Di Central Bank of Nigeria (CBN) on Monday formally launch di Nigerian Overnight Financing Rate (NOFAR), wey be landmark financial market reform wey go strengthen monetary policy transmission, improve transparency, and deepen di kontri financial market.
Speaking at di launch ceremony for Abuja, CBN Governor Mr. Olayemi Cardoso describe di introduction of NOFAR as a significant milestone for di nation ongoing financial sector transformation and a key step towards building a more resilient, efficient, and credible financial system.
According to Cardoso, benchmark interest rates serve as di backbone of modern financial systems, providing reference points for pricing financial instruments, managing liquidity and risk, and supporting di effective transmission of monetary policy.
He explain say NOFAR was developed by di CBN in collaboration with di Financial Markets Dealers Association (FMDA) and with technical support from di European Bank for Reconstruction and Development (EBRD) as a transaction-based benchmark derived from actual market activities rather than subjective estimates.
Di governor note say global financial markets don increasingly shift away from judgment-based benchmark rates following concerns over transparency and manipulation, prompting di adoption of transaction-based reference rates such as di Secured Overnight Financing Rate (SOFR) for di United States, SONIA for di United Kingdom, and €STR for di Eurozone.
He say NOFAR align Nigeria with these global best practices by reflecting di true cost of overnight secured funding for di kontri money market through observable transactions.
According to di CBN, di benchmark go enhance market integrity, improve price discovery, reduce reliance on subjective estimates, minimise manipulation risks, and strengthen confidence for Nigeria financial market.
Cardoso add say di launch of NOFAR forms part of a broader reform agenda aimed at establishing stronger foundations for future financial innovation and ensuring Nigeria remain competitive for an increasingly digital and interconnected global financial system.
“Di introduction of NOFAR represents a significant reform wey reinforce di Central Bank of Nigeria commitment to building a more resilient, efficient, and credible financial services sector.”
“For banks, investors and financial market participants, di introduction of NOFAR provides a transparent and reliable reference rate wey 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 say.
Di governor further note say NOFAR go contribute to a more effective monetary policy transmission mechanism, wey remain critical to achieving di CBN price stability mandate.
Representing di Managing Director of Access Bank, Mr. Roosevelt Ogbonna, di Treasurer of Access Bank Plc and representative of di FMDA Technical Committee, Mr. David Enilolobo, describe di launch as “not a ceremonial occasion, but a structural one” for Nigeria financial market.
He say financial institutions don long rely on benchmark architectures built largely on market contributions rather than actual transactions, adding say NOFAR introduce a more credible and transparent system anchored on real market activity.
“Dat distinction no be technical, e be foundational. E be di difference between a rate wey di market fit defend and a rate wey e get words to explain,” Ogbonna say.
He add say a credible benchmark go attract capital, reduce risks, improve investor confidence, and support Nigeria ambition to deepen ein financial market and increase participation for global capital flows.
Ogbonna also pledge Access Bank support for di initiative, stating say di bank go adopt NOFAR for pricing, trading, and reporting activities to help establish am as di market standard.
