Say you have ₦500,000 sitting in a savings account and you won't need it for six months. A friend says "buy treasury bills." What does that actually mean, how do you do it, and what happens if you need the money earlier than planned? This guide answers all three in plain terms.
One rule up front: this post gives no current rates or yields. They change at every auction, so you will check them yourself from the sources listed below. The numbers in the examples are made up to show the arithmetic.
What a treasury bill is
A treasury bill (T-bill) is a short-term loan you give the Federal Government. In Nigeria, the Central Bank of Nigeria (CBN) runs the auctions on the government's behalf. Common maturities are 91, 182 and 364 days.
You don't receive monthly interest. Instead, you buy at a discount and get the full face value at maturity. The gap between the two is your return.
Discount versus interest rate
This trips up many first-timers. Auction results often show a "stop rate", and you must check whether a figure is a discount rate or a true yield. They are not the same number. A discount rate is measured against the face value, while the true yield is measured against what you actually paid, so the yield is slightly higher. When comparing a T-bill with a fixed deposit or a money market fund, compare true yields.
A worked example (hypothetical)
Suppose a 364-day bill is priced so that ₦1,000,000 face value costs ₦800,000. At maturity you receive ₦1,000,000.
- Profit: ₦200,000.
- Return on what you paid: 200,000 ÷ 800,000 = 25%.
- Discount rate against face value: 200,000 ÷ 1,000,000 = 20%.
Same bill, two different percentages. Always ask which one you are looking at. These figures are invented purely to show the method.
Ways to buy
You generally can't walk up to the CBN as an individual. You go through an intermediary.
| Route | Good for | Watch out for |
|---|---|---|
| Your commercial bank | People who want a familiar institution | Banks add their own margin, so your rate may be below the auction rate. Minimums vary. |
| Licensed stockbroker or asset manager | Larger amounts, access to the secondary market | Confirm SEC registration. Ask about fees in writing. |
| Investment or fintech app | Small amounts, phone-only use | Check who actually holds the bill and whether the app is regulated. See our SEC registration check for the same method. |
| Money market fund (indirect) | People who want flexibility and small starts | Not the same as owning a bill. Read our money market fund checklist. |
Step by step: buying your first bill
- Set the time frame. Pick a maturity that ends when you need the cash. Money for school fees in 6 months suits a 182-day bill better than a 364-day one.
- Get your documents ready. Expect to provide your BVN, valid ID, bank details and sometimes a utility bill. Nobody legitimate will ask for your card PIN or OTP.
- Open the account. With a bank, ask for treasury bill purchase or a custody account. With a broker, you may need a CSCS account, which holds securities in your name.
- Ask for the numbers. Request the rate you will get, the maturity date, fees, and the amount you will receive at maturity. Get it in writing or on screen.
- Know the auction timing. Primary auctions happen on a schedule set by the CBN, so your order may wait until the next one. Check the CBN website for the calendar.
- Fund and confirm. After payment, ask for a transaction confirmation and keep it.
- Set a reminder. Diarise the maturity date and decide beforehand whether to reinvest or withdraw.
What selling early costs
A T-bill is not locked in like a fixed deposit in every case, but you can't simply demand your cash back from the government. To exit early you sell on the secondary market to another buyer, and the price depends on the market rate that day.
If market rates have risen since you bought, your bill is worth less, because buyers can get a better deal elsewhere. If rates have fallen, you may sell at a gain. You also pay any broker or bank charge, and some providers take a day or more to settle.
Early-sale example (hypothetical)
You bought a 364-day bill for ₦800,000 (face value ₦1,000,000). After six months you need cash. Buyers now want a higher return than when you bought, so the bill sells for ₦880,000 rather than the ₦900,000 it might have fetched at your original rate. You still gain ₦80,000 on six months, but less than you expected, and a fee of, say, ₦2,000 trims it further. The exact figure depends on the day, so ask for a quote before selling.
The lesson: don't put your emergency money in a long bill. Keep that in something instantly accessible. Our emergency fund guide covers where.
Risks and costs to weigh
- Inflation. If prices rise faster than your return, your money buys less at maturity even though the naira amount grew. Our guide on saving when inflation is high covers this trade-off.
- Currency risk. Returns are in naira. If you are saving for something priced in dollars, such as a tuition fee abroad, the naira moving against the dollar can erase gains. Recent headlines on the naira's moves show why this matters.
- Intermediary risk. Government credit risk is separate from the risk that your app or agent mismanages your money.
- Tax. Tax treatment of government securities has changed over time. Confirm the current position with a licensed adviser or the tax authority before assuming anything.
Common mistakes
- Comparing a discount rate with a deposit rate and thinking the bill is better or worse than it is.
- Buying a long bill with money you may need in three months.
- Trusting a WhatsApp "investment manager" who promises a fixed return above the auction rates. Real T-bill returns are published; guaranteed extras are a warning sign.
- Forgetting maturity and leaving proceeds idle in a low-interest account.
- Putting everything into one instrument instead of splitting by when you need the cash.
Other countries
Ghana, Kenya and South Africa also issue T-bills, but through different channels (central bank platforms, brokers or banks) with their own minimums and tax rules. If you live there, check your own central bank or treasury site rather than using the Nigerian steps above.
Frequently asked questions
What is the minimum amount?
It depends on the provider. Banks, brokers and apps set their own minimums, so ask before opening an account.
Can I lose my money?
If you hold to maturity, you receive face value from the issuer. You can lose in real terms through inflation, or lose money by selling early at a bad price, or through a dishonest intermediary.
Is a T-bill better than a money market fund?
Not automatically. A bill gives a known return if held to maturity. A fund is usually easier to enter and exit but its returns move. Pick by when you need the money.
Can I buy as a Nigerian abroad?
Often yes through a broker or bank that accepts diaspora clients, but expect extra identity checks and currency conversion costs.
Your next step
Write down how much you can lock away and the date you'd need it. Then ask two providers for a written quote showing the rate, fees and maturity amount, and compare the true yield on both.
This article is for general information only and is not financial, legal, or tax advice. Prices, rates and rules change quickly, so check current details before making money decisions.