Speaking of Nigeria from the angle of commerce and geographical status, Nigeria is one the West African nations with a mixed economy and a very vast expanding manufacturing, financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP.
The Nigeria money market started with the operation of the Treasury Bills Ordinance of 1959 and 1960. Before the passing of the Treasury Bills Ordinance in 1959 there was no organized domestic money market in Nigeria. The financial system was linked to London market.
Nigerian businessmen and government has no effective machinery for mobilizing funds for their business and development respectively. Aside the effective mobilization of funds problems, all the benefits of a money market eluded the country. The motivation for the establishment of Nigeria money market was then pertinent.
The following prompted or motivated the establishment of the Nigerian money market:-
1) Localizing the credit base: This was meant to provide local investors the avenue for retention of funds in Nigeria and for the investment of fund repatriated from abroad.
2) To provide the needed machinery for the provision of short term financing to the government.
3) To establish monetary autonomy which is a prerequisite of the working of a sovereign state.
4) The need for the country to enjoy the functions of money market especially in the operating and executing of government monetary policy effectively.
NOTE:- The money market is where the short-term securities are bought and sold. It is the vehicle through which surplus funds flow from the surplus units to the deficits units. The security traded in this market has maturity time of not more than one year.
The major participants in the money market include individuals, companies, banks, discount houses and government. The new issues and existing issues are both traded in the money market segment, therefore, the market has both primary and secondary segments.