Best guide on treasury bills in Nigeria

Treasury bills in Nigeria is one of best ways to save some income, it is one of forms of investment aside from having a fixed deposit account which has a poor interest rate.

This is actually a short term investment, which have a tenor of three month, six month and one year.

Treasury bills are short term investment securities issued by governments to finance national borrowing requirements.

Most people complain that the fixed deposit interest rate is way too small, especially what the banks and non bank financial institution are offering, then treasury bills can be an alternative to it.

What is Treasury Bill

Treasury bills in Nigeria


Treasury bills or T-bills is a short term financial instrument, issued by the government or the central bank with a maturity periods which is usually three months to one year.

When an investor buys a Treasury Bill, they are lending money to the government.

Unlike the fixed deposit, treasury bills areaa discount instruments and they are so called because the investor gets its interest upfront.

For some people, when they hear about the treasury bills in Nigeria, they usually think it’s an investment that requires a huge sum of money.

But the answer is no, with one hundred thousand naira, you can invest in the the Nigerian treasury bills today.

The best part is that you can buy directly from banks, just walk into any bank that you’re comfortable with and request for the form.

Going to the bank to invest in treasury bills in Nigeria doesn’t require you to have an account with the bank, works similar to fixed deposit account.

In Nigeria, the government issue the treasury bills through the central bank of Nigeria, and you can easily buy one from the commercial bank.

I’ve seen a certain number of people asking if one can make a long investment in the nigeria treasury bills, but the answer is no.

T-bills is actually a discountable instruments used by the Central Bank of Nigeria (CBN) to manage liquidity in the system, usually on short-term basis.

You can’t make a long investment on the T-bills or even automatically rollover, one you stated the amount and the duration you want, that’s final.

But i want you to know that interest with principal can be re-invested immediately after the end of the agreed tenure.

Features of T-bills

Before going further into the topic treasury bills in Nigeria, it is good to take a look at the features, what it offers to the society.

  1. The Nigerian treasury bills are issued on discount by the government, through the central bank.
  2. The minimum requirement as at 2019 or i will say 2020 is N100,000 with a duration of three months to one year.
  3. The repayment of the bill is made at par on the maturity of the term.
  4. Anybody can invest in the treasury bills in Nigeria, be it individuals, firms, companies etc.
  5. The day count is 364 days, in a year, for treasury bills.
  6. It is a negotiable instrument, you can negotiate the interest rate, the duration and the amount which you are willing to invest.
  7. Thanks to technology and modern banking era, you can buy the Nigeria treasury bills through mobile app other than heading to the financial institution.

Tenors of the T-bills

Like i said before, there are three tenors or duration that an investor can invest in the treasury bills in Nigeria, they are;

91 Days: This is the least tenor or duration that you can invest in the T-bills, you can say it is just a three months investment.

On this very tenor, the interest rate may be lower compared to other tenors.

182 Days: The second tenure or duration that you can get on the treasury bills in Nigeria.

This is one of the common or popular duration that investors do go for, usually have a good amount of interest rate especially when you’re buying from investment bankers.

364 Days: The 364 days is the longest period that you can invest, actually a duration of one year.

This is my preferred tenors if i’m not in dire need of money i’m investing cause it yield higher percentage on interest, you can even get as high as 16% on five hundred thousand naira invested on the Nigerian treasury bills.

T bills are among the safest possible investments to hold, and the principal value of their investments is preserved if held to maturity.

How treasury bills in Nigeria works

Having known what T-bills is all about, including the features and the tenors (tenures), next is to understand how do treasury bills works especially here in Nigeria.

Is sad that many Nigerians don’t know about investing in the T-bills, maybe because of the financial institutions we have don’t really create awareness and only focus on the ones that they will get profit like the savings and current account or the fixed deposit account too.

Even some number of individuals that knows about it gives the excuse of how can they give the federal government their money when the government is not doing anything for them or the country in general.

This shouldn’t be a reason why you wouldn’t want to try and invest in T-bills, especially in this hard economy.

You can imagine investing N500,000 for a duration of six month, and gets N90,000 on maturity.

I always prefer the treasury bills than the fixed deposit which has a very poor interest rate offered to us by the banks we have.

In as much that it was said that the central bank directed banks and other financial institutions to stop the sale of T-bills to individuals and small firms, banks and non bank financial institutions still sale treasury bills to individuals and small business owners.

Treasury bills are sold by auctions, conducted by the central bank of Nigeria and investors are requested to quote bids following which the average minimum bid is selected.

Right now in 2019, the least minimum amount to buy or invest in treasury bills in Nigeria is N50,000,000 if you’re buying directly from the CBN.

But financial institutions that invested in it like banks, will resale it at the rate of N100,000 to small firms and individuals.

There are banks that can sale the treasury bills to you at the rate of N50,000.

Since it is negotiable, you can negotiate the amount that you want to invest but it must meet their requirement.

It is sold on Wednesday or i will say biweekly, immediately it is announced by the central bank of Nigeria.

For you to get the latest update on when the treasury bills in Nigeria is sold, i will advise you to endeavour to bookmark this page as i will continue to update it with new auctions.

However you can also check out the Central bank of Nigeria website, which is the main koko of where to get the latest information on the T-bills as well.

But if you know any investment banker or even the bank that you’re investing with, you can request that they keep you updated with new auctions.

How to buy treasury bills in Nigeria

Looking for how to buy treasury bills in Nigeria?

I will recommend to go the bank, or maybe go for a stock broker.

But Note That T-bills can be bought from the primary and secondary market respectively.

In the Primary Market, you’re buying from the central bank of Nigeria directly and which is biweekly usually on Wednesdays.

The least minimum amount is fifty million naira (N50,000,000).

In the Secondary Market, you’re buying from the bank or other financial institutions like the stock brokers.

They usually offer a least minimum amount of N50,000, N100,000 or even N1,000,000 to individuals or small business owners.

There are vast number of online stock brokers, as i haven’t tried any of them, i can’t just say any on this blog post.

For me, it is good to go to the bank and request that you want to invest in the Nigeria treasury bills.

Again note that there’s no auction dates on the secondary market, you can walk into any bank any working day and request for it.

Since you’ve know the meaning, knows where to buy it from and how it works which is investing a sum amount of money for a duration of three months to one year, next is the interest rate and how to calculate it.

Treasury bills rate and how to calculate it

Treasury bills interest rate in Nigeria: You can say the interest rate or also call it stop rate is the bid rate you will receive for the amount you wish to invest.

When buying from primary market which is directly from the central bank itself, you’re to make a bid.

Also others will make their bid. For example you made a bid of 20% and others made 15, 13 or 12 percent respectively.

Then the Central Bank selects bids that are below the marginal rate which is the minimum average rate of submissions made in a bid window.

It maybe 12%, and with this, your bid automatically is rejected cause it is above the marginal rate.

But when an auction is announced, and you bid 10%, at the end of the day the central bank announced that the minimum average rate is 12%, your bid is accepted cause it falls below the marginal rate.

This is one feature of the treasury bills that i don’t really fancy at all, cancelation of bid because it falls higher than the minimum average rate in a bid window.

You don’t need to be a sherlock when making a bid in the primary market, no matter the amount you’re going to invest.

Investors will be making a reasonable percentage of bid, and you as a sherlock will make a high percentage.

However, at the end of a bid window, the central bank will look at the number of bids made, draw their line on the percentage that they can offer and accept those that falls within the range.

You that out of sherlock bidded higher, will automatically be cancelled or rejected.

You’ve to wait for another auction to bid again.

That is why it is good to be reasonable enough when bidding notwithstanding the amount you want to invest cause at the end it is so painful that a bid is rejected.

Buying from the secondary market which is made up of the bank, stock brokers, investment bankers etc, the set their interest rate on treasury bills.

For example you request from your bank that you want to invest in the treasury bills, they will tell you that this is actually their interest rate for a stipulated time.

The only thing you can do is to negotiate with them and that’s all.

The actually bought their from the primary market just like the stock brokers and other non bank financial institution, and the primary market is the central bank, they can sale it at any given rate.

On the secondary market, there’s nothing like bidding, you only negotiate and it is left for them to accept or reject your offer.

How to calculate treasury bills in Nigeria

There’s a formula to calculate your return investment or to calculate treasury bills in Nigeria, and which is  I = P × T × R/100

I = Interest

P = Principal

T = Time/Tenor/Duration

R = Rate

For example, you want to invest 500,000 for one year, with an interest of 15%. Your return investment will be;

500,000 × 1 × 15/100 = 75,000

With this, N75,000 is your return investment which will be paid to you, with the actual money that will be deducted from your account is N425,000.

How i got the N425,000 is by deducting 75000 from the 500,000. In order to get the true yield given to you, what we will do is to use this formula;

Rate = (Interest × 100)/ (Principal x Time).

Here’s the calculation below;

75000 × 100 ÷ 425000 × 1 = 17.64%

So if you hold for one year ur effective yield is N88200 for investing N500,000 for one year.

If you’re planning on going for treasury bills in Nigeria, i will recommend that you make it for a duration of one year, it has more interest rate and true yield compared to others.

Disadvantages of Treasury bills in Nigeria

Honestly, there’s no disadvantages involved in the Nigeria treasury bills.

The only thing I can say is that the central bank of Nigeria or probably the federal government has the say when it comes to the primary market in the Nigeria treasury bills.

As investor, you’re only required to make your bid, and it is left for the central bank to accept the bid or reject the bid.

However, there’s no disadvantages of treasury bills in Nigeria.

Best bank for treasury bills in Nigeria

When it comes to investment or investing in the financial institution in Nigeria, I give to Stanbic IBTC cause of their interest rates.

So the question on the best bank for treasury bills in Nigeria is the stanbic ibtc bank.

Kindly note that the bank act as a secondary market to the investors.

Benefits of treasury bills in Nigeria

The major benefits of treasury bills in Nigeria is that there’s no risk associated with the Nigeria treasury bills.

Mind you, treasury bills is a money market investment and there’s no risk associated with it.

You’ll get your investment, plus the interest at maturity.

Another benefits of treasury bills in Nigeria is that it helps to save for the future, though the recent interest rates offered are way too low.

Can individuals buy treasury bills in Nigeria

Right now, the central bank has stopped individuals from buying or investing in the Nigeria treasury bills.

What i mean to say is that an individual can’t buy directly from the primary market, other than the secondary market.

The likes of stanbic ibtc, United bank for Africa offers the treasury bills to individuals right now in 2020.

Can individuals buy treasury bills in Nigeria?


But only from the secondary market which includes banks and non bank financial institutions.

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I know banks like First bank, UBA, Gtbank, Stanbic IBTC bank, Sterling bank and others do offer sell treasury bills to the public.

I haven’t tried other sources like the stock brokers or merchant banks but if you have done so, i will be pleased to tell me how to buy from them through the comment box.

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