Nigeria’s Federal Government remains the largest economic player owning vast land, oil reserves, infrastructure assets, and regulatory powers that influence every sector. For private businesses, especially in infrastructure, energy, real estate, and tech, doing business with government can unlock enormous value. But it also comes with unique legal, political, and operational risks.
This article outlines some considerations for doing business with the Nigerian Federal and State Government.
1. Understand the Legal Framework
Doing business with government in Nigeria is regulated by a variety of laws. The nature of each transaction or project will typically inform the applicable law. Some of the key laws include:
- Public Procurement Act 2007 (Federal level).
- State-level procurement laws (e.g. Lagos State Public Procurement Law).
- Infrastructure Concession Regulatory Commission (ICRC) Act.
- Public Private Partnership (PPP) policies at state levels.
- BOFIA 2020, for fintech and financial service partnerships.
- Land Use Act, for public land transactions.
2. Due Diligence
Private investors often skip public sector project proposal due diligence when dealing with government, assuming it’s “safe.” However, we find that it is often important to conduct some level of diligence on a number of contract-sensitive issues ranging from, checking that the government agency or ministry has budgetary appropriation or financial backing to perform a proposed contract. It is often important to check whether a proposed contract potentially violates procurement rules or is outside threshold limits. Verifying whether a government agency has legal personality to contract and whether a proposed transaction requires additional approvals, from the Federal Executive Council or other key regulators. It is often also important to investigate the extent to which a proposed venture is subject to TSA (Treasury Single Account) payment delays.
3. Don’t Assume you need local incorporation
Although there is a general rule mandating foreign companies to register a local entity, foreign companies can legitimately apply for an exemption from local registration as the general rule is subject to exemption especially for: (a) Project-specific engagements; (b) Contracts with federal or state governments; and (c) Foreign investments involving technical expertise or funding.
As an example, engineering and technical consultants providing engineering or technical expertise on a federal or state project can successfully apply for an exemption from local incorporation. Government-owned foreign companies can also get an exemption if they engage in export promotion activities. Additionally, foreign companies executing individual loan projects on behalf of a donor country or other international organization can also obtain an exemption from local registration.
4. Structure Your Transaction for Public Scrutiny
Nigeria has a Freedom of Information Act which is often tested by litigants with value for money claims. Therefore, it helps to anticipate that a proposed contract with the federal government or a sub-national may be published, audited, or challenged. Especially for single source and direct procurements, it is often critical to bear this in mind and to use clear commercial terms which demonstrate compliance with public procurement regulations, while also avoiding ambiguous performance milestones.
How We Support our Clients
(A) Pre-Engagement Advisory: We can help:
- Assess whether your project requires local incorporation or exemption under CAMA
- Structure bids and proposals to comply with procurement laws
- Conduct due diligence on government counterparties and land assets
B. Transaction Structuring: We can help:
- Draft and negotiate PPP Agreements, Development Leases, EPC+F Contracts, IP Licences, and MOUs
- Structure payment security: advance payment guarantees, Irrevocable Payment Undertakings (IPUs), and escrow-backed payment flows
- Design risk allocation clauses, including force majeure, change in law, and early termination
C. Execution Support: We can help:
- Secure Governor’s Consent, development permits, and land title verifications
- Obtain CAMA Section 78 exemptions or alternative structuring through SPVs or representative offices
- Advise on regulatory compliance (FIRS, CAC, BPP, ICRC, NOTAP, PENCOM)
D. Second Legal Opinions: We can help:
- Review government contracts and flag redlines before signature
- Issue independent, decisive legal opinions on title, enforceability, and government obligations
Balogun Harold insights are shared for general informational purposes only and does not constitute legal advice. For tailored guidance, please contact our Foreign Investment & Market Entry Lawyers at bhlegalsupport@balogunharold.com.
