Money Market Funds Assets Swell to N2.038trn as Investors Chase Yield

The attractiveness of money market funds has continued to grow with assets surging by 17% since the start of 2025 to a record N2.038 trillion, according to Securities and Exchange Commission (SEC) Nigeria statistics.

Money-market funds — which invest in short-term securities like T-bills — also saw their assets swell to a record N1.68 trillion last year as investors sought to benefit from higher Central Bank rates.

Assets surged by 86%, raking in N776 billion in 2024, according to SEC Nigeria data seen by MoneyCentral.

Investor interest in money market funds increased following a return to more orthodox policies by Nigeria’s Central Bank after being held hostage by financial repression type policies favoured by the erstwhile CBN Governor Godwin Emefiele, which kept rates artificially low.

Since Olayemi Cardoso a former Citigroup Inc. executive, became governor in September 2023, the central bank had increased interest rates by 875 basis points to 27.5% to tame inflation, cleared a foreign-exchange backlog and overhauled the country’s exchange-rate policies.

This helped short term securities become more attractive for investors seeking a steady source of income.

The Central Bank last week sold N704 billion ($467 million) of one-year treasury bills at a yield of 18.43%, with investors offering to buy 3.26 times the amount of securities on offer per the bid-to-cover ratio.

The secondary fixed-income market also experienced a predominantly bullish trend, driven by increased investor demand following a notable decline in primary market rates and the MPC’s decision to maintain policy parameters.

“Investors sought to lock in attractive yields, particularly after the recent auction’s sharp moderation in stop rates,” Meristem Securities analysts said.

Yields could see some moderation in coming weeks however as the Central Bank of Nigeria unanimously held rates steady last week on slowing inflation.

The CBN likely paid N1.6 trillion to N2 trillion in interest on T-bills sold in 2024, assuming N8 trillion total issuance at 20.5-25% average rates, according to MoneyCentral estimates.

Inflation (31.9% in Feb ’2024) and a 27.50% policy rate drove yields up, sucking in investors and ballooning interest costs. Money market fund investors would have gotten a chunk of those interest payments since the funds are largely invested in T-Bills.

Fixed Income investments with yields around 18% would still be viewed as more attractive than stocks, which may explain the movement of cash into money market funds. The NGX All-Share Index (NGX-ASI) a broad measure of Nigerian stocks declined by 0.34% in Mondays trading as year-to-date returns narrowed to 5.05%.

Analysts say the CBN is all but certain to continue with its supply of new bills that’s likely to keep yields elevated, as it seeks to maintain naira stability and mop up excess liquidity in the system.

In 2024, the Central Bank of Nigeria (CBN) offered a total of N10.18 trillion in Open Market Operations (OMO) bills, dwarfing the N900 billion and N850 billion offered in 2023 and 2022, respectively.

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