Treasury bills in Nigeria: what they are and how to buy them

Introduction

A treasury bill (T-bill) is a short-term loan to the Federal Government of Nigeria. You pay less than its face value today and receive the full face value when it matures, and the difference is your return.

Because the government stands behind them, T-bills are generally seen as one of the lowest-risk places to put money in Nigeria. This guide covers how they work, what they cost to buy, the risks, and the ways an everyday investor can get access.

How a T-bill pays you

A T-bill pays no regular interest. You buy it below face value, hold it, and collect the full face value at maturity.

Here is an illustrative example (the numbers are made up to show the mechanics, not a current quote):

Note the two different percentages. The discount rate quoted at auction is measured against face value (₦14,000 ÷ ₦100,000 = 14%), while your actual return is measured against what you paid, so it is higher. When comparing a T-bill with a fund or a savings account, compare the return on what you pay.

Tenors and auctions

T-bills come in three common lengths, called tenors:

• 91 days, about 3 months
• 182 days, about 6 months
• 364 days, about 1 year

The Central Bank of Nigeria (CBN) sells new T-bills at auction on behalf of the government. Investors bid for the price they will pay, and the rates that come out of those bids depend on market conditions and the tenor. That is why T-bill rates move from one auction to the next, and why a rate you read last month may not be on offer today.

Risks to know

T-bills are low risk, not no risk.

• Inflation: Your return can fall behind rising prices. A bill that earns less than inflation loses buying power even though you get every naira back.
• Moving rates: When you buy, your rate is fixed for that bill. If rates rise afterwards, you are locked in until maturity. When your bill matures, the rate on offer for reinvesting may be lower.
• Selling early: You can usually sell before maturity, but the price depends on the market that day and some channels charge fees, so you may get less than you expected.
• Short horizon: With tenors of one year or less, T-bills suit money you will need soon, not long-term goals.
• Not a deposit: T-bills are a government debt instrument, so they are not covered by NDIC deposit insurance the way a bank balance is. The risk to understand is the borrower, which here is the government.

Ways to get access

There is one T-bill, issued by the government, but several routes to it. Each route has its own entry amount, fees and withdrawal terms, so these routes are what you actually compare.

Entry amounts change often, so confirm the minimum and the fees with the provider before you commit.

T-bills versus money market funds

Money market funds often hold T-bills, so the two are related but they work differently.

• What you own: With a T-bill you own a specific bill with a set maturity date. With a fund you own units in a pool, and the fund manager decides what it holds.
• Your return: A T-bill locks in the rate you bought at until maturity. A fund's yield moves as the instruments inside it change.
• Getting your money out: A T-bill pays in full at maturity, and selling early depends on the market. Funds usually let you redeem without a long lock, which is part of why beginners use them.
• Entry amount: Funds often have lower minimums than buying bills directly.
• Cost: Funds charge management fees that come out of the yield, while bills carry dealer margins or platform fees depending on the route.

Neither is a bank deposit, and neither is covered by NDIC insurance.

Tax on T-bill returns

T-bill interest is no longer tax free. In September 2025 the Federal Inland Revenue Service (FIRS) directed banks, stockbrokers and other financial institutions to deduct 10% withholding tax on interest from short-term securities, which includes treasury bills. The same rule ends the earlier exemption for these instruments.

The effect is a lower return than the headline rate. As an example from BusinessDay, an 18% T-bill yield works out to an effective 16.2% after the 10% deduction. Interest on FGN bonds is treated differently and was reported as exempt.

Some details are still unclear, including whether the deduction is final for individuals or can be claimed as a tax credit. Confirm with your provider or a tax adviser before relying on a figure.