Beyond Savings: Smarter Ways to Grow Your Income with Commercial Papers

In today’s economy, growing your income is not a luxury, it is a survival strategy. With inflation
steadily eroding purchasing power and traditional savings accounts offering returns that barely
move the needle, Nigerians are increasingly searching for smarter, safer ways to make their
money work harder.

One often-overlooked option is Commercial Papers (CPs), a powerful yet underutilized financial
tool in the Nigerian capital market.

The Problem with Traditional Savings

For most people, a bank savings account feels like the safest first step. It’s familiar. It’s easy to
access. But when it comes to wealth creation, it’s simply not enough.

Here’s why:

• Low Interest Rates: By regulation, banks only need to pay a minimum of 10% of the
Monetary Policy Rate (MPR)1 and most stick to the bare minimum.

• Taxation: Withholding tax eats into your already modest returns.

• Withdrawal Penalties: Make more than three withdrawals a month? Say goodbye to
your interest for that period.

Add inflation to the mix, and it becomes clear: savings accounts are not built for real wealth
growth.

The Capital Market Advantage

The capital market offers multiple avenues for better returns:

• Equities: Buy company shares and earn through dividends and capital gains.

• Bonds: Lend to governments or corporations over the long term for interest.

• Commercial Papers: Short-term debt instruments issued by companies to meet
immediate funding needs.

While each serves a unique purpose, Commercial Papers stand out for investors seeking higher
returns with relatively low risk.

Why Commercial Papers?

Commercial Papers are short-term notes, typically maturing between 30 and 364 days2.

They are sold at a discount meaning you pay less than the face value and earn the difference at maturity.

Here’s why they deserve a closer look:

• Higher Yields: Often in double digits, far above traditional savings rates.

• Regulatory Oversight: Every CP in Nigeria is registered with the SEC and listed on a recognized exchange, ensuring transparency and compliance.

• Low Default Risk: Issuers are typically blue-chip companies with strong credit ratings, and investors can access rating reports before committing funds.

• Institutional Access: You are essentially lending to the same companies that banks finance except now you earn the interest.

Making Your Money Work Smarter

Convenience aside, savings accounts won’t help you stay ahead of inflation or ahead financially.
Commercial Papers offer a smarter, more rewarding alternative for both individuals seeking
better returns and businesses needing short-term funding.

At AVA Capital Partners, we help you navigate these opportunities confidently so you can make
informed decisions and achieve your financial goals.

References

1. Central Bank of Nigeria. Guidelines on Savings Interest Rates. link
2. Securities and Exchange Commission. Rules on Issuance of Commercial Papers. link

Your Money Deserves Better Than a Savings Account.

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