Business & Investment

Treasury Bills in Nigeria 2020; Overview, Interest Rates, Best Banks to Invest, Benefits and Disadvantages

If you are looking for the safest and most secure form of investment, then you should look at investing in treasury bills.

Why is it the safest form of investment? Because it is backed up by the full faith of the Federal Government of Nigeria.

What are Treasury Bills?

Treasury bills also known as T-Bills are the debt instruments issued by the Central Bank of Nigeria (CBN) On behalf of the government to raise short-term funds to finance national borrowing requirements or the budget deficit.

It is a means by which the government borrows from the public on a short-term basis from the money market. It confirms government indebtedness to the holder for a specified period usually 91 days.

Treasury bills in Nigeria are used by the CBN to control the supply of money in the economy via Open Market Operation (OMO). They are made open to the financial institutions and commercial banks for purchase.

Read Also: 8 Steps to Invest in the Nigerian Stock Market and Enjoy dividends

One thing that you should probably know is that investing in treasury bills is risk-free compared to the other forms of investments. It is also very liquid and can be converted to cash quickly.

Treasury bills don’t attract a huge rate of return but are better for capital preservation. It would also interest you to know that Treasury bills are always offered at discounted prices and attract no monthly interest payments during the life cycle of the bill.

Treasury bills are issued in fixed tenures i.e. 91 days, 182 days and 364 days. Full payment is made by the Federal Government of Nigeria after the maturity of the bill, i.e. the interest plus original value will be paid together.

Read Also: GTBank Fixed Deposit and Interest Rates: Everything you need to know

Treasury bills are highly liquid negotiable instruments. They are available in both financial markets, i.e. primary and secondary. They are very useful and can serve as collateral. They can be resold in the secondary market for a long period of time.

Treasury bills in Nigeria, sales are open to individuals, firms, companies, banks, insurance companies, state government and financial institutions. They are sold through a bi-weekly auction conducted by the CBN.

If you are kind of wondering about how much you can invest? Then it depends on the bank for you can purchase a minimum of #50, 000 and a maximum of #50, 000, 000.

One good thing about investing in treasury bills is that the interest earned is not taxable and it is paid upfront and credited to your bank account.

Read Also: How to Invest in Treasury Bills in Nigeria

Interest Rates of Treasury Bills in Nigeria

The interest rates of treasury bills in Nigeria is simply the bid rate, which is also referred to as Spot Rate. The interest rate depends on the type of treasury bill you intend to purchase.

The interest rate of treasury bills in Nigeria is between 11.57% to 14%.

Note: when you obtain a treasury bill form from the bank, you would be asked to indicate your bidding rate or you can simply leave it to the bank.

The bid rate to be selected by you or your bank must fall below the marginal rate set by the CBN. Once your bid is successful, the interest is paid upfront.

What is a marginal rate? A marginal rate is the minimum average rate for bids submitted within a bid window.

Note: The return on treasury bills is largely driven by economic risk and oil prices. Treasury bills is best considered when the rates are rising as a result of falling oil prices.

How to Calculate Return on investment

For instance, if you purchase 500,000 naira worth of treasury bills for 364 days at 13% then your return on investment would be 65,000 naira which would be paid upfront and 435,000 naira would be the only money invested instead of 500,000.

Read Also: 20 Business Ideas you can Comfortably Start with N100,000 in Nigeria

12 Best Banks to Invest in Treasury Bills in Nigeria

The following banks below are considered the best banks to invest in treasury bills in Nigeria:

  1. Zenith Bank PLC.
  2. Guaranty Trust Bank (GTB).
  3. First Bank.
  4. Stanbic IBTC Bank
  5. Unity Bank.
  6. FCMB Bank.
  7. Sterling Bank.
  8. Access Bank
  9. Ecobank.
  10. Fidelity Bank.
  11. Union Bank.
  12. UBA Bank.

Read Also: List of 25 Banks In Nigeria and their Functions

The banks listed above offers treasury bills to customers at an agreed interest rate and tenure.

-They offer investors attractive and competitive interest rates on investment.

They pay interest upfront.

-They issue treasury bills in fixed tenures i.e. 91 days, 182 days and 364 days.

13 Benefits of Investing in Treasury Bills in Nigeria

1. There are lots of benefits when it comes to treasury bills investment in Nigeria.

2. Treasury bills can be used as collateral securities for repurchase transactions.

3. Interest earned from treasury bills are not subjected to tax.

4. Customers are free to choose the tenure and interest rate suitable for them.

5. Treasury bills are highly liquid and readily tradable in the secondary market.

6. Treasury bills are safe and risk-free as the federal government of Nigeria gives assurance of full redemption at maturity.

7. Treasury bills are a good source of a steady stream of income.

8. Treasury bills are good investments for people who wish to save.

9. Treasury bills can be converted to cash quickly because they are very liquid.

10. Treasury bills are discounted instruments enabling investors to earn interest upfront, thereby increasing the effective yield on investment.

11. Treasury bills attract no transaction fee compared to other forms of investment.

12. Treasury bills are good for capital preservation.

13. Treasury bills are the best investment option for your free and disposal cash.

Read Also: 7 Functions of Discount Houses in Nigeria

Disadvantages of Investing in Treasury Bills in Nigeria

The following are the disadvantages of investing in treasury bills in Nigeria:

  1. Return on investment is subject to inflation risk.
  2. Treasury bills attract low rates of return.
  3. Investment in treasury bills cannot be rolled over as they have to incur a cost each time a bid is made.


Investing in treasury bills is the safest form of investment as it requires no risk and it is backed up by the full faith of the Federal Government of Nigeria.

It is a short term investment and you don’t have to wait for a long period of time to receive your return. Interest received is not subject to tax.

You should visit a bank or stockbroker to purchase your treasury bills and get something for your investment than leaving your money idle with no gain.

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Cynthia Victor

Cynthia Victor is a Content Developer at 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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