Nigerian businesses are sitting on idle cash that could be working harder for them. Between delayed payments, seasonal revenue spikes, and reserves for future expansion, most companies hold ₦500,000 to ₦50 million in current accounts earning barely 2-3% annually—while inflation erodes 20%+ of that value every year.
This comprehensive guide shows you exactly where businesses should put their money in 2026. We'll break down investment options tailored for corporate entities, compare returns across different vehicles, explain regulatory requirements, and provide step-by-step strategies for building investment portfolios that protect and grow your business wealth.
Business investment means deploying your company's excess cash into financial instruments that generate returns while maintaining accessibility for operational needs. Unlike personal investing focused on long-term wealth building, business investment balances three objectives: capital preservation, liquidity management, and yield optimization.
Inflation Protection - At 23.71% inflation (April 2025), every ₦1 million left in a savings account loses ₦237,100 in purchasing power annually. Money market funds delivering 22-24% preserve capital value while savings accounts guarantee wealth destruction.
Opportunity Cost of Idle Cash - Nigerian businesses collectively hold billions in current and savings accounts earning 2-4%. Moving just half that capital to money market funds would generate hundreds of millions in additional profits across the economy.
Tax-Free Returns for Individuals, Strategic for Corporates - While individual investors enjoy tax-free investment income, corporates benefit from lower effective tax rates on investment income compared to operational profit. A well-structured investment strategy reduces overall tax burden legally.
Liquidity Without Sacrifice - Modern investment vehicles offer T+1 or T+2 liquidity (funds available in 1-2 days). Businesses can earn 20%+ returns while maintaining practical access to capital for opportunities or emergencies.
SMEs with seasonal revenue - Restaurants and retail businesses experience Q4 spikes. Instead of leaving December profits idle until March expenses, invest in money market funds earning 5-6% in those three months.
Professional services firms - Law firms, consultancies, and agencies with project-based billing often have ₦2-10 million in accounts awaiting deployment. Money market funds turn waiting capital into working capital.
Manufacturers with inventory cycles - Production businesses with 60–90-day inventory cycles can invest working capital during manufacturing phases, earning returns during the period between raw material purchase and finished goods sale.
Startups with fundraising proceeds - Companies raising ₦50-500 million don't deploy all capital immediately. Treasury bills and money market funds ensure fundraising proceeds grow rather than depreciate during the 12–24-month deployment period.
Established companies building reserves - Mature businesses accumulating capital for expansion, acquisitions, or equipment purchases can earn double-digit returns while maintaining strategic flexibility.
Compare investment returns across vehicles on our investment comparison tool.
Business investment in Nigeria operates through regulated financial instruments managed by Securities and Exchange Commission (SEC) licensed fund managers. Here's the complete process:
Core Investment Process
Step 1: Corporate KYC & Account Opening - Businesses provide CAC documents, board resolutions, and authorized signatories to open investment accounts with fund managers or asset management companies (15 minutes - 3 days depending on provider).
Step 2: Fund Transfer - Transfer capital from business bank account to investment account. Most fund managers accept transfers from any Nigerian bank (same-day processing).
Step 3: Investment Selection - Choose investment vehicles based on timeline, risk tolerance, and liquidity needs. Options range from overnight funds to multi-year bond allocations.
Step 4: Returns Generation - Investments generate returns through interest (money market/fixed income), capital gains (equity funds), or dividends (balanced funds). Returns compound automatically unless you opt for periodic distributions.
Step 5: Redemption - Withdraw funds when needed. Money market funds offer T+1 liquidity, equity funds typically T+3; fixed income varies by tenure.
|
Vehicle |
How It Works |
Typical Returns |
Liquidity |
Minimum |
|
Money Market Funds |
Pooled investment in Treasury bills, commercial papers, bank placements |
21-24% annually |
T+1 (next day) |
₦5,000-50,000 |
|
Fixed Income Funds |
Government and corporate bonds, longer-term securities |
17-30% annually |
T+3 to T+7 |
₦10,000-100,000 |
|
Equity Funds |
Nigerian Stock Exchange listed stocks |
30-90% annually (high volatility) |
T+3 to T+5 |
₦10,000-100,000 |
|
Treasury Bills |
Direct government securities, 91–364-day terms |
18-22% depending on term |
At maturity only |
₦50,000 minimum |
|
Fixed Deposits |
Bank-issued term deposits |
8-15% annually |
At maturity, early exit penalties |
₦100,000 minimum |
|
Dollar Funds |
USD-denominated investments |
4-8% in USD + Naira appreciation |
T+1 to T+5 |
$100-1,000 |
Choose Money Market Funds if your business:
Money market funds invest in: Treasury bills (25-40%), commercial papers (20-30%), fixed deposits with banks (25-35%), and banker's acceptances (5-15%).
Top-performing money market funds: Coronation Money Market (23.74%), EDC Money Market (24.98%), ARM Money Market (21.97%), FBN Money Market (21.77%).
Choose Fixed Income Funds if your business:
Fixed income funds invest in: Federal Government bonds (40-60%), corporate bonds from blue-chip companies (25-40%), treasury bills (10-20%).
Typical returns: 17-22% annually with low volatility, ideal for conservative business treasuries.
Choose Equity Funds if your business:
Equity funds invest in: Nigerian Stock Exchange listed companies across banking, consumer goods, oil & gas, telecommunications, and industrial sectors.
Recent performance: Top equity funds like Halo Equity Fund achieved 90%+ returns in H1 2025, though with significant volatility.
Choose Treasury Bills if your business:
Treasury bill terms: 91-day (short-term), 182-day (medium-term), 364-day (long-term). Rates vary with CBN monetary policy.
Choose Dollar Funds if your business:
Dollar fund returns: 4-8% in USD terms + potential Naira appreciation gains. When Naira weakens from ₦1,500 to ₦1,600, your dollar holdings gain 6.67% in Naira terms plus the underlying USD return.
Scenario: A Digital Agency Optimizing Cash Flow
TechFlow Digital, a Lagos-based marketing agency, maintains ₦8 million in their business current account for payroll, contractors, and operational expenses. Their average monthly expenses are ₦3 million, meaning ₦5 million sits idle most months earning 3% (₦150,000 annually).
Their solution: They moved ₦5 million to ARM Money Market Fund earning 21.97% annually while keeping ₦3 million in their operating account. Returns: ₦1,098,500 annually instead of ₦150,000—a gain of ₦948,500. With T+1 liquidity, they accessed funds the one time they needed extra capital within 24 hours.
Key lessons: Businesses don't need 100% capital liquid. Identify your true monthly maximum cash need, invest the rest in money market funds.
Investment Fees in Nigeria
|
Fee Type |
Money Market Funds |
Fixed Income Funds |
Equity Funds |
Treasury Bills |
|
Management Fee |
0.5-1.5% annually |
1-2% annually |
1.5-2.5% annually |
None (direct) |
|
Entry Fee |
None |
None to 1% |
None to 2% |
Discount from face value |
|
Exit Fee |
None after 30 days |
None after 90 days |
None after 90 days |
N/A |
|
Performance Fee |
None |
Sometimes 10-20% above benchmark |
10-20% above benchmark |
None |
|
Custody Fee |
Included |
Included |
Included |
Bank charges if held |
✅ Choose low-fee fund managers - Fees vary 0.5-2.5% even for similar returns. Use our comparison tool to find best value.
✅ Avoid frequent redemptions - Most funds charge penalties for exits within 30-90 days. Plan investment horizons carefully.
✅ Negotiate institutional rates - Businesses investing ₦50M+ can often negotiate lower management fees (0.5-1% vs standard 1.5-2%).
✅ Consider direct treasury bills - For amounts over ₦5M, buying T-bills directly through a broker eliminates management fees entirely.
✅ Monitor performance fees - Some funds charge 10-20% of returns above benchmark. Calculate the total cost of ownership, not just management fees.
[CTA BUTTON: "Compare Investment Fees"] Links to: https://nairacompare.ng/investments
A Decision Framework for Nigerian Businesses
Calculate your maximum monthly cash outflow over the past 12 months. Add 20% buffer. This is your minimum operating fee. Everything above can be invested in.
Example: If your highest monthly expenses were ₦5M, keep ₦6M liquid (₦5M + 20%), invest the rest.
|
Time Horizon |
Recommended Vehicles |
Rationale |
|
0-3 months |
Money market funds only |
Need immediate access, can't risk volatility |
|
3-12 months |
Money market (70%) + Fixed income (30%) |
Balance liquidity with slightly higher returns |
|
1-2 years |
Fixed income (60%) + Money market (40%) |
Optimize returns while maintaining reasonable access |
|
2-5 years |
Balanced funds (40%) + Fixed income (30%) + Equity (30%) |
Growth focus with diversification |
|
5+ years |
Equity (50%) + Fixed income (30%) + Money market (20%) |
Maximum growth potential with strategic allocation |
Startups (0-2 years):
Growth Stage (2-5 years):
Mature Businesses (5+ years):
Corporates pay tax on investment income at company income tax rate (30% for medium businesses, 20% for small businesses with turnover under ₦25M).
Strategic approach: Use tax-loss harvesting in equity portfolios. Offset capital gains with capital losses to minimize tax burden legally.
Don't put all capital with one fund manager. Spread your money across multiple ones, as this reduces single-manager risk and lets you compare performance directly.
Step 1: Conduct Financial Analysis (1-2 hours)
Pull your last 12 months of bank statements. Calculate:
Example analysis:
Step 2: Set Investment Objectives (30 minutes)
Define what you're investing for:
This determines which vehicles to use and allocation percentages.
Step 3: Select Fund Managers (1-2 hours research)
You can filter by:
Red flags: Fund managers with <2 years of history, consistent underperformance vs peers, unclear fee structures, difficult redemption processes.
Green flags: SEC licensed, 5+ year track records, transparent reporting, rated by Agusto & Co or similar agencies.
Step 4: Prepare Corporate Documents (30 minutes - 1 day)
Gather required documents:
Most fund managers accept scanned copies for initial application, originals for verification.
Step 5: Open Investment Account (2-5 business days)
Online process (most fund managers now offer this):
Offline process:
Processing time: 2-5 days for first account, same day for subsequent investments.
Step 6: Fund Your Investment (Same day)
Transfer from your business bank account to your new investment account. Most fund managers accept:
Important: Funds must come from the registered corporate bank account. Third-party transfers are rejected for compliance reasons.
Processing: Funds received before 2 PM usually start earning same-day. After 2 PM typically start T+1.
Step 7: Select Investment Products (30 minutes)
Log into your investment account portal or call your relationship manager. Choose from available funds based on your strategy.
Step 8: Monitor & Rebalance (Monthly review)
Set up monitoring:
Step 9: Redemption When Needed (1-5 business days)
To withdraw funds:
✅ Inflation Protection - 22% money market returns vs 23% inflation means real capital preservation. Savings account at 3% means 20% annual wealth destruction.
✅ Enhanced Profitability - Investment income improves overall business profitability. A company with ₦50M in reserves earning ₦10M annually from investments has stronger financials than one earning ₦1.5M in savings.
✅ Strategic Flexibility - Investment returns create additional capital for opportunities. That unexpected equipment deal, distressed competitor acquisition, or key hire becomes possible with accumulated investment gains.
✅ Tax Optimization - Structure investment portfolios to minimize tax burden. Work with tax advisors to maximize after-tax returns legally.
✅ Financial Discipline - Formal investment strategy forces treasury management discipline. Companies track cash flows more carefully when optimizing investment allocations.
✅ Founder Wealth Building - Business investment builds wealth beyond operational profits. Founders of companies with mature investment portfolios have 30-40% more net worth than peers who ignore treasury management.
Critical Risks
Investing operational capital in instruments you can't access when needed.
How to avoid: Maintain 30-40% of total reserves in T+1 money market funds. Never invest payroll or imminent obligation funds in equity or long-tenor instruments.
If your fund manager faces issues, all your investment capital is at risk.
How to avoid: Spread capital across 3-4 fund managers. Maximum 40% with any single manager.
Trying to predict market peaks/troughs in equity investments leads to poor returns.
How to avoid: Dollar-cost average into equity positions over 6-12 months rather than lump-sum investments. Maintain disciplined rebalancing schedules regardless of market sentiment.
A 2% annual fee on ₦50M investment = ₦1M per year. Over 5 years, that's ₦5M+ in eroded returns.
How to avoid: Compare management fees actively. Switch managers if fees exceed 1.5% for money market, 2% for fixed income, or 2.5% for equity without commensurate outperformance.
Panicking during market volatility and redeeming equity investments at losses.
How to avoid: Only invest in equity funds with capital you won't need for 3+ years. Accept volatility as part of equity exposure. Review quarterly, not daily.
✅ Never invest capital needed within 30 days
✅ Maintain emergency reserves outside investments
✅ Diversify across fund types (money market + fixed income)
✅ Diversify across fund managers (3-4 minimum)
✅ Review performance quarterly, not daily
✅ Rebalance when allocation drifts 10%+ from target
✅ Keep detailed records for tax reporting
✅ Work with financial advisor for complex portfolios
Securities and Exchange Commission (SEC) Oversight
All mutual funds (money market, fixed income, equity, balanced) must be registered with SEC. Licensed fund managers undergo regular audits and must maintain minimum capital requirements.
What this means for your business:
Verify fund manager registration: Check SEC's website or ask fund manager for registration number before investing.
Tax treatment for companies:
Example tax calculation:
Tax planning strategies:
Compliance Requirements
Record-Keeping:
Reporting:
Corporate Governance:
Potential developments:
Stay updated on regulatory changes through our investment news section.
Nigerian businesses actively managing investment portfolios generate 15-25% more capital for growth compared to those leaving cash idle.
Sole traders and micro businesses: Start with money market funds. Keep operating expenses plus 20% buffer liquid, invest the rest earning 20-24% annually with next-day access.
Small businesses (₦5M-50M reserves): Follow the 70-20-10 rule: 70% money market, 20% fixed income, 10% strategic holdings. Delivers 18-22% returns with quick access to funds.
Established companies (₦50M+ reserves): Add 10-15% dollar fund allocation if you have foreign currency exposure. When Naira weakened from ₦1,400 to ₦1,600 in 2025, dollar allocations earned an extra 14% from currency movement. Consider direct treasury bills above ₦5M to cut management fees.
Is it safe for my business to invest in mutual funds?
Yes, with SEC-registered fund managers. Capital is held by independent custodians, but returns aren't guaranteed.
How much should my business invest vs keep liquid?
Keep 100% of maximum monthly expenses plus 20% buffer. Invest everything above that.
What returns can my business expect?
Money market: 20-24%. Fixed income: 17-22%. Equity funds: 30-90%. Treasury bills: 18-22%. All beat savings accounts (3-4%) by 5-7x.
How quickly can I access funds?
Money market: Next day. Fixed income: 3-7 days. Equity: 3-5 days. Treasury bills: Locked until maturity (91-364 days).
What fees do funds charge?
Management fees: 0.5-2.5% annually. Most have no entry fees. Some charge exits penalties within 30-90 days.
Should my business invest in naira or dollar funds?
Primary allocation in Naira. Add 10-15% dollar funds if you import supplies, pay foreign contractors, or want currency hedging.
What documents are needed to start?
CAC certificate, board resolution, director IDs, bank statement, TIN. Account opens in 2-5 days.
How do investments affect taxes?
Investment income is taxable at 20-30%. Withholding tax of 10% deducted at source.
Best Performing Mutual Funds in Nigeria 2025
Quarterly updated rankings across all fund categories with performance analysis.
Understanding Treasury Bills for Businesses
Complete guide to direct treasury bill investment for corporate treasuries.
Money Market Funds vs Fixed Deposits
Side-by-side comparison helping businesses choose optimal short-term investment vehicles.
Ready to Put Your Business Capital to Work? Stop losing 20%+ annually to inflation and start earning 20-24% returns on your excess cash while maintaining liquidity for operations.
This guide is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice.