary under a tax treaty.  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 
 
--------------------------------------------- ----------------- 
 
 
 
¶49.  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 the short maturities 
of local debt instruments. 
 
 
 
¶50.  Trading on the NSE has witnessed significant declines in value 
since March 2008 due to a combination of factors, including the 
freeze on margin loans by local banks, the sale of large quantities 
of shares by bank debtors to pay back margin loans, and the exit of 
foreign portfolio investors and hedge funds due to the global 
economic and financial crisis.  Market capitalization opened at 
about 7 trillion naira ($46.7 billion) at the beginning of 2009, 
but closed at about 5 trillion naira ($33.3 billion) on December 
31, 2009.  The NSE All Shares Index opened 2009 at about 31,450 
points but fell to 20,827 points on December 31, 2009.  The 
exchange operates nine branches nationwide, and the volume of 
shares listed continues to rise due to new companies listing their 
shares on the NSE.  The introduction of the contributory pension 
system in late 2005, the GON's divestment of equity in parastatal 
companies, and the initial public offerings (IPOs) and issuances of 
additional shares by listed companies have contributed to the NSE's 
growth.  The NSE continues to expand its membership and investor 
pool.  Currently, 214 equities are listed on the exchange. 
 
 
 
¶51.  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.  There has been 
renewed interest in bonds since the decline in the equities market 
in March 2008.  Some state governments issued bonds to finance 
development projects; while some domestic banks also plan to raise 
additional capital from the bond market.  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. 
 
 
 
¶52.  Banking System:  Twenty-four commercial banks were operating 
in Nigeria as of December 2009.  The Central Bank of Nigeria (CBN) 
recently concluded a special audit of the 24 banks to ascertain 
whether they have classified their loans in line with mandated 
prudential guidelines and are also well-capitalized.  The outcome 
of the special audit led to the replacement of the executive 
management of eight banks, while two banks have been ordered to 
raise additional capital.  CBN also provided 620 billion naira 
($4.1 billion) in long-term loans to the eight banks to boost their 
liquidity.  The remaining 14 banks were given a clean bill of 
health, though they were asked to make further provisions for 
non-performing loans granted to petroleum product importers and 
capital market operators.  Some of the banks have published their 
financial results in line with the CBN's new directive of making 
full provision for bad loans, showing a loss position. 
 
 
 
Competition from State-Owned Enterprises (SOEs) 
 
--------------------------------------------- ------------------ 
 
 
 
¶53.  Most State-Owned Enterprises (SOEs) have been privatized in 
order to make them more efficient.  The remaining SOEs are a major 
drain on government finances.  The state-owned telecommunications 
company, NITEL, and its mobile subsidiary, MTEL, have lost 
considerable market share to privately owned competitors.  Both 
NITEL and MTEL have been slated for privatization.  The four 
state-owned petroleum refineries located in Port-Harcourt, Warri, 
and Kaduna operate far below their installed capacity.  The Kaduna 
and Port-Harcourt refineries were sold to a private consortium 
during the Obasanjo administration, but the transaction was later 
reversed by President Umaru Yar'Adua.  The GON's management of the 
refineries has been poor.  There is an ongoing drive to encourage 
private investment in refineries and, in a bid to attract such 
investment, the GON says it plans to fully deregulate the 
downstream sector and allow market forces to determine the price of 
petroleum products.  The GON has also abolished the $1 million 
non-refundable deposit requirement for investors applying to build 
refineries.  There are also plans to attract private investment to 
the railway sector through public-private partnerships (PPPs). 
 
 
 
¶54.  Sovereign Wealth Fund:  The GON desires to establish a 
Sovereign Wealth Fund (SWF).  Discussions are still ongoing within 
the GON on the SWF's objectives and how it would be operated.  SWF 
legislation would be required. 
 
 
 
Corporate Social Responsibility 
 
--------------------------------------- 
 
 
 
¶55.  Both local and foreign enterprises generally follow Corporate 
Social Responsibility (CSR) principles as a way of identifying with 
the communities in which they operate and sometimes to display 
support for GON initiatives.  Generally, firms that pursue CSR are 
viewed favorably. 
 
 
 
Political Violence 
 
----------------------- 
 
 
 
¶56.  Social unrest, religious and ethnic strife, and crime affect 
many parts of Nigeria.  In the oil-rich Niger Delta region, decades 
of neglect, persistent poverty, and environmental damage caused by 
 
energy projects have aggravated unrest.  Sabotage and vandalism of 
pipelines and other installations and kidnapping of Nigerian and 
expatriate oil workers have been regular occurrences.  President 
 
Yar'Adua's unconditional amnesty for Niger Delta militants in 2009 
induced all major militant leaders to put down their arms and join 
a political reconciliation process.  However, the subsequent 
rehabilitation and reintegration process for former militants, as 
well as promised massive investment in infrastructure and 
development in the region, have failed to materialize.  Many 
observers fear that, absent major progress on these fronts, 
militancy could return in 2010. 
 
 
 
¶57.  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 oil companies 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. 
 
 
 
¶58.  Violent clashes between police and militant members of Boko 
Haram (Western Education Is Sin) in four northern states between 
July 26 and 29, 2009, resulted in over 700 reported deaths and 
4,000 people displaced.  The violence began when followers of an 
extremist Islamic leader attacked a police station in retaliation 
for the arrest of several of the group's leaders.  Violence quickly 
spread, and the police and military were accused of using excessive 
force to end it, including the alleged extrajudicial execution by 
police of the leader. 
 
 
 
Corruption 
 
--------------- 
 
¶59.  Domestic and foreign observers recognize corruption as a 
serious obstacle to economic growth and poverty reduction.  Nigeria 
was ranked 130 out of 180 countries in Transparency International's 
2009 Corruption Perception Index (CPI), dropping nine places from 
its 121 ranking in the 2008 CPI.  Nigeria's corruption levels 
remain high and its main anti-corruption institution, the Economic 
and Financial Crimes Commission (EFCC), has underperformed on the 
issue. 
 
 
 
¶60.  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 bribes, 
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. 
 
 
 
¶61.  The EFCC was established to prosecute individuals involved in 
financial crimes and other acts of economic "sabotage."  It has 
been most successful in prosecuting low-level internet scam 
operators, but some high-profile convictions have taken place, such 
as a former governor of Bayelsa State, a former Inspector General 
of Police, and a former Chairman of the Board of the Nigerian Port 
Authority.  However, many other cases languish in the courts 
without resolution.  Concerns about the EFCC's commitment grew 
after its change in leadership in December 2007 and redeployment of 
some 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. 
Nigeria is a pilot participant in the Extractive Industry 
Transparency Initiative (EITI), which seeks to ensure audits of 
Nigeria's oil accounts.  Nigeria has also ratified the UN 
Anticorruption Convention. 
 
 
 
Bilateral Investment Agreements 
 
----------------------------------------- 
 
 
 
¶62.  Investment Agreements:  A Trade and Investment Framework 
Agreement (TIFA) has been signed with the United States.  A 
bilateral investment treaty (BIT) with the U.S. is not in place, 
but President Yar'Adua has expressed interest in negotiating one. 
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, the Netherlands and Romania. 
 
 
 
OPIC and Other Investment Insurance Programs 
 
--------------------------------------------- --------------- 
 
 
 
¶63.  The U.S. Overseas Private Investment Corporation offers all 
its products to U.S. investors in Nigeria. 
 
 
 
Labor 
 
-------- 
 
 
 
¶64.  Nigeria's skilled labor pool has declined over the past decade 
as vocational and university educational standards have fallen, 
mainly because of poor funding.  The low employment capacity of 
Nigeria's formal sector means that over half of all Nigerians work 
in the informal sector and agriculture.  Companies involved in 
formal sector businesses such as banking and insurance possess an 
adequately skilled workforce (often trained abroad in private 
institutions or at the better-funded universities).  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 are strained in some 
sectors, especially in the profitable oil and gas and public 
education sectors. 
 
 
 
¶65.  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.  The Trade Union Amendment 
Act of 2005 allows non-management senior staff to join unions.  The 
Act also gives the Trade Union Congress and the Nigeria Labor 
Congress, Nigeria's most influential organized labor federations, 
representation on Nigeria's National Labor Advisory Council (NLAC), 
which advises the Minister of Labor and Productivity on labor 
matters. 
 
 
 
¶66.  Nigeria's largest labor federation, the Nigeria Labor Congress 
(NLC), contains thirty-seven industrial unions, while the second 
largest, Trade Union Congress (TUC), includes 18.  According to 
figures provided by the Ministry of Labor and Productivity, total 
union membership at the end of 2009 was approximately 7.4 million. 
Approximately 30 percent of the total work force is unionized in 
both the private and public sectors.  Workers in the agricultural 
sector, which employs the bulk of the work force, are not 
organized. 
 
 
 
¶67.  Collective Bargaining:  Collective bargaining occurred 
throughout the public sector and the organized private sector in 
2007 and 2008.  However, public sector employees have become 
increasingly concerned about the GON's failure to honor its 
agreements from the collective bargaining process.  According to 
the NLC and TUC, the GON's failure to honor its agreements 
threatens to "devalue the enviable record of dialogue, 
consultation, and mutual trust that has characterized the 
relationship between the GON and labor unions since 1999."  A bill 
is currently in its final stages in the National Assembly which 
 
 
would allow for better tripartite representation, dialogue, and 
mediation during labor disputes. 
 
 
 
¶68.  Collective bargaining in the petroleum industry is relatively 
efficient compared to other sectors.  Issues pertaining to 
salaries, benefits, health and safety, and working conditions tend 
generally to be resolved quickly through negotiations.  One 
exception is a longstanding unresolved dispute over the industry's 
use of contract labor.  Organized labor's efforts to address broad 
political issues have resulted in industrial actions, such as 
general strikes over fuel price increases, which continue to affect 
industry productivity. 
 
 
 
¶69.  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).  The law forbids employers from granting general wage 
increases to workers without prior government approval, but the law 
is not often enforced.  Strikes occur frequently in both the 
private and public sectors.  There were more than a dozen 
threatened or actual strikes carried out among unions in the 
aviation, education, health, judicial, government, entertainment, 
and transportation sectors in 2009. 
 
 
 
¶70.  The Nigerian Minister of Labor and Productivity 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 Minister of Labor and Productivity's 
referrals. 
 
 
 
¶71.  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 1974 Labor Decree 
allows the apprenticeship of youths as of the age of 13 under 
specific conditions.  Nigeria's poor distribution of income has 
forced many children into commercial activities to enhance family 
income.  The law, which sets a general minimum age of 12 years for 
employment, did not protect children from exploitation in the 
workplace and was not effectively enforced by the government. 
Child labor was widespread, and the Ministry of Labor and 
Productivity and the National Agency for the Prohibition of Traffic 
in Persons (NAPTIP) estimated there were more than 15 million 
children involved in child labor. The federal government passed the 
Child Rights Act of 2003, but implementation was required by each 
state government. Only 21 of the 36 states passed a version of the 
Child Rights Act establishing laws providing protecton of 
children's rights as of the end of 2009.  The 2005, UNICEF State of 
the World's Children report estimated that 39 percent of children 
aged five to 14 were involved in child labor (not 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 percent of them at risk of being trafficked for 
forced labor. 
 
 
 
¶72.  Acceptable Conditions of Work:  Nigeria's 1974 Labor Decree 
provides for a 40-hour work week, 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 Productivity 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 
workers killed in industrial accidents, but the Ministry of Labor 
and Productivity has been ineffective in identifying violators and 
has failed to implement ILO recommendations to update its 
inspection program and accident reporting. 
 
 
 
¶73.  The Ministry of Labor and Productivity deals specifically with 
child labor problems and operates an inspections department to 
enforce legal provisions on conditions of work and protection of 
workers.  The Ministry of Labor and Productivity conducted over 150 
child labor inspections and 50 full investigations with 408 
officers in 2009.  The Inspections Department employed nearly 400 
inspectors for all business sectors, but there were fewer than 50 
factory inspectors for the entire country.  Labor inspections were 
mostly random, but occasionally occurred when there was suspicion 
of, rather than actual complaints of, illegal activity. 
 
 
 
Foreign Trade Zones/Free Trade Zones 
 
--------------------------------------------- --- 
 
 
 
¶74.  The GON established the Nigerian Export Processing Zone 
Authority (NEPZA) in 1992 to attract export-oriented investment. 
NEPZA allows duty-free import of all equipment and raw materials 
into its zones.  Up to 25 percent 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.  Only two 
of the five export processing zones established under NEPZA, those 
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 trades zones scheme. 
This has resulted in the establishment of specialized zones, such 
as Lekki and Olokola, which are under construction. 
 
 
 
Foreign Direct Investment 
 
--------------------------------- 
 
 
 
¶75.  According to data from the United Nations World Investment 
Report of 2009, the stock of foreign direct investment (FDI) in 
Nigeria in 2008 was estimated at $83.07 billion, which accounted 
for 38.7 percent of GDP.  Total FDI Inflow was $20.28 billion in 
2008 and accounted for 103.1 percent of gross fixed capital 
formation.  This FDI inflow is mostly concentrated in the oil 
industry.  The $20.28 billion figure represents 78 percent of total 
FDI in West Africa and 23.1 percent 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 total investment in the non-oil and gas sector 
remains small relative to investment in the oil and gas sector. 
SANDERS