CBN Launches Nigeria Overnight Financing Rate for Market Efficiency

The Central Bank of Nigeria (CBN) officially launched the Nigeria Overnight Financing Rate (NOFR) on Monday in Abuja, with CBN Governor Olayemi Cardoso emphasizing its role in strengthening market transparency and efficiency. The NOFR is designed to align Nigeria's financial system with global best practices and is a reform of the benchmark interest rate.

Cardoso explained that the NOFR represents the true cost of overnight funds and is essential for a modern financial system. The initiative was developed in collaboration with the Financial Market Dealers Association (FMDA) and received technical support from the European Bank for Reconstruction and Development (EBRD).

Key benefits of the NOFR include improved market integration, reduced reliance on estimates, lower manipulation risks, and enhanced price discovery. Deputy Governor for Economic Policy, Philip Chukwuemeka Ikeazor, stated that this reform positions Nigeria to not only adapt to global financial market changes but also to shape them.

David Enilolobo, representing Access Bank PLC, noted the importance of a robust market structure in attracting capital and reducing currency risks.