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.
Daily Trust reports that 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.
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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.
Daily Trust 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.
What it means
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.
Speaking with our correspondent, a financial analyst, Mr. Ayokunle Olubunmi stated that a lot of non-interest financial institutions depended on the window to shore up their capital owing to the hike in Cash Reserve Ratio (CRR) in 2025.
Some of the non-interest financial institutions in Nigeria include Jaiz Bank PLC, Lotus Bank, Taj Bank, The Alternative Bank, Summit Bank, among others with non-interest windows.
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Olubunmi who is the Head of Financial Institutions Ratings at Agusto& CO, said, "The facility is majorly a liquidity support for those banks. For non-interest banks, the available window for them is quite limited compared to the conventional bank.
"Remember any liability source must not have anything like interest. So a lot of them depend on it. Remember last year there was liquidity pressure with the hike in CRR, even public sector deposits impacted them also. Also remember that for the non-interest bank, their minimum paid up capital is not as high as the conventional banks. The capital they raised is not as much as the conventional bank.
"So the facility is largely to support them and the window will always be there. It is like a window, a market where they can come and get funds. It will still be there and a lot of them will actually play on it."
