CBN launches NOFR benchmark amid improving transparency

The Central Bank of Nigeria (CBN) has introduced the Nigerian Overnight Financing Rate (NOFR), a new benchmark interest rate aimed at improving transparency, deepening the money market, and strengthening monetary policy effectiveness.

The Nigerian Overnight Financing Rate (NOFR) is a transaction-based benchmark for the money market, reflecting the interest rate for secured overnight funds in the interbank market.

The apex bank announced the development in collaboration with the Financial Markets Dealers Association, describing it as a key reform to align Nigeria’s financial system with global standards for short-term interest rate benchmarks.

In a statement signed by Hakama Sidi Ali, the CBN said the new rate is expected to enhance price discovery and promote transparency in the pricing of money market instruments.

The CBN said the introduction of NOFR will improve the overall functioning of Nigeria’s financial markets and strengthen policy transmission mechanisms.

“It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments.” 

“It will enhance the effectiveness of monetary policy, support financial innovation, boost investor confidence, and strengthen risk management across the financial system.”  

“It will support financial innovation, boost investor confidence, and improve risk management across the financial system.”  

The bank added that the rate will serve as a credible benchmark for short-term lending activities in the Nigerian financial market.

The introduction of NOFR positions Nigeria alongside major global economies that have adopted similar benchmark rates for financial market stability and transparency.

Comparable benchmarks include the Secured Overnight Financing Rate (SOFR) in the United States.

The Sterling Overnight Index Average (SONIA) is used in the United Kingdom.

Other equivalents include the Euro Short-Term Rate (€STR) and the Tokyo Overnight Average Rate (TONA).

The move also complements regional benchmarks such as the Johannesburg Interbank Average Rate (JIBAR), reinforcing Nigeria’s integration into global financial markets.

The development of NOFR followed a structured engagement process with stakeholders in Nigeria’s financial system.

The benchmark was adopted after a stakeholder meeting held on February 27, 2026.