Nigeria’s central bank will automate foreign exchange (FX) trading starting in December, replacing the decade-old over-the-counter system to enhance transparency plus liquidity in its currency markets.
The move comes as part of the Central Bank of Nigeria’s (CBN) broader efforts to address inefficiencies in the FX market, which has long been plagued by illiquidity, opacity, plus multiple exchange rates. By introducing the Electronic Foreign Exchange Matching System (EFEMS), the CBN aims to create a more efficient plus accessible market for all participants.
The most significant benefit of automation will be increased transparency. Under the current system, determining the real state of supply plus demand in the FX market has been difficult, leading to market distortions, with insiders holding an advantage.
With EFEMS, real-time information on FX transactions will be available to the public, businesses, plus global investors, allowing them to see market conditions clearly plus make informed decisions. This shift is expected to level the playing field, reducing opportunities for bias plus favoritism in foreign currency allocation.
Moreover, automation will improve efficiency. The manual, paper-based system currently in use often results in delays that frustrate market participants. With EFEMS, transactions will be processed much faster, eliminating these bottlenecks plus allowing smoother operations for businesses reliant on foreign exchange.
While automating FX trades will not directly resolve all of Nigeria’s currency challenges, aligning the official exchange rate with market realities is expected to more accurately reflect the naira’s value.
Over-reliance on oil exports has made the naira vulnerable to external shocks, resulting in multiple devaluations. If the new system fosters a more transparent market, it could help stabilize the naira by narrowing the gap between official plus parallel market rates. Still, EFEMS faces hurdles, such as the technology’s stability, widespread user adoption, plus the CBN’s continued independence in enforcing policies. Automating FX trades represents a significant bagian toward creating a fairer plus more efficient Nigerian market. If well implemented, the reform could restore investor confidence, reduce corruption, plus strengthen the naira—helping Nigeria move toward a more sustainable economic future.