The Central Bank of Nigeria has reopened its Open Market Operations securities to retail and corporate investors, a step that could intensify competition for capital between fixed-income instruments and listed equities. The policy, set out in a circular dated 12 August 2026, allows individuals, companies and non-bank financial institutions to take part in both the primary and secondary OMO markets through deposit money banks.
The decision reverses a restriction imposed in 2019 and gives domestic investors direct access to one of the apex bank’s main tools for managing liquidity. While the move expands investment options, attention is focusing on its possible effects on the Nigerian Exchange, particularly because OMO securities are currently delivering yields well above those on comparable treasury bills.
OMO Yields Outpace Treasury Bills
At the treasury bills auction held on 12 August, investors submitted about N4.4 trillion in bids against N700 billion on offer. The 91-day bill cleared at 16.30 per cent, the 182-day instrument at 16.50 per cent and the 364-day bill at 17.59 per cent.
Demand was even stronger the following day for OMO securities. Investors put in N4.93 trillion for an initial N600 billion offered by the Central Bank, which eventually allotted about N2.60 trillion. The 103-day OMO bill cleared at 20.39 per cent, while the 138-day instrument yielded 20.01 per cent.
The gap means investors can currently earn roughly three to four percentage points more from comparable OMO instruments than from treasury bills.
Potential Shift of Funds from Equities
Emerging markets analyst Ike Ibeabuchi noted that some funds previously placed in deposits, treasury bills and other money-market instruments could move toward OMO securities. “This has the capacity to create a higher return threshold for equities, particularly stocks with weak earnings growth, low dividend yields or valuations that do not adequately compensate investors for the additional risks associated with equities,” he said.
Other analysts expect the immediate effect to be stronger demand for OMO paper, though not necessarily lower OMO yields. The eventual impact on the equities market will therefore depend on how far those yields decline as participation widens.
Greater Differentiation Across the NGX
Experts suggest that companies with weak earnings, limited dividend prospects or stretched valuations could face increased pressure as investors gain access to a relatively lower-risk instrument offering higher returns. Rather than triggering a broad sell-off, the reopening of OMO is more likely to deepen differentiation across the Nigerian Exchange.
Abuja-based economist Nonso Iheoma observed that investors may increasingly “demand a clear risk premium before committing funds to equities, making corporate earnings, dividend performance and valuation more important in determining where capital flows.”
For the naira and Nigerian businesses, the policy reinforces the Central Bank’s efforts to absorb excess liquidity and keep interest rates attractive. Listed companies that cannot support their valuations with stronger earnings may find it more difficult to attract local capital as safer, higher-yielding alternatives become available to everyday investors.
