INTRODUCTION
Agriculture is a business, a wealth creating sector. It is estimated that Africa may spend close to $110 Billion importing food unless food production is prioritized. According to Statista, Nigeria has vast potentials for thriving agricultural business with an arable land area of 34 million hectares: 6.5 million hectares for permanent crops, and 28.6 million hectares on meadows and pastures. In 2021, agriculture contributed around 23.36 percent to Nigeria’s GDP whilst 31.41 percent came from industry, and 43.79 percent from the services sector.
The foregoing attests to Nigeria’s leadership in various types of agricultural production, such as palm oil, cocoa beans, pineapple, and sorghum. Nigeria is undoubtedly the largest producer of sorghum in the world just after the United States, and ranks fifth in the production of palm oil and cocoa beans. Nigeria is also a large global exporter in agricultural sector with oil, fruits, nuts, seeds are among the ten best performing export categories.
Setting up an agriculture business in Nigeria requires knowledge of the requirements, procedures and cost as well as the of funding opportunities and regulatory compliance matters.
The focus of this article is solely on the incorporation requirements and costs and other mandatory post incorporation registrations for setting up an agricultural company in Nigeria.
What are the general requirements for setting up an agricultural company in Nigeria?
Generally, a company seeking to engage in agricultural business may be registered as a Business Name (“Business Venture”) or Private Limited Liability Company (“Company”) with the Corporate Affairs Commission (“CAC”) with at least one proprietor or shareholder/director as the case may be. It is advisable to register a private limited liability company if the business must take advantage of some of the agribusiness funding opportunities by the Nigerian governments and international organizations.
Please note that where the business has a foreigner, then it must be registered as a Company with not less than N10,000,000 share capital.
The requirements for incorporation of a company include the following:
i. Proposed Business Name or Name of the Company;
ii. Address of the Business Venture or Company;
iii. Amount of Share Capital (for a Company);
iv. Registered Address, Email and Telephone Number of the Business or Company;
v. Particulars (names, address, means of identification, electronic signature) of proprietor (including proprietor’s passport photograph for Business Venture) or shareholder, director and company secretary (for Company);
You can see our article for the general requirements for incorporation of company here.
What is the required share capital for registering an agricultural seed company with the CAC?
Generally, there is no minimum share capital requirement for incorporating a company seeking to undertake agriculture business which means such company may be registered as a Business Venture or a Company with just N100,000 share capital, being the lowest for a Company.
However, not all agricultural businesses can be registered as Business Venture or Company with N100,000 share capital. Where the farming activities involves the preparation of agricultural seeds or production, processing and marketing of agricultural products, then the business must be registered as a Company with N10,000,000 share capital.
Also, where there is any foreigner amongst the promoters of the agricultural business (either as a shareholder or director), then the minimum share capital of the Company must be N10,000,000.
What is the cost of registering an agricultural company with the CAC?
The cost of registering a Business Venture is less than N20,000 (Twenty Thousand Naira) whilst the cost of a company’s incorporation depends on its share capital. The total payable costs for registering an agriculture seed company with the CAC is about N130,000 (One Hundred and Thirty Thousand Naira) excluding professional fees. The breakdown of the foregoing sum is as follows:
- N55, 000 (Fifty-Five Thousand Naira) is chargeable by the CAC as Incorporation Fee; and
- N75, 000 (Seventy-Five Thousand Naira) is chargeable by the Federal Inland Revenue Service (“FIRS”) as stamp duty on the N10 Million share capital (the formula for calculating this is: 0.75% of 10,000,000);
Are there any mandatory regulatory registration and filings for an agricultural company after incorporation with the CAC?
Yes, a newly registered agricultural seed company may not be able open a corporate bank account unless it registers with the following:
- Special Control Unit for Money Laundering (SCUML), which is an anti-money laundering agency to which all suspicious transactions must be reported periodically by every regulated business entity;
- Federal Inland Revenue Service (FIRS), which is the federal tax authority to which all federal taxes such as company income tax, education tax etc. are to be paid and tax returns filed. Please note that Tax Identification Number (“TIN”) is automatically assigned to a newly registered company for easy reference. Please note also that agricultural businesses are exempted from paying some taxes in Nigeria, for example the Value Added Tax (VAT).
Does a company require any operational licence to carry on agricultural business in Nigeria?
Yes, where a company seeks to engage in the business of production, marketing and sale of agriculture seeds, it must obtain a licence from the National Agricultural Seed Council (“NASC”) before commencement of the business in Nigeria.
The NASC is an agency under the Federal Ministry of Agriculture which is vested with the responsibility of developing and regulating the national seed industry in Nigeria.
What are the Requirements/Procedures for obtaining a licence from the NASC?
A seed company that is seeking to obtain the NASC licence shall submit Application Letter with the following documents:
- Company’s certificate of incorporation
- Article and Memorandum of Association with the object clause clearly stating that the company is into seed/seedling production, processing, packaging and marketing,
- Company’s profile,
- Bank reference letter,
- Tax Clearance Certificate,
- Audited Company Account or Statement of Affairs where the company is new one,
- Duly completed registration form.
Please note that the NASC, upon review applicant’s documents, may require additional information form the applicant. The NASC shall thereafter proceed to inspect and appraise the business site and facilities of the seed company and shall issue the licence upon satisfactory inspection.
What are the applicable costs of obtaining an agricultural seed production, processing and marketing licence?
There are different categories of licence issued by the NASC, depending on the scale of the applicant’s business and the costs for licence are listed below. Please note that the National Committee of the NASC determines the licence category for each applicant after conducting appraisal of the applicant’s application.
A. SEED COMPANY ACCREDITATION
| No | Particulars | Small Scale | Medium Scale | Large Scale | Producer Seller/Seed Dealer |
| 1 | Registration Form | N5,000 | N5,000 | N5,000 | N5,000 |
| 2 | Processing Form | N5,000 | N5,000 | N5,000 | N5,000 |
| 3 | Licence Fee | N30,000 | N40,000 | N60,000 | N15,000 |
| 4 | Conducting CAC search | N5,000 | N5,000 | N5,000 | N5,000 |
| 5 | Statutory Documents | N20,000 | N20,000 | N20,000 | N20,000 |
B. SEED IMPORTATION
| No | Particulars | Costs |
| 1 | Administration Charges | N5,000 |
| 2 | Cereal Crops | Less than 10mt = N100/kg More than 10mt = N50/kg |
| 3 | Legumes/Oil Crops | Less than 10mt = N100/kg More than 10mt = N50/kg |
| 4 | Vegetable and Grass Seeds | Less than 10mt = N200/kg More than 10mt = N100/kg |
| 5 | Root and Tuber Crops | N5,000/Metric Ton |
C. SEED TESTING
| No | Particulars | Costs |
| 1 | Legumes/Oil Crops | N500/Samples |
| 2 | Cereals Crops | N500/Samples |
| 3 | Vegetable and Grass Seeds | N800/Samples |
| 4 | Tree Crops | N1,000/Samples |
| 5 | Root and Tuber Crops | N800/Samples |
D. SEED FIELD INSPECTION
There are other costs associated with inspection of seed facility and seed testing as shown below:
i. Inspection of seed facility (0.1 – 5 hectares) at the rate of N2000 per hectare;
ii. Inspection of seed facility (5 – 9 hectares) at N6000 per hectare;
iii. Inspection of seed facility (multiple of 10 hectares) at N12,000 per each 10 hectares; and
iv. Out-Growers Registration Fee is N1,000 per grower.
E. SEED CERTIFICATION TAG
i. Breeder Seeds Tag is N5.00/tag;
ii. Foundation Seeds Tag is N5.00/tag;
iii. Certified Seeds Tags is N5.00/tag.
What is the validity period of the operational licence of NASC?
A seed licence granted by the NASC is valid for one (1) year and renewable upon payment of the prescribed renewal fees.
What is the timeline for obtaining a seed licence from NASC?
The estimated timeline for obtaining seed licence from the NASC is one (1) month subject to fulfilling all the licence requirements and satisfactory inspection.
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