The Central Bank of Nigeria (CBN), in collaboration with the Financial Markets Dealers Association (FMDA), has introduced the Nigerian Overnight Financing Rate (NOFR) as a new benchmark to improve transparency, strengthen monetary policy transmission and deepen the country’s money market.

The apex bank said the NOFR is a transaction-based benchmark that reflects the interest rate for secured overnight funds in the interbank market, and will serve as a credible reference for short-term lending activities.

In a statement signed by its Acting Director of Corporate Communications, Hakama Sidi Ali, the CBN described the initiative as a key reform designed to align Nigeria’s financial system with global standards for short-term interest rate benchmarks.

Ali said the new rate is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments.

“It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments,” the statement said.

The bank added that the introduction of NOFR would enhance the effectiveness of monetary policy, support financial innovation, boost investor confidence and strengthen risk management across the financial system.

“It will enhance the effectiveness of monetary policy, support financial innovation, boost investor confidence, and strengthen risk management across the financial system,” it added.

The CBN noted that the development positions Nigeria alongside leading global benchmarks such as the Secured Overnight Financing Rate in the United States, the Sterling Overnight Index Average in the United Kingdom, the Euro Short-Term Rate in the Eurozone and the Tokyo Overnight Average Rate in Japan.

It also said the benchmark complements regional standards such as the Johannesburg Interbank Average Rate in South Africa, further integrating Nigeria into global financial markets.

According to the bank, the introduction of NOFR followed a structured engagement with stakeholders, culminating in its formal adoption at a meeting held on February 27, 2026, after which regulatory approvals were secured.

The CBN said it would act as the benchmark administrator, ensuring governance, transparency and regular publication of the rate.