Treasury Bills: A Safe Haven for Nigerian Investors?

With inflation eroding the purchasing power of cash, more Nigerians are seeking alternatives to keeping money idle in bank accounts. Treasury bills (T-bills) have emerged as a popular option—but are they still worth it?

T-bills are short-term debt securities issued by the Federal Government with maturities of one year or less. Investors essentially lend funds to the government and receive their principal plus interest at maturity.

How T-Bill Investments Work

Retail investors cannot directly bid for T-bills at auctions held by the Central Bank of Nigeria (CBN). Instead, they access this market through:

• Wealthtech platforms: These digital investment platforms aggregate capital from multiple retail investors
• Asset managers: Professional fund managers who invest on behalf of clients
• Stockbrokers: Licensed intermediaries who execute orders in financial markets

The CBN conducts auctions where primary dealers (commercial banks and discount houses) submit bids. The government offers a competitive yield to attract sufficient demand.

Current Market Dynamics

At the recent September 9 auction, investor demand reached ₦2.64 trillion ($1.99 billion), more than double the amount offered by the Debt Management Office (DMO).

The 364-day T-bill stop rate has been declining steadily from 17.59% on August 12 to 16.62% on September 9—a drop of 97 basis points in just four weeks.

This trend indicates that investors still desire government debt but are accepting lower returns amid competitive yields from other money market instruments.

The Federal Government plans to raise ₦5.8 trillion ($4.4 billion) through T-bills in the third quarter, signaling continued reliance on this funding source.