How Treasury Bills Work in Nigeria

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Introduction

If you’ve ever wondered how governments borrow money or how conservative investors earn safe returns in Nigeria, Treasury Bills (T-Bills) are central. They are one of the safest fixed-income instruments in Nigeria, backed by the Federal Government. In this post, you’ll learn:

  1. What a Treasury Bill is in Nigeria
  2. How T-Bills work
  3. Current rates/percentages for T-Bills
  4. Where to buy T-Bills in Nigeria
  5. How to calculate returns from T-Bills

Plus, I’ll show how Rich, Young & African, your budgeting templates, and my courses fit with these strategies so you can use T-Bills as part of your overall wealth system.

1. What Is a Treasury Bill (T-Bill) in Nigeria?

A Treasury Bill (T-Bill) is a short-term government instrument through which the Federal Government raises funds. It is issued via the Central Bank of Nigeria (CBN) on behalf of the Federal Government.

Key features:

  • It’s a discount instrument: you buy it for less than its face (par) value.
  • At maturity, you receive the full face value, your “interest” is the difference.
  • It is backed by the full faith of the Nigerian government, making it one of the safer investment options.
  • Typical tenors (maturities) are 91 days, 182 days, and 364 days.

In essence: when you buy a T-Bill, you’re lending the government money for a short period, and they pay you back with interest built into the discount.

2. How Treasury Bills Work in Nigeria

a) Discount Issuance

T-Bills are issued at a discount to their face value. For example, if a T-Bill has a face (par) value of ₦100,000 and is issued at a 10% discount, you might pay ₦90,000 up front. On maturity, you receive ₦100,000. That ₦10,000 difference is your return.

b) Auction System

T-Bills are offered in periodic auctions (often biweekly) where investors submit bids indicating the discount rate they accept. The Debt Management Office (DMO) and CBN conduct these auctions.

  • There is typically a stop rate: the highest discount rate accepted for that issuance. Bids above that are rejected.
  • After the auction, successful bidders have their accounts debited, and the T-Bills are issued to them.

c) Secondary Market

You can also sell T-Bills before maturity in the secondary market. Their market price will depend on the prevailing interest/discount rate environment.

d) Maturity

On maturity (e.g. after 91, 182, or 364 days), the government pays you the full face/par value. That is your principal + built-in interest.

Because the return is known at purchase, T-Bills are relatively predictable.

3. What Percentage is the Treasury Bill Rate in Nigeria?

T-Bill rates vary depending on the tenor and macroeconomic conditions (inflation, interest rates, government borrowing).

  • The 91-day T-Bill rate recently was 15.0% (for example as of certain CBN announcements)
  • One‐year (364-day) T-Bill yields have reached ~19.187% pa in the past months.
  • In October 2024, stop rates for 364-day tenor were reported around 20.65% depending on auction.
  • More recently, yields have declined: the one-year (364-day) benchmark dropped to ~19.4% in a recent auction.
  • In a recent auction, the 364-day rate was increased to 16.50% (as per a CBN auction report) for that term.

So current T-Bill rates in Nigeria might range between ~15% to ~20+% depending on tenor and market conditions. Always check the latest DMO/CBN auction results.

4. Where to Buy Treasury Bills in Nigeria

Primary Market (New Issues)

  • You can buy T-Bills directly from the Debt Management Office (DMO) auctions via your bank or authorized dealers.
  • Many commercial banks and discount houses serve as intermediaries / brokers.

Secondary Market

  • After issuance, you can buy T-Bills from other investors via secondary trading platforms (banks, brokers, or the discount houses).
  • Some fintech platforms or investment houses may offer access.

If you use an investment platform or brokerage that your bank partners with, they may simplify the purchase process for you. However, the easiest way to buy is to reach out to your bank. They will facilitate it for you. Some banks, like Standard Chartered Bank Nigeria, allow you to purchase with a click on the button on their mobile app.

5. How to Calculate Treasury Bill Returns in Nigeria

Because T-Bills are discount instruments, return is calculated based on discount and time to maturity.

Basic Yield Formula (Approximate)

One common formula:

Yield = (Face Value – Purchase Price) / Purchase Price × (365 / Days to Maturity) × 100%

This gives the annualized yield.

Example:

  • Face value = ₦100,000
  • Purchase price = ₦90,000
  • Days to maturity = 91

Yield = (100,000 – 90,000) / 90,000 × (365/91) × 100% ≈
(10,000 / 90,000) × 4.01099 × 100% ≈ 11.11% × 4.01 = ~44.6% (annualized)

Because 91-day yields are often less, real yields might be lower. Use exact auction discount rates for precision.

Discount Rate Basis

T-Bills are often quoted using a discount rate, which is similar but slightly different from yield. To convert discount to yield requires adjustment formula (depending on convention). Many financial sites or your broker will show both yield and discount rates with clarity.

These Resources Tie Into Your Wealth System

For example: Use my budgeting template to set aside money for your rent monthly. Then strategically invest the money into T-Bills. By the time your rent is due, you will have saved up the capital needed, plus dividends you can use for pleasure or additional investments.

FAQs (for SEO & clarity)

Q: Are Treasury Bills safe in Nigeria?
Yes. They are backed by the Federal Government, so default risk is extremely low.

Q: Can individuals buy T-Bills?
Yes, Both individuals and institutions can participate via banks, discount houses, or brokers.

Q: Can I sell T-Bills before maturity?
Yes, via the secondary market. Market value depends on prevailing rates.

Q: Are T-Bill earnings taxed?
As of current legistlation, some sources suggest T-Bills interest is exempt from withholding tax in Nigeria.
(Always verify current tax laws, especially as new reforms emerge.)

Q: Does T-Bill yield change?
Yes, yields depend on auction rates and macroeconomic conditions. Recent auctions showed yields declining for one-year bills to ~19.4%.

Conclusion

Treasury Bills provide one of the most stable, government-backed investment options in Nigeria. They won’t make you extremely rich overnight, but they help you preserve capital, earn predictable returns, and anchor your portfolio.

Your next steps:

  1. Use your Budgeting Template to free up capital each month.
  2. Read Rich, Young & African for mindset + structure.
  3. Explore combining T-Bills with your ebook, side hustle, and passive income streams.
  4. Use a bank or broker to participate in the next T-Bill auction.

If you like, I can build a T-Bill return calculator widget you can embed in your site or share with subscribers, so they can plug in numbers and see how much they’ll earn in their chosen tenor. Do you want me to build that next?