The Central Bank of Nigeria (CBN) has launched the Nigerian Overnight Financing Rate (NOFR), a new transaction-based benchmark interest rate aimed at improving transparency, strengthening monetary policy transmission and deepening Nigeria’s financial markets.
Speaking at the launch ceremony held at the CBN headquarters in Abuja on Monday, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, described the initiative as a major reform designed to align Nigeria’s financial system with global best practices.
According to Cardoso, the introduction of NOFR forms part of the apex bank’s broader strategy to build a more resilient, efficient and credible financial services sector.
“The introduction of NOFR represents a significant reform that reinforces the Central Bank of Nigeria’s commitment to building a more resilient, efficient, and credible financial services sector,” he said.
The CBN governor explained that benchmark interest rates serve as critical reference points for pricing financial instruments, managing liquidity and transmitting monetary policy decisions throughout the economy.
He noted that financial markets worldwide have increasingly shifted from judgment-based benchmarks to transaction-based reference rates derived from actual market activities to improve transparency and reduce the risk of manipulation.
Cardoso disclosed that the benchmark was developed by the CBN in collaboration with the Financial Markets Dealers Association, with technical support from the European Bank for Reconstruction and Development.
He explained that NOFR is designed as a transaction-based overnight secured interbank financing rate that reflects the actual cost of overnight funding in Nigeria’s money market.
“By anchoring the benchmark on observable transactions, NOFR enhances market integrity and credibility, reduces reliance on subjective estimates, minimises the risk of manipulation, and improves price discovery and transparency,” he stated.
According to him, the benchmark will increase confidence in Nigeria’s financial markets and contribute to greater market depth.
“The result of all of that is a deepening of our financial markets. Markets get deeper when they are trusted and when they are credible,” Cardoso added.
The governor said NOFR would serve as a transparent and reliable reference rate for treasury operations, liquidity management, pricing of financial contracts and securities, development of derivatives and structured products, as well as risk management frameworks.
He further explained that the benchmark would support the development of more sophisticated financial products required for a modern and dynamic financial market.
For businesses and borrowers, Cardoso said the new rate would bring greater transparency to the pricing of loans and wholesale deposits across the banking sector.
He identified stronger monetary policy transmission as one of the most significant benefits of the benchmark, noting that it would enhance the effectiveness of the CBN’s efforts to maintain price stability.
“These are critical to having a more effective monetary policy transmission mechanism supporting the delivery of the price stability mandate of the CBN,” he said.
Reflecting on the early days of his administration, Cardoso noted that weaknesses in the monetary policy transmission mechanism influenced policy decisions after he assumed office.
He stressed that monetary policy decisions could not effectively impact the economy without a reliable transmission framework.
The CBN governor expressed optimism that successful implementation of NOFR would strengthen both domestic and foreign investor confidence while supporting sustainable economic growth.
“The successful implementation of NOFR will reinforce domestic and international investor confidence, thereby contributing to sustainable economic growth,” he stated.
Also speaking at the event, the Deputy Governor in charge of the Economic Policy Directorate, Philip Ikeazor, described the launch as a major milestone in the evolution of Nigeria’s financial markets.
He said the benchmark represented not only a market reform but also a reflection of Nigeria’s commitment to financial sector modernisation and stronger market infrastructure.
“This journey to this moment demanded a clear vision, technical rigour, collaboration, resilience, and perhaps most importantly, a shared conviction that our financial system must continuously evolve to meet the demands of a changing world,” Ikeazor said.
He added that as global markets increasingly adopt transaction-based reference rates, Nigeria must position itself to remain competitive and contribute to shaping future market developments.
Representing the Managing Director of Access Bank Plc, Roosevelt Ogbonna, the bank’s Group Head of Treasury, David Enilolobo, described the launch as a structural reform with far-reaching implications for the financial system.
He noted that benchmark rates influence pricing decisions affecting millions of individuals and businesses daily, making transparency and credibility essential.
According to him, transaction-based benchmarks provide stronger market confidence than rates based on estimates or subjective assessments.
“That distinction is not technical; it is foundational. It is the difference between a rate the market can defend and a rate it has words to explain,” Enilolobo said.
He added that stronger market infrastructure would help attract investment, reduce financial risks and improve confidence among international investors.
“Nigeria’s ambition to deepen its financial market and grow its standing in global capital flows cannot be realised without this kind of infrastructure,” he stated.
Enilolobo pledged Access Bank’s support for the benchmark and encouraged financial institutions to incorporate NOFR into money market instruments, floating-rate products and repurchase agreement transactions.
The CBN had earlier announced the introduction of the Nigerian Overnight Financing Rate in April 2026 as part of ongoing efforts to improve transparency in the money market and strengthen the effectiveness of monetary policy transmission.
