NOFR aims to boost transparency, improve pricing, and align Nigeria with global financial benchmarks…
The Central Bank of Nigeria has introduced a new benchmark interest rate, the Nigerian Overnight Financing Rate (NOFR) in a move expected to reshape the country’s money market and strengthen financial system efficiency.
Developed in collaboration with the Financial Markets Dealers Association, the NOFR is designed to serve as a standardized reference rate for overnight lending between financial institutions. The initiative is part of broader efforts to improve transparency, enhance market confidence, and support more effective monetary policy transmission.
In a statement issued Friday and signed by Acting Director of Corporate Communications, Hakama Sidi Ali, the apex bank said the new rate would provide a clearer and more reliable benchmark for short-term funding costs in Nigeria’s financial system.
According to the CBN, the introduction of NOFR marks a significant step toward aligning Nigeria’s financial markets with international best practices. By improving how short-term interest rates are measured and applied, the benchmark is expected to enhance price discovery and ensure more consistent valuation of money market instruments.
Officials say the rate will not only increase transparency but also encourage financial innovation, strengthen risk management practices, and boost investor confidence in Nigeria’s markets.
With the launch of NOFR, Nigeria joins a growing list of economies that rely on modern overnight benchmark rates. These include the Secured Overnight Financing Rate (SOFR) in the United States, the Sterling Overnight Index Average (SONIA), the Euro Short-Term Rate (€STR), and the Tokyo Overnight Average Rate (TONA). Within Africa, it complements South Africa’s Johannesburg Interbank Average Rate (JIBAR).
The CBN revealed that the groundwork for NOFR was laid during a stakeholder engagement session held on February 27, 2026, where market participants formally endorsed the framework. Regulatory approvals followed shortly after, clearing the path for its rollout.
By introducing NOFR, the apex bank is positioning Nigeria for deeper integration into global financial markets, while also laying the foundation for a more transparent and resilient domestic money market.
As implementation begins, attention will turn to how effectively the new benchmark supports liquidity management, pricing accuracy, and overall stability within the financial system.
