CBN reopens OMO securities to retail and corporate investors, potentially impacting Nigerian equities
The Central Bank of Nigeria CBN has reopened Open Market Operations OMO securities to retail and corporate investors, a move that could increase competition for funds between the fixed-income market and Nigerian equities. This policy, announced in a circular dated August 12, 2026, allows individuals, companies, and non-bank financial institutions to participate in primary and secondary OMO markets through deposit money banks. This reverses a 2019 restriction, giving domestic investors direct access to a key CBN liquidity-management instrument. OMO securities currently offer yields significantly higher than comparable treasury bills. For instance, on August 12, the 364-day treasury bill cleared at 17.59 percent, while the following day, a 103-day OMO bill cleared at 20.39 percent. An emerging markets analyst, Ike Ibeabuchi, noted that this could redirect funds from deposits, treasury bills, and other money-market instruments to OMO securities, potentially creating a higher return threshold for equities, especially those with weak earnings growth or low dividend yields. Experts suggest that companies with weak earnings or limited dividend prospects might face increased pressure as investors gain access to a lower-risk instrument offering higher returns. An Abuja-based economist, Nonso Iheoma, indicated that investors may increasingly demand a clear risk premium for equities, making corporate earnings, dividend performance, and valuation more crucial in capital flow decisions.
