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How to Pay Contractors in Nigeria: Complete 2025 Guide

For businesses paying independent contractors in Nigeria

Quick Summary

Best payment methods for Nigerian contractors:

  1. Wise (lowest fees, best rates)
  2. Payoneer (very popular in Nigeria)
  3. PayPal (widely accepted)
  4. Bank transfer (traditional method)

Key requirements:

  • TIN (Tax Identification Number)
  • Written service agreement
  • Currency considerations (USD strongly preferred)
  • FIRS tax compliance (contractor's responsibility)
  • Foreign exchange regulations

Why This Guide Is Different

Nigeria has Africa's largest tech ecosystem and a rapidly growing freelance workforce. If you're hiring contractors in Nigeria, you need to understand:

  • Payment method preferences (Wise, Payoneer, and PayPal all work)
  • Currency considerations (USD strongly preferred over NGN)
  • TIN requirements (Nigerian tax identification)
  • FIRS compliance (Federal Inland Revenue Service)
  • Foreign exchange regulations and restrictions
  • Time zone considerations (WAT is UTC+1)

Payment Methods Compared

MethodCostSpeedBest For
Wise$3-$101-3 daysRegular payments, best exchange rates
Payoneer$5-$121-3 daysVery popular with Nigerian freelancers
PayPal$5-$15InstantWidely accepted, instant transfers
Bank Transfer$20-$453-7 daysLarge amounts, traditional method

Recommended: Wise or Payoneer

Why Wise and Payoneer work best for Nigeria:

  • Both widely accepted by Nigerian contractors
  • Lower fees than traditional bank transfers
  • Reliable and established in Nigeria
  • Can withdraw to local bank accounts
  • Better exchange rates than banks

Currency Considerations

Nigerian contractors strongly prefer USD over NGN due to currency volatility and devaluation.

USD vs NGN

Pay in USD (strongly recommended):

  • Most contractors prefer USD for stability
  • Protects against NGN devaluation
  • Better exchange rates through Wise/Payoneer
  • Easier for international transactions
  • Preferred by tech workers and freelancers

Pay in NGN only if:

  • Contractor specifically requests NGN
  • You have NGN operations in Nigeria

Pro tip: Almost all Nigerian tech contractors prefer USD due to NGN volatility. Always confirm currency preference before setting up payments.

Tax and Compliance Requirements

TIN (Tax Identification Number)

TIN is Nigeria's tax identification number issued by the Federal Inland Revenue Service (FIRS).

  • Required for: All contractors providing services
  • Your responsibility: Verify contractor has valid TIN
  • Contractor's responsibility: Register with FIRS and maintain TIN

Your Responsibilities (as the client)

  • Verify TIN: Ensure contractor has valid tax ID
  • Written agreement: Have clear service contract
  • Payment records: Keep documentation of all payments
  • No withholding: You don't withhold Nigerian taxes (contractor handles this)

Important: As a foreign company paying a Nigerian contractor, you typically don't have tax withholding obligations in Nigeria. The contractor handles their own FIRS tax compliance. Consult with a tax professional for your specific situation.

Common Mistakes (And How to Avoid Them)

Mistake 1: Paying in NGN

Problem: Most contractors prefer USD due to NGN volatility and devaluation.

Solution: Always ask contractor's currency preference. Most will prefer USD.

Mistake 2: Using Expensive Bank Transfers

Problem: Traditional bank transfers cost $20-$45 per transaction.

Solution: Use Wise ($3-$10) or Payoneer ($5-$12) for much lower fees.

Mistake 3: Not Verifying TIN

Problem: Contractor may not be properly registered with FIRS.

Solution: Request TIN certificate before first payment.

Tools for Managing Nigerian Contractors

Kontrable is built specifically for managing international contractors:

  • Track payments across Wise, Payoneer, PayPal, and other methods
  • Store contracts and invoices
  • Handle multiple currencies (USD, NGN, EUR, etc.)
  • Generate payment reports for accounting
  • No per-contractor fees (unlike Deel at $49/month per contractor)
Join Kontrable Waitlist

Frequently Asked Questions

Q: Should I pay Nigerian contractors in USD or NGN?

A: Almost all Nigerian contractors prefer USD due to NGN volatility and devaluation. Always confirm with your contractor.

Q: What's the best payment method for Nigeria?

A: Wise and Payoneer are both excellent choices. Wise typically has lower fees ($3-$10), while Payoneer is very popular among Nigerian freelancers. PayPal also works but has higher fees.

Q: Do I need an EOR platform for Nigerian contractors?

A: No. EOR is for employees. Nigerian contractors handle their own FIRS tax compliance. You just need a good payment method (Wise/Payoneer) and contractor management tool (Kontrable).

Q: Are there foreign exchange restrictions in Nigeria?

A: Nigeria has some foreign exchange regulations, but contractors can receive USD through Wise, Payoneer, or PayPal and withdraw to local banks. This is standard practice.

Get Started

Managing Nigerian contractors?

  1. Verify contractor has valid TIN
  2. Set up Wise or Payoneer business account
  3. Create written service agreement
  4. Confirm currency preference (usually USD)
  5. Get contractor's payment details
  6. Set up regular payment schedule

Want to automate this?

Kontrable launches January 2026 with contractor management tools built for international teams.

Join the Waitlist →

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