Cardoso Introduces Nigerian Overnight Financing Rate

•Provides benchmark for pricing loans, deposits

By Emma Ujah, Abuja Bureau Chief

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, launched the Nigerian Overnight Financing Rate (NOFR) yesterday to enhance transparency in the financial market.

The NOFR is a daily benchmark interest rate introduced by the CBN in partnership with the Financial Markets Dealers Association (FMDA).

It reflects the actual, real‑time cost of secured, short‑term borrowing between financial institutions.

Speaking at the launch in Abuja, Cardoso described the benchmark as “the rate at which everyone agrees, representing a true reflection of the price of money at a particular point in time, and it is the backbone of any modern financial system.”

He added that “before a benchmark can be widely accepted, it must be an output of a trusted, well‑governed, and transparent financial market framework with an underlying administrative process and methodology that protects against any form of manipulation.”

The Governor noted that financial systems, like economies, cannot remain static, stating “they must evolve continuously to reflect changing realities, respond to emerging opportunities, and create stronger foundations for future growth.”

Cardoso said recent global developments have highlighted the need for systems to shift from judgment‑based or indicative rates to transaction‑based benchmarks that mirror underlying market realities.

He explained that the CBN, together with the FMDA and technical support from the European Bank for Reconstruction and Development (EBRD), developed the NOFR as “a credible and robust benchmark derived from actual market transactions.”

“The NOFR has been designed as a transaction‑based overnight secured interbank financing rate, reflecting the true cost of overnight funding in the Nigerian money market by anchoring the benchmark on observable transactions,” he added.

On the rate’s impact, Cardoso said “NOFR enhances market integrity and credibility, reduces reliance on subjective estimates, minimizes the risk of manipulation, and improves price discovery and transparency.”

He described the rate as “a fundamental shift that aligns Nigeria with global best practices in benchmark rate reform and strengthens confidence in our financial markets.”

The outcome, he said, will deepen Nigeria’s financial market, a goal regulators have long pursued. The governor added that NOFR will provide a basis for transparent pricing of loans and deposits in the money market.

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