CBN introduces the Nigerian Overnight Financing Rate to align Nigeria’s financial system with global standards and enhance transparency.
CBN, in partnership with the Financial Markets Dealers Association (FMDA), has introduced the Nigerian Overnight Financing Rate (NOFR) as a new benchmark. This aims to enhance transparency. Furthermore, it will strengthen monetary policy transmission and deepen the money market.
The CBN stated that the NOFR is a transaction-based benchmark reflecting the interest rate for secured overnight funds in the interbank market. It will serve as a reliable reference for short-term lending. In this statement signed by Acting Director of Corporate Communications Hakama Sidi Ali, the CBN described the initiative as a key reform. Moreover, the reform will align Nigeria’s financial system with global standards for short-term interest rate benchmarks.
Ali stated that the new rate is expected to enhance price discovery and transparency. Additionally, it will promote consistent pricing of money market instruments.
“It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments,” the statement said.
The bank added that introducing the NOFR would enhance the effectiveness of monetary policy. It would also support financial innovation, boost investor confidence, and strengthen risk management across the financial system.
“This will, however, improve the effectiveness of monetary policy, support financial innovation, boost investor assurance, and strengthen risk management across the financial system,” it added.
The CBN noted that the development positions Nigeria alongside leading global benchmarks, such as the Secured Overnight Financing Rate in the United States. The benchmarks also include the Sterling Overnight Index Average in the United Kingdom. For example, they include the Euro Short-Term Rate in the Eurozone and the Tokyo Overnight Average Rate in Japan.
The CBN also noted that the benchmark complements regional standards, such as the Johannesburg Interbank Average Rate in South Africa. Furthermore, this development further integrates Nigeria into global financial markets.
According to the bank, the introduction of the NOFR followed structured stakeholder engagement. It was officially adopted at a meeting on February 27, 2026, after securing regulatory approvals.
The CBN will serve as the benchmark administrator, ensuring governance, disclosure, and regular publication of the rate.
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