Nigeria’s central bank is turning to a market it locked individuals out of seven years ago as a fresh line of defense against an anticipated wave of election-related spending.
The Central Bank of Nigeria has reversed a 2019 restriction that confined its Open Market Operations bills, which are among the highest-yielding, lowest-risk instruments in the naira market, to banks and select institutional players.
Under the revised framework, individuals, corporates and non-bank financial institutions can now participate in both primary and secondary OMO markets, bidding and settling transactions through Deposit Money Banks.
The reversal is one part of a broader liquidity overhaul. The CBN has also eased restrictions on banks’ access to its Standing Lending Facility, or Discount
Window, removing curbs tied to participation in foreign exchange transactions and primary auctions of government securities.
One restriction remains in place: institutions that tap the Discount Window still cannot bid in OMO auctions on the same day.
Ayodele Akinwunmi, chief economist at United Capital Plc, said the latest measures represent an aggressive liquidity management strategy by the CBN ahead of election-related fiscal spending.
He said the CBN’s aggressive liquidity mop-up strategy is timely, particularly ahead of the expected increase in election-related campaign spending and the substantial expansion in broad money supply (M3) observed in the market.
According to him, the approach is preferable to an outright increase in the Monetary Policy Rate (MPR), as it allows the CBN to address excess liquidity more directly while avoiding an unnecessarily broad tightening of monetary conditions.
Akinwunmi said while the liquidity mop-up may initially exert some upward pressure on interbank money-market rates, subsequent moderation in rates is expected to be gradual rather than drastic.
“This should enable the CBN to maintain effective control of system liquidity and anchor inflation expectations without imposing excessive pressure on economic activity and credit conditions,” he said.
He added that the latest OMO policy would create an additional outlet for investors in the financial market.
The data illustrates just how much the banking system’s liquidity position has already shifted. Banks’ use of the Standing Lending Facility collapsed to N3.52 trillion in July 2026, down from N65.53 trillion in July 2025 and N75.18 trillion in July 2024, and even below the N11.16 trillion recorded in July 2023. It remains only slightly under the N5.77 trillion posted in July 2022.
