Introduction
Popularly known as the ‘giant of Africa,’ Nigeria is one of the largest economic hubs on the continent. In 2022, the country's GDP was recorded at US$472.62 billion. Its free-market economy and lower corporate tax rate have made this country an attractive destination for global business expansion. This economic strength makes Nigeria a strategic location for companies looking to tap into a large and talented workforce.
If you decide to expand and hire in Nigeria, you've arrived at the right place. Let's examine some of the basic information you should know before hiring.
- The official language of Nigeria is English, closely followed by other major languages, such as Hausa, Igbo, and Yoruba.
- The official currency is the Nigerian Naira ((NGN, ₦).
- The standard working time for all employees in Nigeria is 40 hours per week.
- The current minimum wage is set at 30,000 NGN per month.
Moving on, in this article, we will discuss some of the key aspects of global hiring.
This blog will shed some light on a few challenges businesses might face while hiring employees in Nigeria.
Challenges of Hiring in Nigeria
Let’s look at some of the challenges of hiring in Norway.
1) Employment laws
The Nigerian government ensures employees' rights are protected when working in a firm. To this end, Nigerian labor law is being updated. Some recent additions include the Nigeria Data Protection Act 2023 (the “NDPA”) and the National Minimum Wage (Amendment) Act 2019.
As a business owner, you need to be aware of evolving employment laws and other relevant legislation that guides the labor landscape of this region. This is a potential challenge, especially if you lack the guidance or legal expertise to ensure compliance.
- When seeking opportunities for international expansion in Nigeria, employers must familiarize themselves with the Labor Act, the primary legislation guiding employment relationships in this country.
- It regulates various vital aspects, including daily working hours, overtime compensation, leave policy, and termination procedures.
- In the event of contract termination, employers need to provide a notice period ranging from one day to one month, depending on the tenure of employment.
2) Payroll
Navigating Nigeria's complicated payroll policies can be another potential challenge for employers. Unless you have an excellent payroll management solution, ensuring compliance can be complicated. However, incorporating such a service into your business can be quite demanding in terms of money and other resources.
- Under the Nigerian payroll system, employees and employers must contribute to the pension scheme.
- It constitutes a 10% contribution from the employer and 8% from the employee.
- The current standard VAT rate has been increased to 7.5% from 5%.
3) Competitive talent landscape
The competitive talent landscape in Nigeria is shaped by various factors, one of the primary drivers being the country’s diverse population. Nigeria boasts a large and youthful population, 70% below the age group of 30.
However, Nigeria has an employability gap in terms of quality and relevance. This can be attributed to educational organizations' failure to produce candidates with the skills and knowledge required to excel at their jobs.
To effectively hire and manage employees or remote contractors in Nigeria, a thorough understanding of the local dynamics and investment in talent development is crucial.
4) The remote work challenge
- Significant limitations in developing infrastructures in Nigeria have further hampered the adoption and success of remote work.
- Many areas in Nigeria lack adequate infrastructure for high-speed internet, which carries the potential to disrupt communication, collaboration, and access to online resources, all of which are extremely crucial for remote work.
- Additionally, power outages are quite a common phenomenon in this country, further disrupting work continuity.
5) Economic instability
- Economic instability in Nigeria has forced various qualified and experienced individuals to leave the country in search of better opportunities abroad.
- As a result, organizations are left with a workforce that may lack the essential skills and expertise to foster innovation and productivity in the workplace.
- This, in turn, has a tremendous impact on business growth and competitiveness, particularly in industries where specialized knowledge and experience are paramount.
How to Hire in Nigeria
There are various ways you can hire employees in Nigeria. Some of the most common yet effective means include,
Setting up a local entity
- To establish a legal entity in the country, you must undergo the business registration process, usually handled by Federal Inland Revenue Services (FIRS).
- It involves several key steps, including registering the proposed company's address, uploading relevant documents, and obtaining approval from the Corporate Affairs Commission.
- Setting up a legal entity in Nigeria gives you full authority over the workforce, but it tends to be lengthy and involves utilizing a vast amount of resources.
Hiring employees via Employer of Record
- Partnering with an employer of record in Nigeria means you can legally employ employees without the headaches of all administrative tasks.
- A good EOR like Skuad will handle all compliance, payroll, and hiring tasks, eliminating much of the cost and complication of international global expansion.
Hiring contractors through AOR
- Leveraging AOR (Agent of Record) is another effective way to hire contractors in Nigeria.
- An AOR, although not a legal employer, will assist you in document collection, ongoing compliance review, and audit defense file creation, among other tasks.
- The services of hiring international contractors are usually beneficial for short-term or urgent projects that require immediate attention.
Cost of Hiring in Nigeria
Hiring employees in Nigeria incurs various costs, including legal and compliance costs, administrative burdens, and more.
A detailed cost breakdown of the same is mentioned below.
| Types of costs |
Setting up a local entity |
Partnering with Skuad (AOR/EOR) |
| Initial Costs |
It is typically high since you have to handle tasks involving company registration, tax registration, and other legal processes. |
Typically low since Skuad already has an established presence in Nigeria. |
| Administrative burden |
High, since you need to have in-house HR expertise and ongoing management. |
Minimal as Skuad assumes all HR-related responsibilities, payroll, compliance, and more. |
| Taxes and contributions |
You will need an in-house management team to deal with corporate taxes, employer contributions, and employee taxes. |
Lower and simplified billing since all these tasks are handled by Skuad. |
| Types of costs |
Partnering with Skuad (AOR/EOR) |
Setting up a local entity |
| Initial Costs |
Typically low since Skuad already has an established presence in Nigeria. |
It is typically high since you have to handle tasks involving company registration, tax registration, and other legal processes. |
| Administrative burden |
Minimal as Skuad assumes all HR-related responsibilities, payroll, compliance, and more. |
High, since you need to have in-house HR expertise and ongoing management. |
| Taxes and contributions |
Lower and simplified billing since all these tasks are handled by Skuad. |
You will need an in-house management team to deal with corporate taxes, employer contributions, and employee taxes. |
A Brief about Employment Laws in Nigeria
Some of the key legal provisions and regulations that guide the employee-employer relationship in Nigeria include:
- The Labor Act
- The Industrial Training Fund Act
- The Employee Compensation Act
They cover various aspects of employment, such as,
- Annual leave: You must offer 21 days as annual/earned leave a year.
- Maternity leave: It is a statutory benefit that employers must provide to pregnant employees. In Nigeria, female employees usually get 12 weeks of maternity leave.
- Overtime compensation: The maximum working hours in Nigeria are 40 hours a week. Overtime in Nigeria is not allowed however, it is practiced by several employers. If your employees need to work overtime, they are entitled to overtime compensation.
Hire in Nigeria with Skuad
With Skuad as your global employment partner, you can say goodbye to the headaches of geographical limitations and access a diverse pool of top-tier talent from anywhere in the world.
With the expertise of being an EOR in over 160+ countries, Skuad offers you a seamless global hiring process. Whether navigating the intricate employment lifecycle or automating invoicing and payments, we offer numerous benefits to each client.
What’s more? We also run global payroll with one click in over 100 currencies. This way, you can always ensure that your employees are paid on time and accurately in any currency they prefer.
Do not let geographical boundaries limit your potential anymore. Join us today and build a world-class team without borders!
FAQs
Q1: How do you pay employees in Nigeria?
Ans: You must pay employees in either the Nigerian (NGN) official currency or USD ($). You must also comply with the minimum wage, which is currently set at 30,000 NGN per month.
Q2: Why hire from Nigeria?
Ans: Nigeria has long been deemed an attractive destination for international business expansion. These include low labor costs, a highly skilled workforce, and low corporate tax rates.
Q3: How do you hire employees in Nigeria?
Ans: One of the most effective ways to hire employees in Nigeria is by leveraging the services of an EOR, such as Skuad. It is a comprehensive platform that looks after crucial tasks in the international hiring process, such as payroll, employee benefits, leave policies, and legal compliance. In this way, you can better focus your time and resources on the other pressing issues of your business.
Q4: What are the maximum work hours in Nigeria?
Ans: Under the labor laws, Nigeria's standard working time is 40 hours per week.
.png)
.svg)
.png)
.svg)
.svg)
.svg)
