Home » Trea­sury Bills In Nige­ria 2020: Under­stand­ing How It Works
Treasury bills in Nigeria

Trea­sury Bills In Nige­ria 2020: Under­stand­ing How It Works

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 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.

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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

Treasury bills in Nigeria

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.

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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, and 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.

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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 which  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 × 15100 = 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.

Don’t miss the trea­sury bills rate in Nige­ria 2020 so far

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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Below are the last trea­sury bills rate offered by the cen­tral bank for 2019 year;

Auc­tion dateMar­gin­al Rate
91 days182 days364 days
Novem­ber 27, 20196.497.23%8.37%
Novem­ber 13, 20197.799.00%10.00%
Octo­ber 31, 201910.8011.00%12.94%
Octo­ber 16, 201910.8011.00%12.94%
Octo­ber 02, 201911.0811.60%13.20%
Sep­tem­ber 18, 201911.1011.75%13.30%
Sep­tem­ber 11, 201911.1011.79%13.28%

We’re just few days ahead of 2020 and i promise to keep you post­ed with the lat­est auc­tions com­ing up next year.

This is where i round it up on trea­sury bills in Nige­ria 2020, and i know that you’ve at least have some amount of knowl­edge on what it is, i’m open to your ques­tions and mind you will be hap­py to add more to this thanks.

10 thoughts on “Trea­sury Bills In Nige­ria <span class="numbers">2020</span>: Under­stand­ing How It Works”

  1. Hi! Thanks so much for your posts they’ve been real­ly help­ing me with research­ing the best course of action to take when invest­ing in Nige­ria. I’ve real­ly come a long way. Any­way I had a ques­tion as I’m very new to the invest­ing world I’m a bit con­fused on the return of invest­ment cal­cu­la­tions. My ques­tion is so what is the total amount of mon­ey you would walk away with after tbill of the 500k with 11% inter­est matures? Is it 500k + the 88k? Also do you have any insight in to the tax­a­tion of tbills? And how about mutu­al funds? Which do you sug­gest tbills or mutu­al funds or bjoth?

  2. Oyi­no­la, the bank will deduct the mon­ey invest­ed, and at matu­ri­ty you’ll be paid both the inter­est rate, and the mon­ey you invest­ed.

    It is like you’re lend­ing cash to the bank or the fed­er­al gov­ern­ment.

    That is, the fed­er­al gov­ern­ment is bor­row­ing mon­ey from you, and when the due date reach­es, they will pay you the mon­ey the bor­rowed from you, and the inter­est rate that mount­ed on the mon­ey.

    There’s no tax fee on T‑bills, and if you have the income or the cash, you can go for both T‑bills and mutu­al funds. Right now, stan­bic offers the best on mutu­al funds though i’m yet to try it.

  3. Thanks for your write up.

    In your write up, you sug­gest­ed going for 1 year invest­ment in T‑bills, because of the high­er inter­est rate. For instance, going by your cal­cu­la­tions,

    if 15% inter­est rate is giv­en at 182 days (6 Months) — half a year:

    mon­ey real­ized at the end of a year
    = 6 Months + 6 Months =
    88200 + 88200 = 176,400.

    But, if same amount is invest­ed for 1 year (for instance at same rate),

    mon­ey real­ized at the end of a year is N88200.

    Base, on the above don’t you think, the 6 months (or 182 days) is advis­able?

    Please, I need CLAR­I­FI­CA­TION. THANKS.

    1. Vic­tor what you have to real­ize is that there’s no way the inter­est rate of six months and one year will be the same, it can nev­er be the same.

      CBN or banks or non bank finan­cial insti­tu­tion may offer 15% for six months, and 20% for one year. The inter­est accrued on each month for an investor invest­ing for one year, will be big­ger than the one invest­ing for six months.

  4. Please can you explain more on this. When invest­ing in Tbills for a peri­od of one year, how do you get your inter­est. Is it upfront or at the end of the year?.

    1. You did­n’t read this post cause you would have come across this trea­sury bills areaa dis­count instru­ments and they are so called because the investor gets its inter­est upfront”.

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