Category : Guides , Investing , Savings , Updates

How Do We Determine Our Interest Rates?

How Do We Determine Our Interest Rates?

As we discussed interest rates in Nigeria and the direction for this article, a tweet was posted on our Slack channel. It was a simple but powerful tweet that motivated us. Here’s the tweet:

Before we dig into this, let’s tell you our trust story. When we started our noble journey in 2017, we wanted to make it possible for everyone to access legitimate investments, and we did that.

We didn’t stop at making it possible for people to access these investment opportunities with just NGN100, we introduced an improved security structure to the fintech space. We did this by setting up a trust structure in partnership with Meristem Trustees; we’ll explain the importance of this here.

Right from our very first user, trust has always been our currency. Many have come to us with expectations that are impossible to achieve - 10% monthly for instance. We’ve always been clear about such requests, our commitment is to manage your money for steady growth and not make false promises that get you excited. Three years on, that hasn’t changed.

Interest Rates Update

From March 1, 2020, we’ll update interest rates for our savings plans. We’ll share every single detail with you on why we are making this choice. It’s a necessary move to preserve your trust in us and your funds. For your ease, we have broken this explainer into sections:

  1. Where does the interest on your savings come from?
  2. Why are our interest rates changing?
  3. Are mutual funds impacted by this change?

Where does interest on savings plans come from?

Investment Strategy

As your wealth partner, we take a conservative approach to investing your savings. Hence, we focus on investing in treasury bills, high-quality commercial papers and government bonds, in line with our Investment Policy Statement (IPS). The reason for our choices is not far-fetched. These investment instruments are low-risk by nature.

Are you a bit worried that we have treasury bills there despite the CBN restrictions in 2019? Have no worries. The CBN restricted access to OMO bills, not regular treasury bills. We wrote a simple explainer here.

Who oversees us?

When this journey started, we were only registered under the Cooperative Act. Many other firms were at the same time, but we knew we needed to be more to protect the interest of our customers. To provide an extra layer of security, we partnered with Meristem Trustees, which is regulated by the Securities and Exchange Commission, to carry out these key duties of:

  1. Providing total security for your funds
  2. Monitoring how we invest your savings
  3. Holding certificates of investments that back savings on the behalf of customers.

This sterling move took our security structure to the zenith in the fintech space. Today, our standard is being replicated by various online investment platforms. We are glad that this is happening as it translates to improved security for the digital Nigerian investor.

Why are our interest rates changing?

As the turn of the year approached in 2019, interest rates on treasury bills (T-bills) started to drop. Till date, they’re still low. Unsurprisingly, T-bills are significant in this conversation because they make up the bulk of short-term, liquid and secure investments; for many legitimate wealthtech platforms.

Here’s a graph on the performance of T-bills from December 2009 till December 2019:interest-rates-graph-copyFrom that graph, we can see that it is currently impossible to promise a low-risk investment offer, for less than a year, beyond single-digit returns. To reflect this reality, we are introducing dynamic interest rates.

Currently, it is impossible for anyone investing largely in relatively secure financial instruments, to offer 10% per annum or more.

How our dynamic interest rates work

At the point of creating a savings plan or rolling over one, the prevailing interest rate will be shown. If rates get higher tomorrow, there’ll be an automatic update for new plans or rolled over plans.

In essence, the interest rate at the point of creating a plan is what that plan earns until maturity   regardless of any external changes that occur. That is if you have an existing plan, your rates won’t change in line with the new schedule   except you choose to roll over after maturity. This will be effected from March 1, 2020.

To avoid any confusion, you’ll need to update your app. This is very important.

Are mutual funds impacted by this change?

Currently, we retail 13 mutual funds worth over $60 million. This feat of ours was achieved in 2019; a key chapter in our story of democratizing access to investments. Our partner fund managers at the moment are Meristem, Afrinvest, United Capital and Lotus Capital.

Here’s an interesting fact: we were the first platform to make this possible in Nigeria. We didn’t just make it possible, we spiced things up with improved inclusiveness. You can access these funds, which are regulated by the Securities and Exchange Commission, for as low as NGN100.

On Cowrywise, we have 4 types of mutual funds:

  1. Money market funds
  2. Bond funds
  3. Equity funds
  4. Balanced funds

If we break them down further, we also have the dollar and halal funds. You can read our introductory guide to mutual funds here.

With that covered, which of these fund types are likely to be impacted? Any fund that has major investments in T-bills and other money market instruments will be impacted. That is they’ll offer lower rates. In that light, there are three types of funds that can be impacted directly by the drop in interest rates. These are the money market, bond funds and balanced funds. Notwithstanding, money market funds are great for building emergency funds.

Let’s bring this to a close

When you create a savings plan, we take a look at your timeline and assign your funds to a set of financial securities that correspond to the timeline chosen. The longer the timeline, the higher the returns. Based on this, our first tip: “Give your investments more time to soak in more interest juices.”

Our second tip, build an emergency fund using a money market fund. It’ll help divert your attention from investments meant for other important goals. Finally, you should invest in a dollar fund. We have a beautiful one from United Capital that earns 8% returns per annum, don’t leave without tapping here to view it.


We appreciate you reading through this update. You are the reason why we wake up every day to make magic happen. Drop a comment and share with friends so they also know how to validate returns.


  • Avatar

    Collins Akhabue Reply

    8:58 am . February 21, 2020

    Straight forward explanation. I was secretly wondering if the savings interest rates won’t drop but also secretly hoping that it will continue( Typical Nigerian) but I am glad Cowriewise is open enough to state the facts clearly and not give false hope like some other fund managers do.Kudos to you guys for putting your trust levels on a high pedestal.

    • Ope

      Ope Reply

      11:09 am . February 28, 2020

      The good thing is that as rates get better, you’ll enjoy the benefits in real-time.

  • Avatar

    Onuoha J Emerem Reply

    9:07 am . February 21, 2020

    This is interesting the information and sense of clarity and uprightness in these dynamical times. Your write is very clear and makes your investors aware and confident in your process. Transparency and integrity is key to what are stating here and I believe that as sanguine poeple your investors will understand and will also understand to pull out whenever they feel that you are manipulating them.
    It is however not clear what you menat by dynamic interest rates.

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    Moyo Reply

    9:10 am . February 21, 2020

    I’m pretty impressed. Thank you for the updates.

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    Josiah Solomon Reply

    9:11 am . February 21, 2020

    Yes I agree with Collins, CowryWise at it’s best in making everything they do and offer transparent.

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    Esther Reply

    9:25 am . February 21, 2020

    Quite impressive. I have been wondering how you are able to continuously offer 10% in this current low yield environment. Keep up the transparency..

    • Ope

      Ope Reply

      11:07 am . February 28, 2020

      Thank you

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    Samuel O. Adetoluwa Reply

    9:59 am . February 21, 2020

    I have just started with Cowrywise through the introduction by a brother, whom I did not personally know like Cowrywise, but trust can be trusted. I am quite convince by this explanation and just hope that the relationship will get better. Thanks you education and explanation, I pray whatever it is that has kept you doing this great work will not fail.

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    Tejuoso Adeoluwa Reply

    10:15 am . February 21, 2020

    Thank you @ Cowrywise for your consistent efforts to make money matters easier to understand. This was really helpful.

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    Felim Reply

    10:47 am . February 21, 2020

    Thanks for the information clarity and transparency. But I would like to know if the interest rate changes will affect top-ups In a subsisting plan. Thanks

    • Ope

      Ope Reply

      11:10 am . February 28, 2020

      Hi there, no it doesn’t. As we mentioned, once a plan has been created the interest rate sticks till maturity.

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    Samuel Reply

    11:05 am . February 21, 2020

    Kudose to cowrywise team, well explaind

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    Tafri Jerome Reply

    11:09 am . February 21, 2020

    The most beautiful aspect of this whole write up was its transparency. You made your customers to know in dept things that even there parents won’t tell them. Wouldn’t you take a hug from me.

    • Ope

      Ope Reply

      11:11 am . February 28, 2020

      I will do that gladly. Thank you

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    Joshua Reply

    11:12 am . February 21, 2020

    Nice one,from the moment I decided to use the app,knowing about four to five app,I was just drawn to this app,thanks cowrywise..🤑🤑💵

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    King Ogi Reply

    11:25 am . February 21, 2020

    Thanks for sharing explicitly. This has brought innovation to digital investment space in Nigeria. Keep up the great work! W are solidly with you, as we together we realize all our various investment goals and objectives. Cheers!

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    Grace Reply

    12:06 pm . February 21, 2020

    Thanks for your transparency.

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    Bukola Reply

    12:57 pm . February 21, 2020

    Well explained,you are simply the best.

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    Oluwadahunsi Toluwanimi Reply

    2:30 pm . February 21, 2020

    Cowrywise has been giving me what I need; transparency and trust. Thanks for this update.

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    4:30 pm . February 21, 2020

    Cowrywise, Simply the best!!!

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    Francis Reply

    4:57 pm . February 21, 2020

    Your effort to explain the current market situation and your innovative effort to navigate it is understood. The cause of the downturn in interest regime across board is not the making of CrowryWise. It is beyond you. As challenging as it is, you are making the best effort possible to manage it and carry your investors along, hence this article. It is appreciated.

    However, my little perspective in all this federal government inspired brouhaha is that in engenders a necessity to think far out of the box. In this wise, you may have to radically and robustly WIDEN YOUR INVESTMENT MIX. You may need to go AGRO. Yes, you may need to add agriculture to the portfolio. You may have to partner with big farm outfits. In this way, your investors can be offered the further option of investing/sponsoring aspects of farming activities in return for a percentage of the farms’ profit. That may help diffuse the uncertainty and despair caused by the crash of interest/return in the existing investment mix of T-bills, Mutual fund, Money Market.
    Thank you.

    • Ope

      Ope Reply

      11:12 am . February 28, 2020

      We currently offer bond funds that are not significantly impacted by the drop in treasury bills.

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    Joseph Reply

    5:17 pm . February 21, 2020

    Great success story of Cowrywise is awesome. Pls keep it up. It is not interest rates that attract; it is your commitment, sincerity, security of funds that stand you out.

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    Segun Reply

    6:53 pm . February 21, 2020

    Thank you for your explanation. This is very professional. I appreciate.

    Please clarify these: For an ongoing Plan meant to mature at a much later date, will the interest rate at the point of locking the plan drop too?

    If NO, can the tenure of an ongoing Plan be extended before March 1st just to preserve the interest rate?

  • Avatar Reply

    6:18 am . February 22, 2020

    So what will be the new interest rate from march 1

    • Ope

      Ope Reply

      11:14 am . February 28, 2020

      That will depend on the prevailing interest rate. Although, this won’t affect existing plans until maturity. Once mature, and you choose to roll over, you’ll reinvest at the prevailing market rate.

  • Avatar

    U Reply

    4:42 pm . February 22, 2020

    What would be the new rate @cowrywise?

    • Ope

      Ope Reply

      11:14 am . February 28, 2020

      That will depend on the prevailing interest rate. Although, this won’t affect existing plans until maturity. Once mature, and you choose to roll over, you’ll reinvest at the prevailing market rate.

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    Odukoya Mgbechikanma Reply

    8:21 pm . February 23, 2020

    Thank you so much Cowrywise! Your explanation is very detailed and helpful. Thanks for being transparent, it makes trusting you very easy. Keep doing what you do.

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    Anita Nwalo Reply

    1:43 pm . February 24, 2020

    Thanks Cowrywise, for the transparency. This was really enlightening. Great job!

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    Tamunoala Alalibo Reply

    5:08 pm . February 27, 2020

    Nice work cowrywise keep it ip

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    Chukwuka Edoziuno Reply

    2:11 pm . March 2, 2020

    Good work guys. Don’t fall my hand in the days to come.

    • Ope

      Ope Reply

      6:15 pm . March 19, 2020

      Hi, we have a couple of videos that can help with this.

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    M Reply

    12:26 pm . March 4, 2020

    Welldone, but I think you guys have to demystify your App. It’s complex to navigate and not straight forward, more like an encrypted message.

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    Obanye ifeoma Reply

    1:15 pm . March 9, 2020


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    Emmax Reply

    2:36 pm . March 9, 2020


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