Transactions under the Central Bank of Nigeria’s (CBN) Funding for Liquidity Facility (FfLF) increased sharply in 2025, reflecting heightened demand for short-term liquidity by financial institutions amid the country’s tight monetary policy environment.
According to the CBN in its 2025 annual report, transactions through the facility rose to N129.71 billion, a 61.1% increase from N80.51 billion recorded in 2024. The Funding for Liquidity Facility (FfLF) is an overnight financial instrument introduced by the CBN to provide short-term, zero-interest liquidity support exclusively for licensed Non-Interest Financial Institutions (NIFIs). The facility was introduced in 2017 to aid liquidity management and deepen the financial system.
At the time of its introduction, the CBN also unveiled an Intra-day Facility (IDF) to provide access for Non-Interest Financial Institutions (NlFls) licensed by the Bank. The FfLF features include to “provide a liquidity facility on overnight basis only and to be terminated on next business day.
Authorized Non-Interest Financial Institution (NIFI) to provide eligible securities to the CBN as collateral for the facility. The value of collateral is to be a minimum of 110 per cent of the value of the facility. For example, if a NIFI wishes to take a FfLF of N10 billion, it would be required to provide eligible security collateral worth N11 billion (that is N10 ” 1.1=N11 billion).
The CBN shall specify acceptable collateral(s) from time to time. These shall include, but not limited to the following securities. CBN Safe Custody Account (CSCA) Deposit, CBN Non-Interest Note (CNIN), CBN Asset-Backed Security (CBN-ABS), Sukuk (that has received liquidity status from the CBN), Warehouse Receipt(s) as provided in the CBN Act 2007, and any other collateral designated by the CBN that does not contravene the CBN guidelines for NIFI’s operations.
The transaction shall be at a zero per cent interest rate. The opening hours for FfLF shall be between 2.00pm — 3.30pm, and terminated on commencement of next business day.
It was learnt that several non-interest financial institutions took advantage of the window to boost liquidity amidst tighter monetary management. According to the CBN 2025 annual report, although the facility was accessed on only 12 transaction days, compared with 75 days in the previous year, the average value of transactions surged to N10.81 billion per day, up from N1.07 billion in 2024. This implies that banks borrowed larger amounts each time they accessed the window.
The CBN also raised the administrative fee for the facility to N20 million, four times the N5 million charged in 2024. The apex bank said the fee was determined on a discretionary basis and aligned with the prevailing monetary policy stance.
The Funding for Liquidity Facility is one of the CBN’s instruments for providing short-term liquidity support to eligible financial institutions facing temporary funding pressures. It is designed to promote stability in the banking system while ensuring institutions can meet their settlement and operational obligations.