CBN Introduces Nigerian Overnight Financing Rate (NOFR) to Align With Global Benchmarks

The Central Bank of Nigeria on Friday introduced the Nigerian Overnight Financing Rate, or NOFR, as a new benchmark for the country’s money market. It was developed in partnership with the Financial Markets Dealers Association (FMDA).

The CBN’s Acting Director of Corporate Communications, Hakama Sidi-Ali, announced the rate in a statement, calling it a step toward bringing Nigeria in line with how other major economies handle short-term interest rate benchmarks.

NOFR is a risk-free benchmark that tracks the actual cost of overnight secured lending between banks. Unlike projections or estimates, it draws strictly from real transactions, which the CBN says makes it more accurate and credible. The rate gets published daily at 10:00 a.m. on the next business day and applies only to naira-denominated overnight secured interbank deals that meet specific criteria.

How the calculation works

The rate uses a volume-weighted trimmed mean approach, meaning it strips out outlier transactions to keep the number reliable. If there is not enough transaction data on a given day, the previous day’s rate carries over and gets flagged clearly so everyone knows.

The CBN was careful to point out that NOFR does not replace the Monetary Policy Rate or any existing tool. Think of it more as a reference point for pricing financial instruments, contracts, and some corporate loans.

Nigeria joins the global club

With NOFR, Nigeria now sits alongside economies that already use similar benchmarks: SOFR in the United States, SONIA in the United Kingdom, eSTR in the Eurozone, TONA in Japan, and JIBAR in South Africa.

The framework came out of a stakeholder engagement on February 27, 2026, where market participants agreed on the structure before getting regulatory sign-off. NOFR is already operational, with the CBN running it as administrator.

What this means in practice

For investors, the benchmark should make it easier to value, price, and manage risk on naira assets, which could deepen activity in the domestic money market. For everyday Nigerians, the CBN says not to expect immediate changes in loan or savings rates. But the idea is that more transparency in how overnight rates work will gradually strengthen confidence in the financial sector overall.

On governance, the CBN said rate adjustments would only happen if significant errors are found, and any changes would be disclosed. The methodology gets reviewed at least once a year to stay in step with market realities.

Sources: NaijaBlitzNews, CBN