The Central Bank of Nigeria (CBN) has introduced the Nigerian Overnight Financing Rate (NOFR), a new benchmark interest rate designed to improve transparency in the money market, deepen financial market activity, and strengthen monetary policy transmission.
The apex bank announced the development in collaboration with the Financial Markets Dealers Association, describing it as a major reform aligned with global standards for short-term interest rate benchmarks.
In a statement signed by Hakama Sidi Ali, the bank said the new benchmark will enhance price discovery and promote transparency in the pricing of money market instruments.
The Nigerian Overnight Financing Rate (NOFR) is a transaction-based benchmark that reflects the interest rate for secured overnight funds in the interbank market.
According to the CBN, the introduction of NOFR is expected to improve the overall efficiency of Nigeria’s financial markets while strengthening monetary policy transmission mechanisms.
“It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments,” the statement noted.
The bank added that the benchmark will enhance financial innovation, boost investor confidence, and improve risk management across the financial system.
It will also serve as a credible reference rate for short-term lending activities in Nigeria’s financial markets.
The development followed extensive consultations with stakeholders across the financial system, culminating in a key meeting held on February 27, 2026, where the framework was adopted.
The CBN will act as the benchmark administrator, ensuring governance, transparency, and regular publication of the rate.
Recent market data showed mixed movements in money market indicators, with the overnight lending rate rising slightly to 22.9 percent, while the overnight Nigerian Interbank Offered Rate increased to 22.84 percent.
The 3-month NIBOR also recorded a marginal increase, while the 6-month rate declined slightly and the 1-month tenor remained unchanged. The Open Repo rate held steady at 22.50 percent.
At the latest Treasury Bills auction, the CBN raised ₦1.91 trillion at lower stop rates, with the 364-day bill notably clearing at reduced levels compared to previous auctions.
Analysts say the introduction of NOFR signals a broader effort by the central bank to modernise Nigeria’s financial infrastructure and align with international best practices in benchmark rate administration.
