In Nigeria, businesses intending to operate in Nigeria must first cross the regulatory compliance threshold of the Corporate Affairs Commission (CAC). However, upon a successful registration with the CAC certain businesses require additional licenses and permits to fully operate. The specific licenses needed vary based on the nature of the business.
It is important to note that obtaining appropriate business licenses and permits before commencement of operation will ensure that a new business is legally compliant, avoid the risk of penalties including fine and closure of business. It also boosts the reputation of a new business by giving it legitimacy and credibility, thereby encouraging an increase in business patronage. Finally, it can also open doors of access to funding from both governmental and non-governmental sources.
Here are some examples of business categories that may require external licenses in Nigeria
- Food and Beverage Industry: Restaurants, cafes, food vendors, and food production companies require licenses from the National Agency for Food and Drug Administration and Control (NAFDAC) to operate legally. Under Nigerian law, no processed food, drug, drug product, cosmetic, medical device or water can be manufactured, imported, exported, advertised, sold or distributed in Nigeria unless it has been registered with NAFDAC. Products are classified as Micro, Small, Large depending on the type of product and size of operations. There are certain requirements which must be fulfilled before a regulated product can attain a registered status in Nigeria. A food processing company would also need registration with the Agribusiness Department of the Federal Ministry of Agriculture and Rural Development. In addition, requirements for registration of local manufactured products are a bit different from imported goods. It must be noted that a company producing different products must register each of them separately.
- Healthcare Industry: Companies incorporated within the healthcare space definitely require additional licenses before they can commence operations. Hospitals, clinics, pharmacies, digital healthcare providers and other healthcare facilities should obtain relevant operation licenses from relevant licensing bodies. It is important to note that the specific activity of the Healthcare company will determine the kind of external license required. Some important professional, regulatory and licensing agents include: the Medical and Dental Council of Nigeria, Pharmacy Council of Nigeria, Nursing and Midwifery Council of Nigeria, Pharmacists Council of Nigeria and Medical Laboratory Science Council of Nigeria, the Federal Ministry of Health, Medical and Dental Council of Nigeria, State Ministries of Health and State Primary Healthcare Development Agencies.
- Real Estate Industry: The real estate industry in Nigeria is a viable one because of the availability of large expanses of land, availability of enabling regulations and an equally large population in need of land. It also has diverse sectors such as property development, property management, real estate consultancy sectors, etc, and each sector is mostly regulated. External agencies a real estate company should register with include:Federal Ministry of Works and Housing and State Ministries of Housing.Real Estate Developers Association of Nigeria (REDAN). REDAN is the main regulatory body for housing development companies (public and private) in Nigeria. It is not a Federal Government Agency but it is renowned as the primary port of call for government, private establishment and international partners who intend to participate in housing development in Nigeria.State Real Estate Regulatory Agencies such as the Lagos State Real Estate Regulatory Authority (LASRERA). These state agencies have a duty to regulate and monitor the affairs of real estate companies through the regulation of persons who can be licensed to practice as real estate professionals in Lagos State and issuance of other necessary permits. The Nigerian Institution of Estate Surveyors and Valuers – which specifically regulates the regime of Real Estate Surveyors and Valuers.
- Road Transportation Industry: Like the real estate industry, the road transportation industry is another in-demand and ever-growing industry to venture into as a business entity in Nigeria and its capital requirements are quite modest in comparison to other businesses. Some regulatory agencies which provide external licenses for the transportation industry include: The Federal Road Safety Corps (FRSC), National Union of Road Transport Workers (NURTW) and State Transport Authorities (STA), which is often applicable to intra-state transport operators, local government permits such as the hackney permit in Lagos State which is needed by drivers of commercial vehicles or cabs in Lagos State.
- Construction Industry: Construction companies and contractors require licenses from the Council for the Regulation of Engineering in Nigeria (COREN), which regulates the practice of engineering in all its ramifications and membership with the Nigerian Institute of Building (NIOB) which is the professional body regulating the affairs of those who are builders or want to be builders in Nigeria.
- Energy Industry: The Nigerian Electricity Regulatory Commission (NERC) is tasked with regulating the administration of Companies involved in the generation (including captive generation which is electricity generated for consumption by the generating entity and not for sale to a third party), production, transmission, distribution and trade of electricity in Nigeria. The NERC is empowered to do this by virtue of Section 62 of the Electric Power Sector Reform Act 2005 which provides that any person intending to engage in the business of electricity generation, transmission, system operation, distribution or trading shall be required to obtain an operator’s license from the Nigerian Electricity Regulatory Commission.
- Banking and Finance Industry: Banks, Payment Service Companies, Insurance Companies, Investment Companies and other Financial Institutions require additional operating licenses from the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and the National Insurance Commission (NAICOM).
- Education Industry: Private and Public Higher Institutions of learning, Distance Learning Institutes and other advanced educational institutions require additional licenses from the Federal Ministry of Education and the National Universities Commission (NUC) before commencing operations. However, institutions that provide primary and secondary school educational services are often regulated by the Federal Ministry of Education (in cases of Federal Government owned educational establishments) and State Ministries of Education for all other public and private owned primary and secondary schools and the teachers in the school must be registered members of the Teachers Registration Council of Nigeria..
- Private Security Companies: The Nigerian Security and the Civil Defence Corps (NSCDC) has the responsibility of licensing, monitoring and the supervision of private securities companies in Nigeria so as to ensure that those working within the industry are fit and proper persons who have received adequate training for the role they perform.
- Money Lending Companies: A person or company whose sole line of business is lending money with the expectation of receiving a larger sum in return may be granted a money lender license. Money lender licenses are issued for a one-year term that expires on December 31st of each year and can be renewed. They are governed by the various state money lending laws in Nigeria. Due to the fact that most Nigerian states have laws pertaining to money lending that are essentially the same, most states have very similar licensing requirements and procedures. By Aviel Avenante Law Practice
REFERENCES
Nkume K. (3/3/2023). How to Obtain A Food and Alcohol License in Nigeria. (3/3/2023) https://www.mondaq.com/nigeria/food-and-drugs-law/1289150/how-to-obtain-a-food-and-alcohol-license-in-nigeria
Health Ethics and Law Consulting (August, 25 2023). Spotlight: the regulation of healthcare providers and professionals in Nigeria. https://www.lexology.com/library/detail.aspx?g=0ca5e1f0-ed47-419e-8184-da7ebee811a3
https://lasrera.lagosstate.gov.ng/about.jsp
https://www.niesv.org.ng/aboutus.php
https://coren.gov.ng/about-us/; https://coren.gov.ng/service/contracting-firm/
https://www.cbn.gov.ng/Out/2022/FPRD/Circular_and_AML_Licensing_Guideline.pdf. Financial institutions that require CBN regulation include: Deposit Money Banks; Discount Houses; Primary Mortgage institutions; Finance Companies; Bureaux-de-change; Development Finance Institutions; Micro Finance Bank