Introduction
Nigeria boasts a dynamic creative market, with a notable presence in the fashion sector. According to Euromonitor, the Nigerian fashion market is valued at an impressive $4.7 billion. To put this into perspective, some of the most prominent French companies primarily operate in the cosmetics and fashion domains. Among them, LVMH stands out with a staggering valuation of $500 billion, followed by L’Oreal at $238.98 billion, Hermes at $212.88 billion, and Dior at $157.69 billion. These figures highlight the substantial economic impact and value within the global fashion landscape, showcasing the significance of the Nigerian fashion market. In recent times, there seems to be a growing demand for Nigerian fashion globally, both by international stars and with demands comes compliance. In this article, we will explore the legal considerations for starting a fashion business in Nigeria, intellectual property protection for fashion entrepreneurs, and funding and investment strategies for fashion entrepreneurs in Nigeria.
Legal Considerations for Starting a Fashion Business in Nigeria
In Nigeria, every individual, firm, or company is required to register with the Corporate Affairs Commission within 28 days after the commencement of business. There are a number of options available for fashion entrepreneurs to register their business in Nigeria, which are:
Business name for sole proprietorship and partnership
Limited Partnership
Limited Liability Partnership
Private company limited by shares
Public Company
Unlimited Company
Registration/incorporation with the Corporate Affairs Commission gives legal status to the business, and most people, including but not limited to customers and investors, have more trust in buying or investing in a duly registered business than one that is not registered. Upon incorporation with the Corporate Affairs Commission (CAC), the business proprietor or company, as the case may be, is required to register with the relevant tax authorities, which are the Federal Inland Revenue Service and the State Inland Revenue Services Offices. The purpose of registration with the tax authorities is for the remittance of taxes such as Personal Income Tax and Value Added Tax.
Intellectual Property Protection for Fashion Entrepreneurs:
Fashion entrepreneurs in Nigeria can explore a number of intellectual property protections for the product of their creativity. Some of which are:
Trademarks:
A trademark is an intellectual property that is used to distinguish the goods or services of one business from those of another. A trademark can take many forms, including a logo, a word or phrase, or slogan (wordmark), the shape of goods, their packaging, and a combination of colours. However, note that whatever marks that are sought to be registered must be distinctive and must not interfere with the registered trademark of another. A registered trademark in respect of goods gives the proprietor of a trademark the exclusive right to the use of the trademark in relation to those goods. What this means for fashion entrepreneurs is that they can register their distinctive name, for instance, the brand name or the name of any fashion item they have produced for sale. For instance, Hermes registered the mark "Birkin," which is the name of their popular bag.
2. Industrial Design:
Under the Patents and Designs Act, any combination of lines or colours or both, and any three-dimensional form, whether or not associated with colours, is an industrial design if it is intended by the creator to be used as a model or pattern to be multiplied by industrial processes and is not intended solely to obtain a technical result. This implies that in the context of fashion designing, this definition highlights that aspects such as the combination of lines, colours, and three-dimensional forms are considered part of industrial design. Fashion designers often create patterns, shapes, and colour combinations that may be intended for mass production in the fashion industry. If a designer intends their clothing design to be replicated through industrial processes, the design or sketch could be regarded as an industrial design under this definition. It underscores the intersection of creativity and mass production within the realm of fashion design. It is, however, important to note that registrable designs under this Act must be new and not contrary to public order or morality.
3. Copyright:
Under the Copyright Act, artistic works enjoy eligibility for copyright protection. This copyright status bestows upon the owner exclusive rights to both undertake and authorise various acts, including the reproduction, communication to the public, and adaptation of the work. For entrepreneurs in the fashion industry, this signifies that their design sketches hold the potential for robust protection under the Copyright Act, securing their creative endeavours.
It is crucial to emphasize that the protection of these designs, logos, and wordmarks pertains specifically to distinctive designs and words. These protections afford owners exclusive and proprietary rights over their creative work, empowering them to enforce these rights and prevent unauthorised use by others.
Funding and Investment Opportunities for Fashion Entrepreneurs in Nigeria
Funding is a key part of any business, and this includes fashion businesses. There are a few organisations that make funds available for fashion entrepreneurs to support their businesses. Some of which are:
Small & Medium Enterprises Development Agency of Nigeria (SMEDAN): The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established by the SMEDAN Act of 2003 to promote the development of the MSME sector of the Nigerian economy. The Agency positions itself as a one-Stop-Shop for MSME Development. Micro Enterprises are included in the clientele of the Agency since they form the bedrock for SMEs. SMEDAN provides funding for medium and small enterprises in Nigeria; however, in addition to CAC registration, the business must be registered with SMEDAN.
Tony Elumelu Foundation: Tony Elumelu Foundation is the leading philanthropy empowering a new generation of African entrepreneurs, driving poverty eradication, catalysing job creation across all 54 African countries, and increasing women's economic empowerment. Since the launch of the TEF Entrepreneurship Programme in 2015, the Foundation has trained over 1.5 million young Africans on its digital hub, TEFConnect, and disbursed up to USD$100 million in direct funding to 18,000 African women and men, who have collectively created over 400,000 direct and indirect jobs. Tony Elumelu Foundation offers a successful applicant a grant of $5,000. It is important to note that the application for this grant opens on 1 January and closes on 31st March every year.
Others include loans from foreign investors and financial institutions such as the Development Bank of Africa, Bank of Industry, Afrexim Bank, fashion competitions, private investors such as angel investors, family members, and friends.
How can The Firma Advisory help?
The Firma Advisory can help fashion entrepreneurs seeking to establish themselves within this ecosystem to register their businesses, facilitate intellectual property protection, provide legal advisory services and prepare compliance documentation.