A Treasury Bill is a short loan you make to the federal government. A money market fund is a pool of investors’ money that a fund manager places in Treasury bills and bank deposits. Both pay you for parking cash. They differ on how fast you can get your money back. Their headline rates are also not measured the same way.
This week the numbers on both sides are fresh. Let’s compare them properly.
What does a Treasury bill actually pay?
At the CBN auction on 14 October 2026, the stop rates were 15.50% for the 91-day bill, 15.80% for the 182-day bill and 15.90% for the 364-day bill. The stop rate is the highest rate the Debt Management Office accepted at the auction.
“For a Treasury bill, check the minimum amount with your bank or broker, any handling fees, and whether you can roll the bill over automatically at maturity. A fee of ₦5,000 on a ₦100,000 bill takes 5 percentage points off your return.”
Keep in mind that the stop rate is a discount rate. You do not lend ₦1,000,000 and get ₦1,159,000 back. You pay less than ₦1,000,000 today and receive exactly ₦1,000,000 at maturity. The gap is your interest.
Here is the calculation for the 364-day bill. The discount is 15.90% multiplied by 364/365, which gives 15.8564%. On a ₦1,000,000 bill, that is ₦158,564. So you pay ₦841,436 today. In 364 days, you receive ₦1,000,000.
Now work out the return on the money you actually put in. ₦158,564 divided by ₦841,436 is 18.84%. Adjusted to a full 365-day year, that is about 18.9%. This is the true yield before tax. After the 10% withholding tax, it is about 17.0% (more on that below). Either way, it is always higher than the stop rate, because you earn interest on a smaller sum than the face value.
Read also: Nigeria’s slimming market faces test of trust as ShapesLagos pursues growth
That is why the yields on bills already in the secondary market look higher than the auction headline. A bill maturing on 2 September 2027 was quoted at a pre-tax yield of 18.39% on 14 October.
What does a money market fund pay?
The SEC-tracked average for Nigeria’s 49 money market funds was a week-to-date yield of 17.33% on 2 October 2026, with a range from 10.5% to 21.29%. Vetiva’s money market fund showed a daily effective yield of 17.39% on 15 October 2026.
A week-to-date yield takes what the fund earned in a few days and scales it up to a year. It is a snapshot. It is not a promise. The fund’s yield moves every week as its bills mature and are replaced at new rates. Fund yields are also quoted after the manager’s fees are deducted, so the figure you see is close to what you keep, subject to the tax point below.
So which one pays more?
Use the same ₦841,436 in both and hold for a year. There are two answers, depending on tax.
Outcome A: Before tax.
In the 364-day bill, you get ₦1,000,000 back. Your gain is ₦1,000,000 minus ₦841,436, or ₦158,564.
In a fund earning the 17.33% average for the whole year, your gain is ₦841,436 multiplied by 0.1733, or ₦145,821.
The bill wins by ₦158,564 minus ₦145,821, which is ₦12,743.
Outcome B: After the 10% withholding tax on the bill.
T-bill interest is no longer tax-free. Since November 2025, 10% withholding tax has been deducted at source (SEC circular, 1 July 2025; FIRS directive; Nigeria Tax Act 2025, s.51(5)). FGN bonds remain exempt. Bills do not.
10% of ₦158,564 is ₦15,856. Your gain on the bill falls to ₦158,564 minus ₦15,856, or ₦142,708. On ₦841,436, that is a true yield of about 17.0%, not 18.9%.
The fund still gives ₦145,821 at 17.33%.
Now the fund wins by ₦145,821 minus ₦142,708, which is ₦3,113.
So before tax, the bill is ahead by ₦12,743. After tax, the two are close, and the fund edges it by about ₦3,113.
One caution on that fund figure. Published money market fund yields are typically reported after the manager’s fees. The fund’s own investments are also subject to withholding tax, but how that shows up in the quoted yield varies from fund to fund. Check your fund’s factsheet before you compare. And remember that ₦3,113 on ₦841,436 is less than half a percentage point. A small move in the fund’s yield over the year can wipe it out.
What the bill does give you is certainty. With the bill, your cash is locked in until maturity unless you sell it in the secondary market, and that usually means going through a bank or stockbroker at whatever price is on offer that day. With the fund, you can get your money out within a day or two, but the rate is not fixed.
There is a second point. The fund’s yield will not stay at 17.33%. The CBN cut the Monetary Policy Rate to 23% in September, and the 364-day stop rate has fallen from a third-quarter peak of 17.70% on 8 July to 15.90%. As the fund’s older, higher-yielding bills mature, it buys new ones at lower rates, and its yield drifts down. The bill locks in today’s rate for 364 days. When rates are falling, that lock is worth something.
What about inflation?
Headline inflation was 14.63% in September 2026. Subtract it from the bill’s after-tax true yield of about 17.0%, and your real return is about 2.4 percentage points. Before tax, at 18.9%, it would be about 4.3 points. On the fund’s average of 17.33%, it is about 2.7 points. Both beat inflation today. Both are positive in real terms only as long as inflation stays where it is.
Which one fits your money?
Ask what the money is for. That question decides the choice better than the rate does.
Take Chiamaka, a nurse in Enugu. She has ₦600,000 saved as her emergency fund, which is about three months of her expenses, and another ₦900,000 for her daughter’s school fees due next September.
The emergency fund belongs in a money market fund. An emergency does not wait for a maturity date. If her car breaks down in February, she needs the cash that week. Giving up some yield for access is a fair trade for this money.
The school fees money can go into a bill that matures before the fees fall due. She knows the date. She knows the amount. A 182-day or 364-day bill bought now matures in time, and she locks in today’s rate. If she needs ₦900,000 at maturity, she can work backwards: at an after-tax true yield near 17.0%, she would invest about ₦769,000 today, since ₦900,000 divided by 1.170 is about ₦769,000.
What should you check before you invest?
For a treasury bill, check the minimum amount with your bank or broker, any handling fees, and whether you can roll the bill over automatically at maturity. A fee of ₦5,000 on a ₦100,000 bill takes 5 percentage points off your return.
For a money market fund, check that it is registered with the SEC and how long withdrawals take. Then compare its yield with the average over several weeks rather than one. A fund that tops the table this week may not top it next week. Do not chase a 21% yield without knowing what the fund holds.
In closing, before tax, the bill pays more. After the 10% withholding tax, the fund edges it by about ₦3,113 on ₦841,436, a margin that can vanish if fund yields keep falling. With a gap this small, the higher rate is the wrong place to start. The date on which you need the money is the right one.
Education only, not financial advice.
Kalu A. Aja is a Certified Financial Education Instructor and an astute professional with over 27 years of experience spanning capital market operations, treasury, investment, asset management, and occupational pension services. Do follow on X: @FinPlanKaluAja1
Related News
