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5 Government Incentives For Diaspora Investors

Over the years, the Nigerian government has implemented various initiatives aimed at attracting investment from Nigerians living abroad.

These programmes span financial instruments, sector-specific opportunities, and general incentives designed to channel diaspora resources into national development.

In this newsletter, we focus on highlighting a few of these initiatives.

1. Nigeria Diaspora Fund

In 2023, the federal government announced plans to establish a US$10 billion Nigeria Diaspora Fund, led by the Federal Ministry of Industry, Trade, and Investment.

This initiative aims to consolidate the billions of dollars remitted to Nigeria, estimated to be around US$20 billion, and provide a structured platform for Nigerians living abroad to invest in sectors such as infrastructure, healthcare, and education.

The investment horizon is projected to last 3 to 5 years, with the fund's duration set at 10 years, including an option for a 2-year extension.

2. Diaspora Bond

Nigeria has issued diaspora bonds to attract investments from its citizens living abroad. These bonds offer competitive interest rates and are intended to fund various government projects, particularly in infrastructure development.

The first Diaspora Bond was issued in 2017 through the Debt Management Office and was oversubscribed, reflecting strong interest from the diaspora community.

According to the Central Bank of Nigeria governor, plans are currently underway to issue a US Diaspora Bond later this year.

3. Sector-Specific Incentives

In addition to encouraging investments through instruments like bonds and funds, the Nigerian government provides several incentives, including tax holidays, pioneer status, and export incentives, to stimulate direct investment in critical sectors of the economy.

Companies investing in specified industrial activities such as glass manufacturing, fertilizer production, and steel manufacturing may be granted pioneer status, which includes a tax holiday for an initial three years, extendable for up to two additional years upon meeting certain conditions.

Companies engaged in approved manufacturing activities within Export Processing Zones (EPZs) are entitled to a 100% capital allowance on qualifying buildings and plant equipment in the assessment year.

Additionally, small or medium-sized companies involved in primary agricultural production are eligible for an initial tax-free period of four years, which may be extended for an additional two years.

4. Diaspora Housing Scheme

In November 2023, the Minister of Housing and Urban Development launched the Diaspora Housing Scheme, allowing Nigerians in the diaspora to access mortgage loans of up to N50 million at a favourable interest rate of 6.9%, payable over 10 years.

This initiative also includes the Diaspora City Project, in collaboration with the Nigerian in Diaspora Commission, the Federal Housing Authority, the Federal Capital Territory Administration, and the private sector, which will offer various housing types tailored for diaspora investors.

5. Policy Reforms And Investment Protection Measures

Nigeria has implemented several reforms to improve its business environment and attract diaspora investments. These reforms address areas such as company registration, property rights, and tax administration, facilitating the establishment and operation of businesses in the country. The improvements aim to reduce bureaucratic hurdles that have historically deterred potential investors.

Thanks to the Nigerian Investment Promotion Commission (NIPC), there are further measures in place to promote and protect investments in Nigeria, including those from the diaspora. Through its One-Stop Investment Center, the NIPC coordinates various government agencies, provides information on investment incentives, offers guidance on legal issues, and maintains an investor grievance mechanism to support the resolution of investment-related complaints.

Action Steps

Nigeria has established a diverse array of incentives and programmes specifically designed to attract and protect diaspora investments.

For more information on how to take advantage of these incentives and position your investments for success, contact us today!

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