TBY talks to Theophilus I. Emuwa, Partner at ǼLEX, on the nuances of investing in Nigeria, impediments to growth, and the nature of taxation in the country.

Theophilus I. Emuwa
Theophilus I. Emuwa is both a lawyer and qualified engineer. He is the Chair of the Corporate and Commercial Practice Group of the Firm. His practice is focused on corporate and commercial law and taxation. Emuwa draws on his joint professional training to provide insightful advice to the Firm’s clients on various projects and transactions. He is widely acknowledged as one of Nigeria’s leading tax practitioners. He regularly advises on Nigerian companies’ income and petroleum profit tax issues, corporate structures, shareholder rights, and other corporate governance issues. Among prestigious positions held, he is a Fellow of the Chartered Institute of Taxation Nigeria (CITN).

Where does ǼLEX fit in the Nigerian market?

ǼLEX is a full-service commercial and litigation law firm. We have offices in four locations in West Africa; three in Nigeria, and one in Ghana. Our Nigerian offices are in Lagos, Abuja, and Port Harcourt, and the Ghana office is in Accra. We aim to serve large corporates. That is our main client type, and our service offering covers most of the things they would need, be it advice on entry into the country, setting up a company, the structure of the company, licensing, immigration, tax, and building permits. We handle everything involved in having and operating a business. Once their business is up and running, they would also need our services for labor and litigation issues. Once a business is thriving in Nigeria, every government entity wants to find it at fault, be it for taxes, licensing, or even traffic offenses; they will come after businesses. Therefore, we help our clients manage these issues and help them find solutions to problems.

What do foreign investors and big corporates need to know about Nigeria today since the election took place?

Not much has changed yet, because Nigeria's needs have not changed. The infrastructure deficits we had a year ago have not gone away. Electricity is still scarce. We produce 5,000MW, but we probably need between 50,000 and 100,000MW. We could build power stations all my life and we still would not have enough. We need roads. We need seaports. The biggest seaport in Lagos is congested and getting goods through it is a nightmare; therefore, more ports are needed. Rail transportation is insufficient. None of this has changed. Airports are the only area where we may have what we need, but then again a recent report found Lagos and Port Harcourt airports to be among the worst airports in Africa. Even though we have a large airport in Lagos, it does not work well and it is not inviting. All in all, there is a lot of work to be done in Nigeria and that has yet to change. The obvious challenge that the new government faces is that of figuring out how to get things done. That was also the challenge the previous administration faced, but it seems the voting public decided the outgoing leadership did not have the wherewithal to do what was needed. Hence, there is a new team in place. They have only just appointed ministers recently despite the fact that months have passed since the elections. The new ministers appear to be mostly private sector appointees, which is perhaps a good thing since they may be thinking more about getting things done in contrast to the party faithful who may have the next elections and their own positions in mind instead of getting the job done. The current cabinet will have a better understanding of the problems and have better idea of how to get those problems resolved.

What do you consider the most significant legal and fiscal barriers to investment in Nigeria today?

There are not many fiscal barriers in Nigeria. Corporate tax rates are 30%, with an extra 2% education tax, so that is 32% in total, which is not too high. Many countries have higher corporate tax rates than that, and they still get FDI; therefore, there are no serious fiscal barriers to doing business here. The problem is the daily challenges of getting business done in Nigeria. The regulatory framework for doing business is slow. Whereas in other countries it may take two or three years to get a project or a business up and running, in Nigeria that could easily take up to six or seven years. That is a problem.