BY NKECHI NAECHE-ESEZOBOR—The Central Bank of Nigeria (CBN), in collaboration with the Financial Markets Dealers Association (FMDA), has introduced the Nigerian Overnight Financing Rate (NOFR), a new benchmark designed to improve transparency and efficiency in Nigeria’s financial markets.
In a statement released on Friday, the apex bank said the NOFR will serve as a standardized reference rate for overnight lending, strengthening monetary policy transmission and supporting the development of the country’s money market.
According to the CBN, the new benchmark aligns Nigeria with global best practices in short-term interest rate frameworks. It is expected to enhance price discovery, ensure more consistent pricing of money market instruments, and promote greater transparency across the financial system.
The bank added that the introduction of NOFR would also bolster investor confidence, improve risk management practices, and create opportunities for financial innovation.
With the rollout, Nigeria joins other major economies that have adopted similar benchmarks, including the United States’ Secured Overnight Financing Rate (SOFR), the United Kingdom’s Sterling Overnight Index Average (SONIA), the Eurozone’s Euro Short-Term Rate (€STR), and Japan’s Tokyo Overnight Average Rate (TONA). It also aligns with regional benchmarks such as South Africa’s Johannesburg Interbank Average Rate (JIBAR).
The NOFR follows a stakeholder engagement session held on February 27, 2026, where market participants formally adopted the framework. With regulatory approvals secured, the benchmark is now operational.
The CBN will act as the benchmark administrator, with responsibility for governance, transparency, and the regular publication of the rate.
The initiative marks a significant step in ongoing efforts to modernize Nigeria’s financial markets and align them with international standards.
