Treasury bills, often referred to as T-bills, are one of the most secure and popular investment vehicles in Nigeria. They are government debt instruments issued by the Central Bank of Nigeria (CBN) to control the money supply and raise short-term funds for the government. Given their low-risk nature and ease of investment, T-bills have become a preferred choice for both individual and institutional investors.  This article aims to provide comprehensive information about Treasury bills in Nigeria, including their workings, benefits, drawbacks, and how they compare to other investment options like treasury bonds.

What are Treasury Bills?

Treasury bills are short-term securities issued by the government with maturities ranging from 91 to 364 days. They are sold at a discount to their face value, meaning investors buy them at a price lower than their nominal value and receive the total face value at maturity. The difference between the purchase price and the face value represents the interest earned by the investor.

How Do Treasury Bills Work?

T-bills are typically issued through a competitive bidding process managed by the CBN. Investors submit bids indicating the amount they are willing to invest and the discount rate they expect. The CBN selects the most competitive bids until the total T-bills offered are fully subscribed. Successful bidders receive T-bills at the rates they bid, while others may have their bids partially accepted or rejected.

Once issued, T-bills can be held until maturity or sold in the secondary market before they mature. The interest earned on T-bills is the difference between the purchase price and the face value, and it is paid upfront since the bills are sold at a discount.

How Can I Buy Treasury Bills?

There are several ways to purchase Treasury bills in Nigeria:

  • Primary Market: Investors can buy T-bills directly from the CBN during periodic auctions. To participate, you need an account with a commercial bank or a discount house that can facilitate the purchase on your behalf.
  • Secondary Market: T-bills can also be bought from existing holders through the secondary market. This option provides flexibility as you can purchase T-bills with various remaining maturities.

To buy T-bills, follow these steps:

  • Open a Treasury bill account with a commercial bank.
  • Submit a bid form indicating the amount you want to invest and the discount rate.
  • Pay the amount due if your bid is successful.

What is the Minimum Amount I Can Buy?

The minimum investment amount for Treasury bills in Nigeria is typically ₦50,000. This makes T-bills accessible to many investors, from individuals to large institutions.

Factors That Affect Treasury Bill Prices

Several factors influence the pricing and yields of Treasury bills:

  • Interest Rates: T-bill yields are closely linked to prevailing interest rates. When interest rates rise, T-bill prices fall, and yields increase, and vice versa.
  • Inflation: Higher inflation expectations can lead to higher T-bill yields as investors demand compensation for the loss of purchasing power.
  • Government Policy: Government fiscal and monetary policy changes can impact T-bill prices. For example, increased government borrowing can drive up yields.
  • Economic Conditions: Economic stability and investor sentiment also influence T-bill pricing. During times of economic uncertainty, T-bill prices may rise due to increased demand for safe-haven assets.

When is the Interest on Treasury Bills Usually Paid?

The interest on Treasury bills, or the discount, is effectively paid upfront. This means that when you purchase T-bills, you pay less than the face value, and the difference between the purchase price and the face value represents your interest earnings. At maturity, you receive the total face value of the T-bill.

Benefits of Treasury Bills

  • Low Risk: T-bills are considered one of the safest investments since the government backs them.
  • Liquidity: T-bills can be easily sold in the secondary market, providing liquidity to investors.
  • Predictable Returns: The returns on T-bills are known at the time of purchase, making them predictable.
  • Accessibility: With a low minimum investment amount, T-bills are accessible to a wide range of investors.
  • Tax Advantages: In some jurisdictions, the interest earned on T-bills may be tax-exempt.

Cons of Treasury Bills

  • Lower Returns: Compared to other investment options like stocks or corporate bonds, T-bills generally offer lower returns.
  • Inflation Risk: While T-bills are low-risk, their returns may not always keep pace with inflation, potentially eroding purchasing power.
  • Reinvestment Risk: If interest rates fall, reinvesting the proceeds from maturing T-bills at the same high yields may be challenging.

How Are T-Bills Different from Treasury Bonds?

While both T-bills and treasury bonds are government debt instruments, they differ in several key aspects:

  • Maturity: T-bills are short-term instruments with maturities of up to one year, while treasury bonds have longer maturities, typically ranging from 10 to 30 years.
  • Interest Payment: T-bills are sold at a discount and do not pay periodic interest, whereas treasury bonds pay semi-annual interest payments.
  • Investment Horizon: T-bills are suitable for short-term investment goals, while treasury bonds are better suited for long-term investments.


Treasury bills in Nigeria offer a secure and reliable investment option for those looking to preserve capital and earn predictable returns. Their low-risk nature, combined with the government’s backing, makes them an attractive choice for conservative investors. However, factors such as inflation and interest rates must be considered when investing in T-bills. Incorporating T-bills alongside other assets can provide stability and liquidity for those seeking a balanced investment portfolio.

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