Oyo assembly backs Makinde's N100bn UBA loan and N300bn debt shift

Oyo State's lawmakers have cleared Governor Seyi Makinde to borrow another N100 billion from United Bank for Africa (UBA) and to move a separate N300 billion contractors' loan from Access Bank to the same bank.

The House of Assembly gave the go-ahead on Wednesday after the governor wrote to Speaker Adebo Ogundoyin asking for approval, according to reports of the plenary.

The two deals are not the same kind of money. The N100 billion is new borrowing. The N300 billion is a refinancing: the state is not taking on an extra N300 billion, but shifting an existing debt to a new lender on cheaper terms.

What the numbers mean for Oyo

The contractors' facility currently sits at Access Bank at 26 per cent interest. Under the approved arrangement, UBA takes it over at 22 per cent, a drop of four percentage points. That should trim what the state pays on that debt, though the actual saving depends on how much is still owed and how repayments are scheduled.

The fresh N100 billion also carries 22 per cent, but that rate can be reviewed as money market conditions change. It runs for 48 months, with a management fee of 0.25 per cent a year and an advisory fee of 0.5 per cent a year, both charged on the outstanding balance.

There is a three-month break from paying back principal and interest. The interest that builds up during that window is not cancelled; it will be paid along with the fourth, fifth and sixth instalments.

Lawmakers who spoke during the debate, including Deputy Speaker Muhammad Abiodun Fadeyi, Adebayo Babajide Gabriel, Olorunpoto Cephas Rahman and Sunkanmi Babalola, argued that the spending is needed to finish projects already started.

They named the LAUTECH Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road as examples. Completing them, the lawmakers said, would improve transport, support businesses, create jobs and make sure money already spent does not go to waste.

For ordinary residents, the practical question is whether those projects get finished and whether the state can service the loans without squeezing spending on schools, health and other services. The new borrowing adds to Oyo's debt stock, while the refinancing only restructures what is already owed.

The approval also means the state's contractors' finance dealings will now sit with one bank, UBA, rather than being split with Access Bank.

What happens next

The Makinde administration can now draw the N100 billion from UBA and complete the transfer of the N300 billion facility. How much the state eventually saves, and what the new loan truly costs, will depend on the final terms and how the repayment schedule plays out.