The Central Bank of Nigeria (CBN) has officially launched the Nigerian Overnight Financing Rate (NOFR), a transaction-based benchmark designed to enhance transparency, strengthen monetary policy effectiveness, and align the country’s financial system with global best practices. The announcement was made on June 16, 2026, by CBN Governor Olayemi Cardoso during a launch event attended by regulators, bankers, market operators, and development partners.
Governor Cardoso Highlights Reform Significance
Speaking at the event, Cardoso described the initiative as a critical reform that would reinforce the resilience, efficiency, and credibility of Nigeria’s financial services sector. He emphasized that benchmark interest rates form the backbone of modern financial systems, serving as reference points for pricing financial instruments, managing liquidity and risk, and transmitting monetary policy decisions across the economy. “Financial systems cannot remain static. They must evolve continuously to reflect changing realities, respond to emerging opportunities and create stronger foundations for future growth,” he stated.
Development and Global Alignment
The NOFR was developed by the CBN in collaboration with the Financial Markets Dealers Association and with technical support from the European Bank for Reconstruction and Development. Unlike previous benchmarks, NOFR is based on actual overnight secured interbank transactions rather than indicative submissions or market estimates. Cardoso highlighted that this move reflects a broader global shift towards transaction-based reference rates, following international benchmark reforms implemented after concerns about the integrity of traditional benchmark-setting mechanisms.
Adopting NOFR is expected to enhance market integrity, improve transparency, reduce reliance on subjective estimates, and minimize the risk of manipulation. “This is a fundamental shift that aligns Nigeria with global best practices in benchmark rate reform and strengthens confidence in our financial markets,” Cardoso added.
Deepening Financial Markets
A central theme of the launch was NOFR’s role in deepening Nigeria’s financial markets. Cardoso argued that trusted benchmarks create stronger and more liquid markets by providing participants with a reliable reference point for pricing and risk management. “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,” he stated.
The initiative forms part of a broader reform agenda aimed at preparing Nigeria’s financial system for an increasingly digital, interconnected, and technology-driven future. The benchmark will support treasury operations, liquidity management, financial contract pricing, and the development of derivatives and structured financial products.
Monetary Policy Transmission
Cardoso stressed the need for a more effective mechanism to ensure that policy decisions are reflected in broader financial market conditions and economic activity. He observed that one of the challenges facing policymakers when the current CBN management assumed office was the weakness of the monetary transmission process. “What we are attempting to do here is to ensure that we have a more effective monetary policy transmission mechanism supporting the delivery of the price stability mandate of the CBN,” he said.
The Deputy Governor of Economic Policy at the CBN, Muhammad Sani Abdullahi, added that a credible benchmark rate can improve the link between central bank policy actions, interbank funding costs, lending rates, and investment decisions, thereby enhancing the effectiveness of monetary policy. He also noted that NOFR would facilitate the eventual development of term benchmark rates and more sophisticated financial instruments, including derivatives and structured products, which are essential features of mature financial markets.
Impact on Businesses and Borrowers
For businesses and borrowers, the benchmark is expected to improve transparency in loan pricing while also serving as a reference point for wholesale and institutional deposit pricing. Abdullahi described the launch as another milestone in Nigeria’s financial market evolution, noting that the country’s financial system has consistently demonstrated its capacity to adapt to changing global realities. “As global markets increasingly move toward more robust, transaction-based reference rates, Nigeria must continue to position itself not merely to follow change, but to shape it,” he said.
Industry Support
Echoing the optimism of Cardoso, the Managing Director of Access Bank, Roosevelt Ogbonna, described the launch as “not a ceremonial occasion, but a structural one.” Ogbonna, represented by the Group Head of Treasury at Access Bank Plc, David Enilolobo, argued that the credibility of financial markets depends heavily on the quality of their benchmark architecture. “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. He maintained that transaction-based benchmarks provide stronger foundations for market confidence.
