In a bid to align the Nigerian financial market with global standards and strengthen the efficiency of its financial market infrastructure, the Central Bank of Nigeria (CBN), in collaboration with the Financial Markets Dealers Association (FMDA), introduced a new benchmark reform known as the Nigerian Overnight Financing Rate (NOFR).

At its core, the NOFR is designed to function as a standardised overnight reference rate, grounded in actual secured transactions.

This shift is intended to enhance transparency, improve price discovery, strengthen monetary policy transmission, and support the development of a more resilient and globally competitive financial market ecosystem in Nigeria.

In this industry piece, we provide an in-depth understanding of the newly introduced NOFR, its impact on financial contracts in Nigeria, and the practical challenges surrounding its implementation.