How volatile forex rates affect Oyo’s debt servicing, govt house overhauling cost — Makinde

Oyo State Governor, Engr. ‘Seyi Makinde, has justified the approval of ₦63.4 billion for the overhauling of the Government House, attributing the cost to the fluctuating exchange rate.

The approval has generated controversy among stakeholders, who argue that the estimated amount for the project is excessive.

However, Governor Makinde, during the presentation of the State of the State Address at the House of Assembly in Ibadan on Friday, attributed the cost to the fluctuating exchange rate of the naira to the dollar.

Drawing a comparative analysis, the governor explained that the cost of servicing debt inherited from the previous administration is also subject to the prevailing exchange rate at any given period.

He added that the state is currently grappling with a steep increase in its foreign debt repayment obligations, which have ballooned from ₦70 billion to over ₦300 billion due to exchange rate volatility.

Makinde, who traced the origin of the debt to a $200 million loan obtained from the World Bank during the twilight of the administration of his predecessor, the late Governor Abiola Ajimobi, disclosed that at the time the loan was secured, the exchange rate stood at ₦350 to a dollar, bringing its naira equivalent to approximately ₦70 billion.

“Today, because of the steady depreciation of the naira since 2019, we are now servicing the same loan at a valuation of over ₦300 billion.

“When we assumed office, our monthly repayment stood at ₦700 million. But as of now, we are compelled to pay ₦3 billion monthly.”

The governor expressed concern over the state’s helplessness in the face of foreign exchange fluctuations, emphasising that matters of currency and exchange rate fall strictly under the Federal Government’s exclusive legislative list.

“As a sub-national, Oyo State has absolutely no influence on exchange rate decisions. Yet, we bear the consequences in our fiscal planning,” Makinde lamented.

Despite the financial strain, the governor announced a major development in the area of state security and strategic infrastructure.

On the security situation, Makinde revealed that the government had concluded plans to procure two aircraft for aerial surveillance and security operations.

“These aircraft will not only support our security architecture but will also commemorate Oyo State’s 50th anniversary since its creation from the old Western Region,” he stated, adding that the acquisition aligns with his administration’s broader strategy to ensure the safety of lives and properties across the state.

Speaking candidly to lawmakers, Makinde traced the root of the debt to a $200 million loan obtained from the World Bank during the twilight of the administration of his predecessor, the late Governor Abiola Ajimobi.

“At the time the loan was secured, the exchange rate stood at ₦350 to a dollar, bringing its naira equivalent to approximately ₦70 billion.

“Today, because of the steady depreciation of the naira since 2019, we are now servicing the same loan at a valuation of over ₦300 billion,” Makinde explained. “When we assumed office, our monthly repayment stood at ₦700 million. But as of now, we are compelled to pay ₦3 billion monthly.”

The governor expressed concern over the state’s helplessness in the face of foreign exchange fluctuations, emphasising that matters of currency and exchange rate fall strictly under the Federal Government’s exclusive legislative list.

“As a subnational, Oyo State has absolutely no influence on exchange rate decisions. Yet, we bear the consequences in our fiscal planning,” Makinde lamented.

Despite the financial strain, the governor announced a major development in the area of state security and strategic infrastructure.

He revealed that the government had concluded plans for the procurement of two aircraft for aerial surveillance and security operations.

“These aircraft will not only support our security architecture but will also commemorate Oyo State’s 50th anniversary since its creation from the old Western Region,” he stated, adding that the acquisition aligns with his administration’s broader strategy to ensure the safety of lives and properties across the state.

In his address, the Speaker of the Oyo State House of Assembly, Rt. Hon. Adebo Ogundoyin, disclosed that under Governor Seyi Makinde, the Assembly has witnessed significant welfare improvements for staff within the Assembly and the House Commission.

“Timely salary payments and regular allowances, 30% CONLESS implementation for legislative staff, Promotions and career advancement opportunities, and Monthly release of operational funds for administrative efficiency.”

The Speaker disclosed that the State Government has approved the recruitment of 181 new staff into the Assembly, adding that the exercise would be strictly merit-based.

He praised the synergy between the legislature and the executive branch, crediting Governor Makinde’s open-door approach.

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“We have chosen partnership over partisanship, and the dividends are clear in the policies we have helped shape and the laws we’ve enacted.

“Let me reiterate that our relationship and collaboration remain exemplary, and it is one of the key reasons we have recorded so much progress.”

Rt. Hon. Ogundoyin called on his colleagues to rededicate themselves to the task ahead.

“We are unwavering in our commitment to delivering quality legislation, robust oversight, and responsive representation. We will continue upholding our constitutional duty with sincerity, diligence, and accountability.

“To my colleagues, I extend my heartfelt gratitude for your support, cooperation, unity of purpose, discipline, decorum, and unparalleled dedication.

“Let me remind us all that the next two years present even greater challenges, and we must rise to them with a stronger sense of duty and resolve.

“This House belongs to the people of Oyo State. Their hopes and voices shape our debates, and their future drives our resolve.”

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