The Central Bank of Nigeria has introduced the Nigerian Overnight Financing Rate as a new benchmark for the country’s money market, in a move aimed at improving transparency and strengthening monetary policy transmission.
The announcement was made on Friday in a statement by the apex bank’s Acting Director of Corporate Communications, Hakama Sidi Ali.
“The Central Bank of Nigeria, in collaboration with the Financial Markets Dealers Association, today announced the introduction of the Nigerian Overnight Financing Rate, a standardised benchmark aimed at enhancing transparency, strengthening monetary policy transmission, and deepening Nigeria’s money market,” the statement read.
The CBN explained that the new benchmark is designed to reflect global best practices in short term interest rate measurement and will support improved price discovery and consistency in the pricing of money market instruments.
“NOFR was developed to align Nigeria with global best practices in short-term interest rate benchmarks. It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments,” the statement added.
The Bank said the benchmark would boost the effectiveness of monetary policy, encourage financial innovation, and strengthen investor confidence, while also improving risk management practices across the financial system.
It noted that the introduction of NOFR places Nigeria alongside global benchmarks such as SOFR in the United States, SONIA in the United Kingdom, €STR in the Eurozone, and TONA in Japan, as well as South Africa’s JIBAR.
According to the CBN, the rate has already been adopted by market participants following a stakeholder engagement held on February 27, 2026, with regulatory approval secured.
“Following a stakeholder engagement session held on February 27, 2026, where market participants formally adopted the benchmark and subsequent regulatory approval, NOFR is now in use, with the CBN serving as the benchmark administrator. The Bank will ensure governance, transparency, and regular publication of the rate,” the statement said.
The Nigerian Overnight Financing Rate is a risk free benchmark that reflects the cost of overnight secured funding in the interbank market and is based on actual transactions rather than estimates.
The rate is published daily at 10:00 a.m. on the next business day and applies only to eligible naira denominated transactions. It is calculated using a volume weighted trimmed mean methodology to ensure accuracy and eliminate extreme values.
The CBN clarified that the benchmark does not replace key policy tools such as the Monetary Policy Rate, but will serve as a reference for pricing financial instruments, contracts, and certain corporate loans.