Oyo State's House of Assembly has approved a N100bn loan facility from United Bank for Africa to finance infrastructure projects across the state's 33 local government areas. Governor Seyi Makinde requested the approval in a letter read during plenary on Wednesday. The financing arrangement also includes a N300bn facility to refinance an existing contractors' finance facility that the state government had obtained from Access Bank.
The refinancing element aims to reduce the state's borrowing costs by consolidating its contractors' finance obligations with one institution. Under the existing Access Bank arrangement, the state was paying an interest rate of 26 per cent. UBA would provide the refinancing facility at 22 per cent, cutting the rate by four percentage points. This change is expected to ease the state's financing burden and consolidate its contractors' finance operations with UBA, subject to agreed terms.
The separate N100bn loan carries an interest rate of 22 per cent, subject to review based on money market conditions, with a repayment period of 48 months. The terms include a management fee of 0.25 per cent per annum on the outstanding amount and an annual advisory fee of 0.5 per cent on the outstanding balance. Both facilities include a three-month moratorium on repayment of principal and interest, with interest accruing during this period to be repaid alongside the fourth, fifth and sixth loan instalments.
Lawmakers supporting the approval cited ongoing infrastructure projects including the Ladoke Akintola University Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road as examples of initiatives requiring timely completion. The House said that completing these projects would ensure that investments already made translated into tangible benefits for residents, while sustained infrastructure development would generate employment, stimulate commercial activities and improve movement of people, goods and services across the state. With the Assembly's approval, the N100bn facility is expected to provide additional funding for infrastructure development, while the N300bn refinancing would allow the state to transfer its existing contractors' finance facility from Access Bank to UBA at the lower rate.