Treasury Bills (T-Bills) are one of the safest investments available to Nigerians. Backed by the full faith and credit of the Federal Government of Nigeria, T-Bills offer guaranteed returns that consistently beat inflation and savings account interest rates.
Whether you're a conservative investor seeking capital preservation, a beginner looking for a safe entry point into investing, or someone who wants to diversify their portfolio with fixed-income securities, understanding Treasury Bills is essential.
💰 Treasury Bills Quick Facts
- Risk-free investment backed by the Federal Government
- Current rates range from 10-20%+ annually
- Minimum investment: ₦50,000 (through banks) or ₦50 million (direct from CBN)
- Tenors: 91 days, 182 days, and 364 days
- Interest is paid upfront (at discount)
What Are Treasury Bills?
Treasury Bills are short-term debt instruments issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government to raise funds for government expenditures. When you buy a Treasury Bill, you're essentially lending money to the government, which promises to pay you back with interest.
T-Bills are considered "risk-free" because they're backed by the Nigerian government. The government has the power to collect taxes and, in extreme cases, print money to meet its obligations. While no investment is truly 100% risk-free, sovereign debt from your own country is as close as you can get.
How Treasury Bills Work
Treasury Bills work differently from traditional loans or bonds:
- Sold at discount: You buy T-Bills below their face value and receive the full face value at maturity. The difference is your return.
- Example: You might pay ₦950,000 for a ₦1,000,000 T-Bill. At maturity, you receive ₦1,000,000, earning ₦50,000.
- No periodic interest payments: Unlike bonds, T-Bills don't pay interest monthly or quarterly. Your entire return comes at maturity.
Treasury Bill Tenors
Nigerian Treasury Bills come in three tenors (durations):
| Tenor | Duration | Best For |
|---|---|---|
| 91-day T-Bill | ~3 months | Short-term parking of funds, emergency reserves |
| 182-day T-Bill | ~6 months | Medium-term savings goals |
| 364-day T-Bill | ~12 months | Maximum returns, long-term investors |
Generally, longer tenors offer higher interest rates to compensate for the longer commitment of your funds.
Current Treasury Bill Rates
T-Bill rates fluctuate based on market conditions, CBN monetary policy, and government borrowing needs. As of 2025, rates have been attractive due to tighter monetary policy:
- 91-day T-Bills: Typically 10-15% per annum
- 182-day T-Bills: Typically 12-18% per annum
- 364-day T-Bills: Typically 15-22% per annum
These rates significantly outperform most savings accounts, which offer 1-4% annually. To find current rates, check the CBN website or contact your bank's treasury desk.
How to Invest in Treasury Bills
There are two main ways to invest in Treasury Bills in Nigeria:
Method 1: Through Your Bank
This is the most common and accessible method for individual investors.
- Contact your bank: Visit your bank branch or use online/mobile banking if available
- Indicate your interest: Request to purchase Treasury Bills
- Choose tenor and amount: Select 91, 182, or 364 days and specify investment amount
- Complete documentation: Fill out required forms, provide ID and BVN
- Fund your investment: The discounted amount is debited from your account
- Receive confirmation: You'll get a certificate or confirmation of your investment
- At maturity: The full face value is credited to your account
Minimum through banks: Typically ₦50,000 - ₦100,000
Method 2: Directly from CBN (Primary Market Auction)
For larger investors, you can participate in CBN's weekly T-Bill auctions:
- Open a treasury account with the CBN
- Submit bids during the auction (usually Wednesdays)
- Successful bids are allotted based on competitive bidding
Minimum for direct purchase: ₦50,000,000 (fifty million naira)
Method 3: Through Investment Platforms
Several fintech platforms now offer access to T-Bills with lower minimums:
- Cowrywise: Minimum ₦1,000
- PiggyVest: Access through their investment products
- Stanbic IBTC: Minimum ₦100,000
- ARM Investment: Through money market funds
Calculating Your Treasury Bill Returns
Understanding how T-Bill returns are calculated helps you compare options and plan your investments:
The Discount Calculation
When you buy a T-Bill, you pay less than the face value. The formula is:
Purchase Price = Face Value ÷ (1 + (Rate × Days ÷ 365))
Example Calculation
Let's say you want to invest ₦1,000,000 in a 364-day T-Bill at 18% annual rate:
- Purchase price: ₦1,000,000 ÷ (1 + (0.18 × 364 ÷ 365)) = ₦847,457
- You pay: ₦847,457
- At maturity you receive: ₦1,000,000
- Your profit: ₦152,543
- Effective return: 18% (paid upfront)
Important: Interest is Paid Upfront
Unlike bank fixed deposits where you pay the full amount and receive interest later, with T-Bills you pay the discounted amount and receive the full face value at maturity. This means you get your "interest" immediately as a discount.
Advantages of Treasury Bills
1. Government Guarantee
T-Bills are the safest investment in Nigeria. The Federal Government has never defaulted on its domestic debt obligations. Your principal is as secure as it can be.
2. Attractive Returns
With rates often exceeding 15% annually, T-Bills offer returns that beat inflation and far surpass regular savings accounts.
3. Liquidity
Although T-Bills have fixed tenors, you can sell them before maturity in the secondary market. This provides flexibility if you need your funds early.
4. Low Minimum Investment
Through banks and fintech platforms, you can start investing with as little as ₦1,000 to ₦50,000.
5. Predictable Returns
Unlike stocks, T-Bill returns are known at purchase. You know exactly how much you'll receive at maturity.
6. Tax Benefits
Treasury Bill interest income may be exempt from certain taxes, though you should confirm current tax treatment with a professional.
Disadvantages and Risks
1. Inflation Risk
If inflation rises above your T-Bill rate, your real (inflation-adjusted) returns become negative. You preserve capital nominally but lose purchasing power.
2. Reinvestment Risk
When your T-Bill matures, prevailing rates might be lower. You may not be able to reinvest at the same attractive rate.
3. Opportunity Cost
Money locked in T-Bills can't be used for potentially higher-returning investments like stocks or real estate.
4. Currency Risk
If the naira depreciates significantly, your T-Bill returns may not keep pace with dollar-denominated assets.
5. Early Exit Costs
Selling before maturity may result in receiving less than expected, depending on market conditions.
Treasury Bills vs Other Investments
| Investment | Typical Return | Risk Level | Liquidity |
|---|---|---|---|
| Treasury Bills | 10-20% | Very Low | High |
| Savings Account | 1-4% | Very Low | Very High |
| Fixed Deposit | 8-15% | Low | Low |
| FGN Bonds | 12-18% | Low | Medium |
| Stocks | Variable | High | High |
| Real Estate | Variable | Medium | Very Low |
Strategies for Investing in Treasury Bills
1. Laddering
Instead of investing everything in one tenor, spread your investment across multiple maturity dates. For example:
- ₦500,000 in 91-day T-Bills
- ₦500,000 in 182-day T-Bills
- ₦500,000 in 364-day T-Bills
This provides regular liquidity events while capturing different rate environments.
2. Rolling
When your T-Bills mature, automatically reinvest into new T-Bills. This creates a continuous investment cycle that compounds your returns.
3. Rate Chasing
Monitor T-Bill rates weekly. When rates spike (often due to government borrowing needs), invest larger amounts to lock in attractive rates for longer tenors.
4. Emergency Fund Allocation
Use 91-day T-Bills for your emergency fund. You earn better returns than savings accounts while maintaining reasonable access to funds.
Frequently Asked Questions
What is the minimum amount to invest in Treasury Bills?
Through banks, the minimum is typically ₦50,000-₦100,000. Through fintech platforms like Cowrywise, you can start with as little as ₦1,000. Direct purchase from CBN requires ₦50 million minimum.
Are Treasury Bills taxable in Nigeria?
Interest earned on Treasury Bills may be subject to withholding tax. However, rates and exemptions vary. Consult a tax professional for your specific situation.
Can I sell my Treasury Bills before maturity?
Yes, you can sell T-Bills in the secondary market before maturity. However, the price depends on current market rates—you might receive more or less than expected.
What happens when my T-Bill matures?
The full face value is credited to your bank account or investment account. You can then reinvest or withdraw the funds.
Are Treasury Bills better than fixed deposits?
T-Bills typically offer higher rates and are more secure (government-backed vs. bank-backed). However, fixed deposits may offer more flexibility with tenors. Compare current rates from both before deciding.
Conclusion
Treasury Bills offer Nigerian investors a safe, reliable way to grow their money with returns that consistently beat savings accounts and inflation. Whether you're building an emergency fund, saving for a short-term goal, or adding stability to your investment portfolio, T-Bills deserve consideration.
Start by checking current rates with your bank or preferred investment platform. Consider your investment timeline, compare T-Bill rates with alternatives, and choose the tenor that matches your needs. With government backing and attractive yields, Treasury Bills remain one of the smartest choices for conservative investors in Nigeria.