CBN introduces NOFR as transaction-based benchmark for naira markets

The Central Bank of Nigeria introduced the Nigerian Overnight Financing Rate as a risk-free reference for secured overnight naira funding among eligible financial institutions.

NOFR is calculated from actual transactions rather than dealer estimates. The CBN also publishes a companion index and compounded readings that can support loans, bonds and derivatives priced over longer periods.

Why a benchmark matters

A credible reference rate gives market participants a shared measure of the price of short-term money. That can reduce disputes over valuation, improve the pricing of floating-rate instruments and make hedging contracts easier to compare.

The reform aligns Nigeria with the global move toward transaction-based benchmarks after weaknesses in survey-based rates became clear. Adoption will depend on consistent publication, adequate secured-market volume and clear fallback provisions for contracts when data is thin.

Sources

Central Bank of Nigeria, Nigerian Overnight Financing Rate data page and NOFR policy framework (2026).