Nigeria’s Central Bank has unveiled a new benchmark interest rate, the Nigerian Overnight Financing Rate (NOFAR), in a move officials say will deepen financial markets, boost transparency, and strengthen monetary policy.
At the launch in Abuja, CBN Governor Olayemi Cardoso described NOFAR as a “significant milestone” in the country’s financial sector reforms. He explained that the rate is transaction-based, derived from actual market activity rather than estimates, aligning Nigeria with global best practices such as SOFR in the United States, SONIA in the UK, and €STR in the Eurozone.
Cardoso said the benchmark will improve price discovery, reduce manipulation risks, and enhance confidence in Nigeria’s financial markets. “For banks, investors and financial market participants, the introduction of NOFAR provides a transparent and reliable reference rate that can support treasury and liquidity management operations, pricing of financial contracts and securities, development of derivatives and structured products, and strengthening of risk management frameworks,” he noted.
Access Bank’s Treasurer, David Enilolobo, representing the Financial Markets Dealers Association, called the launch “structural, not ceremonial,” stressing that NOFAR would attract capital and improve investor confidence. He pledged the bank’s adoption of the rate in pricing and reporting activities.
Background shows Nigeria has long relied on judgment-based benchmarks, which critics say lacked transparency and were vulnerable to manipulation. The shift to NOFAR is part of broader reforms aimed at modernizing the financial system and ensuring Nigeria remains competitive in global capital markets.
Reactions have been swift. On social media, many Nigerians welcomed the move, with hashtags like #NOFARLaunch and #CBNReforms trending. Financial analysts praised the initiative as overdue, noting that Nigeria’s reliance on opaque benchmarks had discouraged foreign investors. Some users, however, expressed skepticism, questioning whether the new rate would be consistently enforced.
Policy makers and industry stakeholders largely applauded the launch. Lawmakers said the reform could help stabilize monetary policy, while investment firms described it as a step toward integrating Nigeria more fully into global financial flows. Civil society groups urged the CBN to ensure transparency in implementation, warning that credibility will depend on consistent reporting and oversight.
Analysts compared the move to reforms in other emerging markets, such as India’s adoption of transaction-based benchmarks, which helped attract foreign capital and reduce volatility. They say Nigeria’s adoption of NOFAR could have similar effects if backed by strong regulatory enforcement.
For now, the launch signals a new chapter in Nigeria’s financial markets, with the CBN betting that a credible, transparent benchmark will help restore confidence and lay the groundwork for future innovation.
