How to Invest in Commercial Papers in Nigeria and Reap High Returns

  Are you looking for a relatively low-risk investment that could deliver high returns? One of the best options of this kind is commercial papers. With yields of up to 24% on offer from some of the country’s most stable large-scale businesses, they have become a favourite for smart investors. If you’d like to tap into opportunities of this sort, you’ll want to know how to invest in commercial papers.

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In the past few years, corporate organisations have increasingly turned to issuing commercial papers as a way to finance their operations in the short term. Wealthy Nigerians and institutional investors, seeing the returns that could be made, have bought into them. Now, thanks to a number of digital platforms, lower-income people can reap the benefits too. This article lays out the basics of commercial papers and lets you know how you can invest in them.

What is a Commercial Paper?

A commercial paper is a short-term debt instrument that companies issue with the aim of raising funds to finance their operations. Investors purchase the commercial paper from the issuing company, which utilises proceeds from the sale to finance inventory, payroll, and other immediate needs. Corporate organisations may secure financing via commercial papers as an alternative to bank loans if they consider the former to be more favourable. One attractive thing about commercial papers is that they have a short maturity period. They are especially sought after if they are presented by companies with a solid reputation.

Facts about Commercial Papers 

Here are a few things about commercial papers you need to know:

• They are not backed by collateral; investors, therefore, rely on the issuing companies’ historical and current stability as a basis for evaluating the quality of potential investments
• Commercial papers usually have a short maturity period, with most falling within the 30 to 90 day range; some may be as long as 270 days
• The ‘yield’ of this investment type is, in fact, the value of the discount applied to the commercial paper at sale; it is the difference between the face value of the commercial paper and its price at sale
• It can be traded in the money market, where short-term debt instruments (including treasury bills and certificates of deposit) are bought and sold
• Commercial papers are regulated by the Securities and Exchange Commission (SEC)

How to Invest in Commercial Papers in Nigeria

If you would like to invest in commercial paper, you can do so in one of these ways:

Asset Management Firms

Firms like ARM Investment Managers, Coronation Asset Managers, and CardinalStone Partners can help you access and manage investments in commercial papers. You can visit their websites to find out more.

Request Assistance from Your Bank

You can consult your bank for further information and guidance on how to invest in commercial papers in Nigeria. They will provide you with the currently available options, including issuers, duration, and yields. Most traditional financial institutions in Nigeria may specify a minimum investable amount for commercial papers. The figure is often around ₦1 million. If you don’t have that much money at your disposal, you may try the next option:

Digital Investment Platforms

Besides convenience, a major selling point for digital investment platforms is that they lower the barrier of entry for would-be investors. This is true for commercial papers. A number of these platforms are making it possible for low-income people to access opportunities of the kind discussed in this article.

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Assetbase, I-Invest, and Trove all offer commercial papers from various companies in Nigeria. You may invest with as little as ₦50,000, and enjoy similar rates of return with investors who boast deeper pockets.

Steps You Should Take Before Investing in Commercial Papers

You should do the following before investing in a commercial paper in Nigeria:

Understand How the Market Works

The standard advice for all investment types applies here as well: understand the opportunity before deciding whether or not to invest in it. Things you’ll want to acquaint yourself with include the finances of the issuers, the historical returns they have recorded, and the risks associated with offerings.

Register with a Broker

Make sure that your investments are done through a broker registered with the SEC and platforms that are regulated by the appropriate authorities. You can begin investing after registering and opening an account with them.

Evaluate the Opportunity

Things you should check for are the reputation of the issuer, the state of their business, and their credit rating (which indicates their ability to repay). Do not invest in a company’s commercial paper if it shows signs of financial distress or is constantly struggling in its market.

Decide How Much Money You Will Invest

This is entirely up to you. However, make sure you already have emergency funds saved up and stashed away beforehand. There’s always a risk of losing money, even with supposedly safe investments, and you don’t want to be left stranded if things do not go as you expect.

Monitor Your Investment

Track your investments as they approach maturity. This is probably easier to do if you’re invested through a digital platform. If you are working with a bank or traditional broker, you can ask your account officer for information.

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Final Words

Now that you know how to invest in commercial papers, it’s time to put that knowledge to work. Your idle cash will serve you better when it’s deployed to low-risk investment vehicles that produce significant returns. As always, make sure to do due diligence before committing to any investment.

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This article was first published on 4th May 2025
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