The Central Bank of Nigeria (CBN) has unveiled the Nigerian Overnight Financing Rate (NOFR) as a new benchmark for the country’s money market, aimed at improving transparency and strengthening monetary policy effectiveness.
The announcement was made in a statement by the bank’s Acting Director of Corporate Communications, Hakama Sidi-Ali.
According to the CBN, the initiative was developed in partnership with the Financial Markets Dealers Association to deepen the financial system and align Nigeria with global best practices in short-term interest rate benchmarks.
The NOFR is designed to enhance price discovery, ensure more transparent pricing of money market instruments, and improve overall efficiency in the financial market. It also aims to boost investor confidence, support financial innovation, and strengthen risk management across the system.
The apex bank noted that the new benchmark places Nigeria alongside global standards such as SOFR in the United States, SONIA in the United Kingdom, €STR in the Eurozone, TONA in Japan, and JIBAR in South Africa.
Following stakeholder engagement on February 27, 2026, and subsequent regulatory approval, the rate has now been adopted, with the CBN serving as its administrator to ensure proper governance, transparency, and regular publication.
NOFR reflects the cost of overnight secured lending in the interbank market and is based strictly on actual transaction data rather than estimates, enhancing its accuracy and credibility. It is published daily at 10:00 a.m. on the next business day.
The framework only includes eligible naira-denominated overnight transactions and uses a volume-weighted trimmed mean method to remove extreme values and ensure reliability. Where transaction data is insufficient, the previous day’s rate is retained and clearly disclosed.
The CBN clarified that NOFR is not a replacement for key policy tools like the Monetary Policy Rate but will serve as a reference for pricing financial instruments, contracts, and some corporate loans.
While retail customers may not see immediate changes in lending or savings rates, the bank believes the improved transparency will strengthen confidence in the financial system and deepen activity in Nigeria’s money market.
The bank also emphasized that any corrections to the benchmark will only occur in cases of significant error and will be fully disclosed, while the methodology will be reviewed annually to ensure it remains effective and aligned with market conditions.