The Central Bank of Nigeria (CBN) has unveiled the Nigerian Overnight Financing Rate (NOFR), a transaction-based benchmark interest rate.
The initiative aims to improve transparency, strengthen monetary policy transmission, and deepen the country’s financial markets.
CBN Governor Olayemi Cardoso launched the benchmark on Monday at the bank’s headquarters in Abuja. He described the initiative as a major reform that aligns Nigeria’s financial system with global best practices. He added that it would promote efficiency and strengthen market credibility.
According to Cardoso, benchmark interest rates form the backbone of modern financial systems. They help financial institutions price assets, manage liquidity, and transmit monetary policy decisions across the economy.
He explained that many global markets have abandoned judgment-based benchmarks. Instead, they now rely on transaction-based rates derived from actual market activities. This approach reduces manipulation and improves transparency.
The CBN developed NOFR in collaboration with the Financial Markets Dealers Association. It also received technical support from the European Bank for Reconstruction and Development.
Cardoso said NOFR reflects the true cost of overnight secured interbank funding in Nigeria’s money market. He added that the benchmark improves market integrity because it relies on actual transactions instead of estimates.
The CBN governor said the new benchmark will provide a reliable reference rate for treasury operations, liquidity management, securities pricing, and financial contracts. It will also support the development of derivatives, structured products, and stronger risk management practices.
For businesses and borrowers, Cardoso said NOFR will introduce greater transparency in loan pricing and wholesale deposits. He also noted that the benchmark will improve the effectiveness of monetary policy across the banking sector.
Reflecting on his early days in office, Cardoso said weak monetary policy transmission limited the impact of policy decisions. He noted that interest rate decisions become more effective when supported by a reliable transmission mechanism.
Cardoso expressed confidence that NOFR will strengthen domestic and foreign investor confidence. According to him, stronger confidence will support sustainable economic growth and deepen Nigeria’s financial markets.
Deputy Governor for Economic Policy Philip Ikeazor described the launch as a major milestone for Nigeria’s financial sector. He said the benchmark reflects progress, modernization, and the country’s commitment to stronger financial infrastructure.
Representing Access Bank Managing Director Roosevelt Ogbonna, Group Head of Treasury David Enilolobo described NOFR as a structural reform rather than a ceremonial event. He noted that credible benchmark rates influence millions of financial transactions every day.
Enilolobo urged financial institutions to adopt NOFR across money market instruments, floating-rate products, and repurchase agreement transactions. He added that stronger market infrastructure will attract investment, reduce financial risks, and improve Nigeria’s position in global capital markets.
The CBN first announced NOFR in April 2026. The benchmark forms part of broader reforms to improve transparency, strengthen monetary policy, and deepen Nigeria’s financial markets.
