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How to Invest in Treasury Bills in Nigeria

In this article, I will show you how to invest in Treasury Bills in Nigeria. Treasury bills basically are short term securities that reach maturity in a year or less from their date of issue.

Treasury bills basically are short term securities that reach maturity in a year or less from their date of issue.

In the first week of February 2017, the interest rates on 364 days treasury bills were reported to be as high as 22%. The Central Bank also recently announced her intentions to sell treasury bills worth about N142.43 billion at an auction slated for the 15th of February 2017. The details of the sale are as follows:

91 days: N3.43 billion

182 days: N30 billion

364 days: N80 billion

What are treasury bills? And how profitable are investments into treasury bills?

How to Invest in Treasury Bills in Nigeria


The government has certain ways of generating revenue to fund its projects and one of the ways is by the creation of fixed income securities that are backed by the full faith and credit of the government’s treasury. Treasury bills are also employed by the government to regulate the economy of the country and implement economic policies. Treasury bills are one of these forms of funding for the government.

Treasury bills basically are short term securities that reach maturity in a year or less from their date of issue. They are one of the simplest forms of market securities available. In the simplest of expressions, treasury bills are simply a way of lending money to the government of a country at a price that is less than their original face value.

For instance if the original value of the Treasury bill is at at N100, it could be issued at a price of N95. And upon maturity, the government pays back at the full face value. So basically, your profit at the end of that maturity period is the difference between the purchase price you paid at the beginning and the maturity price. for instance, if you paid N100 at a discount rate of 5% for a treasury bill with a face value of N110 at an auction for a 1 year treasury bill, your yield to maturity , or the amount earned if you hold the bill for one year Is ( N110-N100)/100×100=

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Treasury bills are considered one of the safest forms of investments across the world because they are backed by the government itself. In actual fact, they are considered risk free. They are also very affordable for the individual investors as they do not need a huge capital to start.

They are issued in denominations of 1000s, however most banks in Nigeria prefer a minimum investment of N100,000 because of the cost and the stress and logistics and also they are exempt from withholding taxes.

It has been argued that the rate of returns on treasury bills are low, however considering the safety involved in investing in treasury bills , it is still a favorite among individual investors across the world, because of the literally 100% money back guarantee.  Treasury bills can also be used as collateral security. It can be resold and converted back into cash at any point.


Nigeria is Africa’s biggest economy after South Africa and the country issues treasury bills regularly to reduce money supply, curb inflation and help lenders manage their liquidity. Treasury bills are usually sold at commercial banks and discount houses.

Read Also: 5 Best Ways to Invest Money in Nigeria and how to Invest

In Nigeria, we have a total number of five discount houses namely, Associated Discount House Ltd, Consolidated Discount Limited, Express Discount Limited, First Securities Discount House Ltd, Kakawa Discount House Ltd. In Nigeria, the Federal Government through the Central Bank of Nigeria, usually issues bills at a discounted price for maturity periods of between 91 and 364 days. So, there are three tenures; 91 days, 182 days and 364 days.

To start, go to a commercial bank or a discount house, write an application letter expressing your intent  to invest in any of the offered bond, this letter must  be tendered at least 48 hours before the date of the auction, because usually most commercial banks are required to submit their clients’ applications by Wednesday before the dates announced by the Central Bank, usually from a quarterly issuance calendar which is published on the Central Bank website(www.cbn.gov.ng)  and also announced typically a week ahead of the scheduled date for the auctions in the newspapers. Also you need to attach a form of identification to the application letter.

There are two ways of bidding for treasury bills. First is a competitive bid, you will specify the discount rate you want  by appropriating filling the ‘ stop rate’ section of your application form, however you may or may not get the specified discount rate depending on the discount rate that is determined at the auction.

However the current rates in Nigeria is between 12% and 14%, although sometimes there is a rise in the rates. Note that if you specified a rate which is significantly higher than the rate offered by the Central Bank, your bid will fail, so be careful when specifying the rate.

Read Also: 4 Best Investment Plans for Retirement

Second, is the non competitive bid, here you leave your interest rate to the discretion of the bank or the discount house acting as an agent for the central bank. You must agree to be bound by whatever the interest rate you are given is. Interest rates differ from bank to bank and from discount house to discount house.

You do not get interest, or any form of monthly interest rates on treasury bills, remember that they are discounted upfront. There would be no regular notifications or updates on the treasury bills save for the debit alert at the date of issuance and the credit alert at the date of maturity when the government pays back the money.

It is best that you ask for a certificate or statement evidencing the transaction from your bank. The certificate is called a Treasury Bill Certificate, it is a detailed statement evidencing your investment in treasury bills and this certificate is what is used as a document when the Treasury bill is to be used as collateral.

You should note that an administrative fee of 0.0125% will be charged on the face value of every investment. Also, you are allowed to sell your treasury bills over the counter with any primary dealer. The prices are subject to fluctuations in the market and you may not make as much of a profit as you would have if you had left the bills till the fixed date of maturity.


To calculate the returns on your investment, you would subtract the discounted price from the face value and divide it by the discount price, then multiply by 100, which would give you the percentage increase that amounts to the yield on your investments.

Read Also: 5 Best Ways to Invest Money in Nigeria and how to Invest

For instance, if you paid N100 at a discount rate of 5% for a Treasury Bill with a face value of N110 at an auction for a bill with a maturity period of one year, your yield at maturity will be calculated like this: (N110-N100)/100×100=10%. Which means that your profit is 10% of the total sum invested.

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Abiola Ogunsola

Abiola is a content writer at InfoGuideNigeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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