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The money market in Nigeria.
The money market is one in the collection of mutual funds that offer high liquidity and short-term maturities.
The arrangement of the money market allows it to open an investor up to investment instruments that are safe – one of the principal factors of investments. The returns for trading assets on the money market are also higher than those of a basic savings account in Nigeria.
Some banks in Nigeria offer money market investment account with a startup rate of a minimum of N5000.
- CBN extends CRMS to Microfinance, Development, other banks
- African Development Bank arm, ALSF, to receive €6 million grant from the Netherlands
The money market vs mutual fund in Nigeria
The money market is a big player in Nigeria’s mutual fund space and in the last years, this space rose both in number and asset value.
NAV Summary Report shows the industry’s asset value in June 2020 grew from N1 trillion to N1.3 trillion.
The contribution of the money market to this growth was primarily seen in the NAV 2019 report when the mutual funds reached trillion Naira.
- FG not adopting flexible foreign exchange rate or NAFEX – CBN
- CBN requirements for innovative products under the regulatory sandbox
The money market is beneficial to regular savers with short to medium-term financial target that would like to grow income. More of the benefits of the money market fund include:
- Low risk and flexibility.
- Yield could rise higher than the inflation rate at some point.
- Compound interest
- Top-up on an investment account at any time is enabled
- Low management fees
- Low starting rate
- The security level is high
- Interest is higher than savings accounts
Things to know about the mutual fund in Nigeria
- Back in 1991 when it started, only one mutual fund was present in Nigeria – Paramount Equity Fund.
- The total net asset value of mutual funds reached N17.5 million at the time.
- By 2019, Nigeria has hit the trillion Naira mark for the total asset value of mutual funds.
- In 2020, the number of mutual funds grew to 106 with an asset value of N1 trillion according to NAV posted by the Security and Exchange Commission, SEC.
- Out of an estimated N481.6 billion that mutual funds had in 2020, money market funds attracted N337 billion. This is according to a report by Quantitative Financial Analytic on mutual funds in Nigeria.
