Cardoso Launches Nigeria Overnight Financing Rate to Boost Confidence, Price Discovery, Market Stability

Nigeria has introduced the Overnight Financing Rate (ONFR) in a move designed to bolster confidence, improve price discovery, and ensure stability within its financial markets. The Central Bank of Nigeria (CBN) is spearheading this initiative, which signals a significant shift in how key financial benchmarks are determined.

CBN Governor Olayemi Cardoso stated that global financial markets are increasingly moving away from subjective, judgment-based benchmarks. Instead, there is a growing preference for transaction-based reference rates that accurately reflect actual market activity. The ONFR is intended to align Nigeria's financial infrastructure with these international best practices.

“

Says global financial markets moving away from subjective, judgment-based benchmarks towards transaction-based reference rates that reflect actual market activity

Philip Ikeazor, the CBN's First Deputy Governor, described the ONFR as a milestone in the modernization of the financial market. This new rate is expected to provide a more transparent and reliable benchmark for overnight lending, thereby reducing uncertainty and encouraging greater participation in the market. The transition to a transaction-based system is anticipated to foster a more robust and efficient financial ecosystem in Nigeria.

“

Philip Ikeazor describes initiative as milestone in financial market modernisation