Oyo Assembly Approves Governor Makinde’s ₦100bn Loan Request, ₦300bn Refinancing Facility
The Oyo State House of Assembly has approved Governor Seyi Makinde’s request for a ₦100 billion loan facility from United Bank for Africa (UBA) Plc to accelerate the completion of ongoing infrastructure projects and fund other critical development initiatives across the state.
The approval followed a request by Makinde in a letter addressed to the Speaker of the House, Rt. Hon. Adebo Ogundoyin, which was read during plenary on Wednesday.
The proposed financing arrangement also includes a separate ₦300 billion facility to refinance an existing contractors’ finance facility obtained by the state government from Access Bank.
During deliberations, lawmakers said the arrangement would help reduce the state’s borrowing costs, consolidate its contractors’ finance obligations with one financial institution and strengthen its capacity to execute infrastructure projects.
The ₦300 billion refinancing facility is designed to facilitate the transfer of the existing contractors’ finance facility from Access Bank to UBA. The state had reportedly accessed the facility from Access Bank at an interest rate of 26 per cent.
Under the proposed arrangement, UBA will provide the refinancing facility at an interest rate of 22 per cent, representing a reduction of four percentage points on the existing rate.
The refinancing is expected to ease the state government’s financing burden and enable it to consolidate its contractors’ finance operations with UBA, subject to the agreed terms and conditions.
The separate ₦100 billion loan will be deployed to fund critical infrastructure projects, accelerate the completion of ongoing initiatives and sustain the administration’s infrastructure development programme.
The facility carries an interest rate of 22 per cent, subject to review in line with prevailing money market conditions, and a tenor of 48 months.
Its terms also include a management fee of 0.25 per cent per annum on the outstanding amount and an advisory fee of 0.5 per cent annually on the outstanding balance.
The financing arrangement provides for a three-month moratorium on the repayment of both principal and interest. Interest accruing during the moratorium will be repaid alongside the fourth, fifth and sixth loan repayments, respectively.
Contributing to the deliberations, the Deputy Speaker, Hon. Muhammad Abiodun Fadeyi, alongside Hon. Adebayo Babajide Gabriel, representing Ibadan North II; Hon. Olorunpoto Cephas Rahman, representing Oyo East/Oyo West; and Hon. Sunkanmi Babalola, stressed the importance of sustained investment in infrastructure to create lasting developmental benefits for the state.
The lawmakers cited major projects, including the LAUTECH Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road, among other ongoing infrastructure initiatives.
They noted that the timely completion of the projects would support economic growth, improve connectivity and enhance access to public services across the state.
According to the lawmakers, completing ongoing projects would ensure that investments already made translated into tangible benefits for residents. They added that sustained infrastructure development could create employment opportunities, stimulate commercial activities and improve the movement of people, goods and services.
With the Assembly’s approval, the ₦100 billion loan is expected to provide additional funding for critical infrastructure projects, while the ₦300 billion refinancing arrangement will allow the state government to transfer its existing contractors’ finance facility from Access Bank to UBA at a lower interest rate.
The two facilities are expected to support the state’s infrastructure programme and restructure its existing financing obligations, although the terms of the loans will determine the overall cost and repayment burden on the state.