ABUJA, Nigeria (VOICE OF NAIJA)-The Central Bank of Nigeria on Monday introduced the Nigerian Overnight Financing Rate, 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 in Abuja, CBN Governor Olayemi Cardoso said the initiative is part of broader reforms to build a more resilient, efficient and credible financial system.
Cardoso described the Nigerian Overnight Financing Rate (NOFR) as a major reform that would align the country’s financial markets with global standards and provide a dependable reference rate for banks, investors and other market participants.
“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,” Cardoso said.
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He explained that benchmark interest rates form the foundation of modern financial systems as they guide pricing of instruments, liquidity management and monetary policy transmission across the economy.
According to him, global markets are increasingly shifting from judgment-based benchmarks to transaction-based rates derived from actual market activity in order to reduce manipulation risks and improve transparency.
Cardoso said the CBN developed NOFR in partnership with the Financial Markets Dealers Association, with technical support from the European Bank for Reconstruction and Development.
He added that the benchmark is a transaction-based overnight secured interbank financing rate that reflects the true 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.
He further said the new framework would strengthen trust in the financial system and support the deepening of market activities.
“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 said.
The CBN governor noted that the benchmark would serve as a transparent reference rate for treasury operations, liquidity management, pricing of financial contracts and securities, development of derivatives and structured products, and improved risk management frameworks.
He added that it would also support the creation of more advanced financial products needed for a modern financial system.
For businesses and borrowers, Cardoso said NOFR would bring greater transparency to the pricing of loans and wholesale deposits within the banking sector.
He also stressed that one of its key benefits is strengthening monetary policy transmission and supporting the bank’s price stability mandate.
“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 phase of his leadership, Cardoso said weaknesses in the monetary policy transmission system influenced key decisions when he assumed office.
He argued that holding policy meetings without an effective transmission mechanism would not have produced the desired economic outcomes.
Cardoso expressed optimism that successful implementation of NOFR would boost confidence among domestic and foreign investors and support 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, Deputy Governor (Economic Policy Directorate) Philip Ikeazor described the launch as a significant milestone in Nigeria’s financial market evolution.
He said it represents progress and modernization, as well as a commitment to building stronger financial 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 adopt transaction-based reference rates, Nigeria must not only align with international trends but also contribute to shaping them.
Representing Access Bank’s Managing Director, Roosevelt Ogbonna, Group Head of Treasury David Enilolobo described the initiative as a structural reform rather than a ceremonial event.
He said benchmark rates influence pricing decisions that affect millions of customers and businesses daily, making credibility essential.
He also noted that transaction-based benchmarks provide stronger reliability than estimate-based rates.
“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,” he said.
Enilolobo added that stronger market infrastructure improves investor confidence, reduces risks and supports capital inflows.
“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 said.
He pledged Access Bank’s support for the new benchmark and urged financial institutions to integrate it into money market instruments, floating-rate products and repo transactions.
Earlier in April 2026, the CBN had announced the introduction of the Nigerian Overnight Financing Rate as a new money market benchmark designed to enhance transparency and improve monetary policy transmission.