Nigeria offers entrepreneurs a vibrant market with over 200 million people. Starting a small business here requires careful planning. This guide provides clear steps for 2026, with specific costs and official requirements. We cover everything from registration to funding options.

Find Your Business Idea

First, identify a viable business idea. Nigeria's market has high demand in agriculture, technology, retail, and services. A 2025 Moniepoint Blog article lists profitable ideas like food vending and e-commerce. These can start with under NGN 500,000 (about USD 300). Research local needs through surveys or platforms like Nairaland. The Nigerian Bureau of Statistics provides consumer trend data. This data guides your market entry strategy.

Register Your Business Legally

Register your business with the Corporate Affairs Commission (CAC). The Companies and Allied Matters Act (CAMA) 2020 governs this process. As of 2025 data from UseMultiplier, follow these steps. First, reserve your business name on the CAC portal. This costs NGN 500 (about USD 0.30). Next, register as a private limited company. This is common for small businesses. The minimum share capital is NGN 100,000. Registration fees start at NGN 10,000 for companies with share capital up to NGN 1 million. Add NGN 5,000-10,000 for filing documents. Online registration takes 24-48 hours. Manual processes may take up to 7 days. You need two proposed business names. Provide details of at least two directors. Include a registered office address and valid identification. Sole proprietorships cost NGN 5,000-7,000 but offer less legal protection.

Handle Tax Registration

After registration, get a Tax Identification Number (TIN). Apply online or at a Federal Inland Revenue Service (FIRS) office. This is free. Small businesses pay Company Income Tax (CIT). Companies with turnover below NGN 25 million pay 0%. Medium-sized companies (NGN 25-100 million turnover) pay 20%. Larger turnovers pay 30%. Value Added Tax (VAT) is 7.5% on most goods and services. Remit VAT monthly if applicable. Failure to file returns brings fines. Fines start at NGN 25,000 for the first month. Then add NGN 5,000 for each subsequent month.

Obtain Necessary Licenses and Permits

Your industry may need extra permits. Food and beverage businesses require a NAFDAC license. Registration for small-scale products starts at NGN 45,000. Processing takes 60-90 days. Financial services need Central Bank of Nigeria (CBN) approval. Licensing fees range from NGN 250,000 to NGN 2 million. Get local government permits for signage or waste disposal. These cost NGN 10,000 to NGN 50,000 yearly. Costs vary by location like Lagos or Kano.

Secure Capital and Funding

Starting capital varies by business scale. Micro-businesses like retail can start with NGN 50,000-200,000. Small businesses often need NGN 500,000-5 million. Consider funding options. The Bank of Industry (BOI) offers loans at 5-9% interest yearly. These go up to NGN 5 million with no collateral. Commercial banks like First Bank provide SME loans. Interest rates range from 15-25%. You need a registered business, a business plan, and financial records.

Set Up Banking and Financial Systems

Open a corporate bank account. Banks like Zenith Bank require your CAC certificate and TIN. Provide director's ID and passport photos. Account opening fees range from NGN 5,000 to NGN 15,000. Minimum balances are often NGN 50,000. Use digital payment platforms like Moniepoint. They offer low-cost transactions and POS services. Setup costs are under NGN 20,000.

Navigate Key Challenges

Nigeria's business environment has challenges. Inconsistent power supply costs businesses about NGN 50,000 monthly on generators. Bureaucratic delays can slow processes. Inflation was 33.2% in mid-2025. Budget for operational hiccups like alternative power sources. Use online tools for CAC and FIRS processes to save time. Join the Nigerian Association of Small and Medium Enterprises (NASME) for support.

Explore Sector-Specific Opportunities

Some sectors are particularly lucrative. Agriculture benefits from government initiatives like the Anchor Borrowers' Programme. Startups in rice farming or poultry access loans at single-digit interest rates. Tech thrives in Lagos with companies like Andela and Flutterwave. The Nigerian Communications Commission provides guidelines. Retail and e-commerce see high demand on platforms like Jumia. Start-up costs for dropshipping can be under NGN 100,000.

FAQ

What are the first steps to start a business in Nigeria? First, identify a viable business idea through market research. Then, register your business name with the Corporate Affairs Commission. This costs NGN 500 and takes 24-48 hours online.

How much does it cost to register a small business? For a private limited company, registration fees start at NGN 10,000. Add NGN 5,000-10,000 for filing documents. The minimum share capital is NGN 100,000.

What taxes do small businesses pay in Nigeria? Companies with turnover below NGN 25 million pay 0% Company Income Tax. Medium-sized companies pay 20%. Value Added Tax is 7.5% on most goods and services.

Where can I get funding for my small business? Consider Bank of Industry loans at 5-9% interest for amounts up to NGN 5 million. Commercial banks like Access Bank offer SME loans at 15-25% interest.

What licenses do I need for a food business? You need a NAFDAC license. Registration for small-scale products starts at NGN 45,000. Processing takes 60-90 days.

How do I open a corporate bank account? Banks require your CAC registration certificate, TIN, and director's ID. Account opening fees range from NGN 5,000 to NGN 15,000.

What are the biggest challenges for small businesses in Nigeria? Inconsistent power supply costs about NGN 50,000 monthly on generators. Bureaucratic delays and high inflation at 33.2% in 2025 also pose challenges.

Starting a small business in Nigeria in 2026 demands clear planning. Costs range from NGN 50,000 to millions based on your scale. Follow CAC and FIRS regulations closely. Secure necessary permits for your industry. Use online portals to streamline processes. Consider successful examples like Paystack in tech or local food vendors in Lagos markets. Next, draft a detailed business plan and begin market testing.