How Ghana’s Treasury Bills Became Africa’s Most Attractive Short-Term Investment

ACCRA — Across Africa’s fixed-income universe, one market stands out for delivering some of the highest short-term yields: the short-dated treasury bills issued by the Bank of Ghana (BoG) and the Ministry of Finance, Ghana. Once dismissed as risk-heavy, Ghana’s T-bills are now widely cited as among the most compelling short-term investment opportunities on the continent. This transformation reflects a confluence of macro-economic shifts, institutional reform and investor psychology.

Here is how Ghana’s Treasury bills ascended, the dynamics at play, and the risks that must be navigated by The High Street Business

The Yield Story: From Crisis to Premium

Not so long ago, Treasury yields in Ghana were soaring — symptomatic of inflation surges, currency depreciation and sovereign stress. At the end of 2023, for example, 91-day T-bill rates were around 29.39 percent, 182-day bills about 31.70 percent, and 364-day bills nearly 33.0 percent.

As stability gradually returned — inflation eased, currency pressures moderated and reserve buffers improved — the yield curve began to normalise. By June 2025, the 91-day was down to about 14.69 percent, the 182-day to 15.25 percent and the 364-day around 15.65 percent.

While sceptics might argue such yields are still high, they nonetheless offered returns that out-paced many regional peers, especially for short-term maturities. Moreover, the deep oversubscription trends underscored strong investor demand: for instance, in April 2025 an auction registered bids worth GH¢6.865 billion against a target of GH¢6.678 billion.

A particularly telling data point: In April the weighted average yields for the 91-day bill were 15.45 percent, the 182-day 16.21 percent and the 364-day 18.65 percent, all showing meaningful declines week-on-week as demand surged.

Why Investors Are Buying Ghana T-Bills

Several factors have combined to make Ghana’s Treasury bills increasingly attractive:

1. Elevated Yield Premium

Compared to many other African markets where yields for short-term sovereign instruments are under pressure, Ghana’s T-bills offered a visibly higher return. The spread between risk-free (or perceived nearly risk-free) short-term paper in Ghana and many peer markets created a yield magnet for both domestic institutional investors and yield-seeking foreigners.

2. Improved Macro Fundamentals

Ghana’s macro-economic backdrop has improved: inflation has been trending downward, exchange-rate pressures have somewhat eased, and foreign-exchange reserves have grown. The result: higher confidence that the Treasury bills won’t be eroded by runaway inflation or sharp currency devaluation — two of the biggest risks for short-term holders in emerging-market Africa. For example, the fixed income market report for Q2 2025 noted that inflation had dropped by roughly 870 bps (from 22.4 % to 13.7 %) while the T-bill yields also fell notably in the same period.

3. Market Liquidity & Active Trading

The short-end market in Ghana has become active. A report noted that in April, T-bills accounted for ~60.85 % of total volume in government securities trading. Short-dated instruments dominated activity, showing that investors are comfortable rotating in and out of short maturities and that secondary liquidity exists.

4. Risk Management & Portfolio Fit

For many institutional investors — banks, pension funds, asset-managers — short-dated T-bills offer a way to park funds in local currency with a relatively high yield and shorter maturity risk. In an environment where equities may look volatile and longer-dated bonds carry duration / credit risk, short-term T-bills emerge as a “safeish” anchor for portfolios.

5. Supply-Demand Imbalance

The oversubscription trends highlight strong demand. For example, February 2025 registered bids of GH¢20.49 billion for a target of GH¢7.72 billion — a 140.5 % oversubscription. With limited appetite for longer maturities and corporate issuance still shallow, the short-end has become a go-to for fixed income investors in Ghana.

Why They Are “Africa’s Most Attractive”

When you compare Ghana’s T-bills with short-term sovereign paper elsewhere in Africa — both in yield and in real return (i.e., yield minus inflation) — the relative attractiveness becomes clear. Many countries offer lower nominal yields, but their inflation, currency or political risks are higher; Ghana, despite its challenges, presented a rare combination of still-high yields and improving underlying fundamentals.

In addition, the maturity profile (91-, 182- and 364-day) gives flexibility and relatively low duration risk compared to long-dated bonds. That means investors can turn over capital more frequently if they choose.

Thus, Ghana’s T-bills became a short-term investment of choice — especially for investors willing to take on frontier-market risk in return for real yield.

Risks & What Could Change the Story

Of course, nothing in investing is without caveats. Key risks that could erode the attractiveness of Ghana’s T-bills include:

• Inflation or Currency Resurgence

Should inflation re-accelerate or the cedi depreciate sharply, the real return on T-bills would shrink accordingly.

• Fiscal or Refinancing Shock

If the government’s fiscal position deteriorates, or if borrowing shifts back into long-dated or riskier maturity profiles, the premium on short-term paper might compress.

• Yield Compression

As macro fundamentals improve further, yields may normalise downward. Indeed, some recent auctions show the 91-day yield falling to around 10.45 % in some instances. As yields fall, the appeal versus other instruments may decline.

• Opportunity Cost

If equity markets rally, or if longer-dated bonds regain favour, the relative attractiveness of short-term T-bills might weaken.

• Secondary Market / Liquidity Risk

Even though activity is good at the short end, Ghana’s fixed income market remains shallow compared with mature markets. Large institutional entries/exits could move prices. The repo market remains underdeveloped, limiting some institutional flexibility.

What Investors Should Consider

For current and prospective investors, some practical take-aways:

• Monitor inflation and FX trends. If inflation drops meaningfully and the cedi strengthens, the real returns will improve but yields may compress — so timing matters.

• Stay short-dated. Given the environment, 91-day and 182-day maturities offer the best mix of yield and roll-over flexibility.

• Compare real yields. If inflation is at ~11-13 % (see Q2 2025 data), a yield of ~15-16 % offers a modest positive real return, but a yield of ~10 % might be less attractive.

• Diversify across instruments. Don’t simply lock all capital into T-bills; consider equities, longer-dated bonds or alternative assets as the macro-story improves.

• Watch yield trends. If yields fall quickly, the window of “highest-yield short-term paper in Africa” narrows and alternative markets may look more competitive.

• Keep an eye on institutional policies. Pension funds and insurance firms may have mandates affecting how much T-bill exposure is advisable.

The Bottom Line From THSB

Ghana’s Treasury bills have risen from the periphery of Africa’s fixed income markets to a central position in the short-term investment universe. The combination of high nominal yields, improving fundamentals, strong demand and relatively short maturities make them among the most attractive choices for yield-seeking investors in Africa in 2025.

That said, the story is evolving. As inflation continues to moderate, currency risk diminishes and yields compress, Ghana’s T-bills may gradually lose their “highest yield frontier” status. But for now — and in the current cycle — they remain a standout instrument in Africa’s short-term fixed-income landscape.

Source: The High Street Business