Quick Summary
Nigerian companies lose billions of naira annually by leaving idle cash in current accounts while inflation erodes value. With the CBN benchmark rate at 26.5% as of August 2026, the opportunity cost of uninvested cash is at a historic high. This guide explains the regulatory boundaries for corporate investing in Nigeria — the CBN and SEC approved instruments where cash can go, the absolute red lines to avoid, and a step-by-step framework for drafting a compliant Investment Policy Statement (IPS). It also compares two SEC-registered money market funds with verifiable costs to help treasury teams make informed decisions.
Quick Answer
A compliant Investment Policy Statement for a Nigerian company must restrict investments to instruments approved by the CBN and the Securities and Exchange Commission (SEC) Nigeria. The most accessible regulated vehicles are SEC-registered Money Market Funds (e.g., Stanbic IBTC Money Market Fund from ₦5,000, AVA GAM Money Market Fund from ₦20,000) and CBN-eligible government securities (Nigerian Treasury Bills, FGN Bonds, OMO Bills). Anything outside this list — unregistered schemes, unapproved digital assets, or unrated commercial paper — is a red line your treasury should never cross.
Key Takeaways
- Only invest through vehicles registered with SEC Nigeria — unregistered schemes are illegal.
- CBN eligible instruments include NTBs, FGN Bonds, OMO Bills, and other government securities.
- Commercial papers require a minimum investment-grade rating and are restricted to qualified investors.
- Unregulated cryptocurrencies, unrated CPs, and loans to related parties are absolute red lines.
- Draft your IPS with clear objectives, eligible instruments, counterparty limits, and liquidity buckets, then get board approval.
The Regulatory “Can Go” List – CBN & SEC Approved Instruments
1.1 The Investments and Securities Act 2025
The legal foundation for corporate investing in Nigeria is the Investments and Securities Act 2025 (Act No. 2). This Act establishes the SEC Nigeria as the apex regulatory authority for the Nigerian capital market, repealing the previous Investments and Securities Act 2007. Under the ISA 2025, all Collective Investment Schemes (CIS) must be authorised and registered with the SEC before they can be offered to the public. Source: SEC Nigeria — Investments and Securities Act 2025
For your IPS, this means one thing: only invest through vehicles that are registered with SEC Nigeria. If a fund manager cannot show you a valid SEC registration certificate, that investment has no place in your corporate treasury.
1.2 CBN Eligible Instruments for Custodianship
The CBN Guidelines for Custodianship in Money Market and Other Fixed Income Instruments explicitly list where corporate cash can be placed. According to the Guidelines, eligible instruments include:
- Nigeria Treasury Bills (NTBs)
- FGN Bonds
- Federal Republic of Nigeria (FRN) Bonds
- Treasury Certificates
- Open Market Operation (OMO) Bills
- CBN Certificates
- Securities issued by government at all levels, corporate organisations, government agencies and parastatals
Source: CBN Guidelines for Custodianship in Money Market and Other Fixed Income Instruments
These are the only instruments a compliant IPS should authorise for idle cash. The Guidelines also set a maximum custody fee of 0.35% per annum, charged monthly, with a transaction cost of ₦500 per transaction. Custodian banks may share up to 20% of revenue with a non-custodian bank that appointed them. Source: CBN Guidelines for Custodianship
1.3 The OAGF Circular for Government MDAs
While this guide focuses on private companies, the Federal Treasury Circular issued by the Office of the Accountant-General of the Federation (OAGF) in 2009 remains a useful benchmark. It requires all government MDAs to invest idle balances in 91-day Primary Market NTBs, with 50% of idle overhead balances invested in 30, 45, or 60-day NTBs. Realised interest must be remitted to the Consolidated Revenue Fund at the CBN. Source: OAGF Federal Treasury Circular 2009
Private companies are not bound by this circular, but it shows the conservative, low-risk approach that regulators expect for public-sector cash. Your IPS can adopt a similar philosophy: prioritise capital preservation and liquidity over yield. For more on low-risk options, see our guide on Best Money Market Funds in Nigeria: Returns, Fees and Liquidity Compared.
1.4 Commercial Papers: The Corporate Debt Option
For larger treasury teams, Commercial Papers (CPs) offer another regulated avenue. According to FMDQ Exchange’s Commercial Papers FAQs, CPs are unsecured short-term instruments issued by corporates with:
- Minimum size: ₦100 million (in multiples of ₦50 million thereafter)
- Tenor: 15 to 270 days
- Rating requirement: Minimum investment-grade rating from a credit rating agency registered with SEC Nigeria
Source: FMDQ Exchange — Commercial Papers FAQs
Importantly, “clean” CPs (those without credit enhancement) can only be sold to Qualified Institutional Investors (QIIs) and Eligible Investors (EIs) upon a risk declaration. Source: FMDQ Exchange — Commercial Papers FAQs
If your company is not a QII or EI, your IPS should restrict CP investments to rated, FMDQ-listed issuances only. For a broader view of regulated investment options, read our Mutual Funds in Nigeria: Your Complete Guide to Money Market, Balanced, Equity & Dollar Funds.
The Absolute “Cannot Go” List – Red Lines for Nigerian Companies
Just as important as knowing where your cash can go is knowing where it cannot go. Here are the red lines:
2.1 Unregistered Collective Investment Schemes
SEC Nigeria defines Collective Investment Schemes as including Unit Trusts, Venture Capital Funds, Open-ended Investment Companies, Real Estate Investment Schemes, and Specialized Funds. All schemes must be authorised by SEC and registered with the Commission. Any scheme operating without SEC registration is illegal. Source: SEC Nigeria — FAQs on Collective Investment Schemes
Before investing a single naira, ask the fund manager for their SEC registration number and verify it on the SEC website. If they cannot provide one, walk away. For more on verifying investment platforms, see Safest Investment Apps in Nigeria 2026: How to Verify SEC Status and Protect Your Money.
2.2 Unregulated Cryptocurrencies and Digital Assets
The CBN and SEC have not approved unregulated cryptocurrencies or digital assets for corporate treasury investment. While the SEC has introduced a regulatory framework for virtual assets, the status remains uncertain for most tokens. Your IPS should explicitly prohibit investing idle cash in any digital asset that is not approved by the SEC and CBN.
2.3 Unrated or Unlisted Commercial Paper
As noted above, CPs must have a minimum investment-grade rating from an SEC-registered credit rating agency. Do not invest in CPs issued by companies without a valid rating, no matter how attractive the yield looks.
2.4 Loans to Related Parties
Your IPS should also prohibit lending company funds to directors, shareholders, or related companies unless expressly approved by the board and structured as a documented, interest-bearing transaction. This is a common source of fraud and regulatory breach.
Top Investment Companies & Verifiable Naira Costs (Comparison Framework)
To help you compare, here are two SEC-registered money market funds with verifiable costs. These are examples, not endorsements.
3.1 Stanbic IBTC Capital – SIMM Money Market Fund
Stanbic IBTC Money Market Fund (SIMM) is an SEC Nigeria-registered open-ended unit trust that invests 100% in money market instruments. Key details:
- Minimum investment: ₦5,000
- Management fee: 1.5% per annum
- Minimum holding period: 30 days
- Distributions: Quarterly
- Credit rating: Aa–(f) by Augusto & Co.
Source: Stanbic IBTC Capital — Money Market Fund
3.2 AVA Capital Group – AVA GAM Money Market Fund
AVA GAM Money Market Fund is an SEC Nigeria-registered open-ended fund investing in treasury bills, fixed deposits, commercial papers and other low-risk securities. Key details:
- Offer price: ₦1.00 per unit
- Minimum entry: 20,000 units (₦20,000)
- Subsequent investments: 5,000 units
- Available to: Corporate treasury teams, HNIs, trustees, foundations
Source: AVA Capital Group — AVA GAM Money Market Fund
3.3 Comparison Table
| Provider | Instrument | Minimum Investment | Management Fee | Key Features | Source |
|---|---|---|---|---|---|
| Stanbic IBTC Capital | SIMM Money Market Fund | ₦5,000 | 1.5% p.a. | 100% money market; 30-day min hold; quarterly distributions; rated Aa–(f) | Stanbic IBTC |
| AVA Capital Group | AVA GAM Money Market Fund | ₦20,000 (20,000 units at ₦1.00) | Not disclosed | Open-ended; available to corporates, HNIs, trustees, foundations | AVA Capital |
Note: Always confirm the current management fee and expense ratio with the fund manager before investing. Fees reduce your net return.
Step-by-Step Framework for Drafting Your IPS
Now that you know the regulatory boundaries, here is a practical framework for drafting your company’s IPS.
- Step 1: Define Objectives and Risk Tolerance — Ask yourself: Is this cash for working capital, a specific project, or a rainy-day reserve? Your IPS should state a clear objective, e.g., “The primary objective is capital preservation and liquidity, with secondary emphasis on yield.”
- Step 2: Set the Eligible Instruments List — Based on Section 1, list the instruments your company is allowed to invest in. For example: Nigeria Treasury Bills (91-day, 182-day, 364-day), FGN Bonds, OMO Bills, SEC-registered Money Market Funds, fixed deposits with NDIC-licensed banks (up to the NDIC limit), and rated Commercial Papers (minimum investment-grade).
- Step 3: Set Counterparty Limits — Define maximum exposure to any single bank, fund manager, or issuer. For example: no more than 25% of the portfolio in a single bank’s fixed deposit, no more than 50% in a single money market fund, no more than 10% in a single commercial paper issuer.
- Step 4: Define Liquidity Requirements — Map your cash flow forecast and set liquidity buckets: at least 30% of the portfolio in instruments maturing within 30 days, at least 70% within 90 days, and no more than 30% in tenors beyond 12 months.
- Step 5: Approve the IPS at Board Level — Your board of directors must formally approve the IPS. This is a fiduciary requirement under the Companies and Allied Matters Act 2020 (CAMA). The IPS should be signed by the Managing Director and the Chief Financial Officer, and reviewed annually.
- Step 6: Implement and Monitor — Once approved, open accounts with your chosen fund managers. Be prepared to provide: Certificate of Incorporation, Board resolution authorising the investment, BVN of all directors and signatories, and NIN of individual signatories (as part of KYC). Source: SEC Nigeria — FAQs on Collective Investment Schemes
- Step 7: Review and Update — Your IPS is a living document. Review it quarterly, or whenever there is a significant change in CBN policy, SEC regulation, or your company’s cash flow position.
For more on tax implications of corporate investments, see Tax on Investments in Nigeria: Dividends Capital Gains Withholding Tax and Dollar Funds.
Frequently Asked Questions (FAQ)
What is an Investment Policy Statement?
Can a Nigerian company invest in cryptocurrencies?
What is the minimum amount to invest in a money market fund?
Are money market funds in Nigeria safe?
Do we need a board resolution to invest?
What are the tax implications of corporate investments?
What to Do Next
Common Pitfalls to Avoid
Even with a solid IPS, many Nigerian companies fall into these traps. Here is how to sidestep them:
- Chasing Yield Without Liquidity: Never invest more than 30% of your portfolio in tenors beyond 90 days unless you have a confirmed cash flow buffer.
- Ignoring Counterparty Concentration: Diversify across at least three SEC-registered fund managers and two different banks. Use the counterparty limits in your IPS as a hard ceiling.
- Overlooking KYC and Documentation Delays: Prepare your KYC documents before you approach any fund manager. Have your board resolution pre-approved with a generic investment mandate.
- Treating the IPS as a One-Time Exercise: Set a calendar reminder to review your IPS every 90 days, and after every MPC meeting.
Final Word: Make Your Cash Work for You
Your company’s idle cash is not a trophy—it is a tool. By following the framework in this guide, you can turn a dormant current account balance into a steady income stream without sacrificing safety or liquidity. The Nigerian investment landscape offers enough regulated, low-risk options to suit any corporate treasury. The key is discipline: stick to your IPS, monitor your portfolio, and review regularly. Your bottom line will thank you.
This article is for educational purposes only and does not constitute investment, legal, or tax advice. Always conduct due diligence and consult qualified professionals before making investment decisions.