The Oyo state governor, Engr. ‘Seyi Makinde has justified the approval of N63.4 billion for the overhauling of
the Government House, attributing it to the fluctuating exchange rate.
The approval has generated controversies among the stakeholders, as they submitted that the amount for such project is on the high side.
But Governor Makinde during the presentation of the State of State Address at the House of Assembly, Ibadan on Friday attributed it to the fluctuating Exchange rate of naira to dollars.
Drawing a comparative analysis, the governor submitted that the cost of servicing debt inherited from the previous administration is subjected to the exchange rate available at the 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 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 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, emphasizing 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.
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.
Governor Makinde’s speech drew mixed reactions from the Assembly, with lawmakers commending the transparency in financial disclosures while also urging the Federal Government to devise mechanisms to cushion the effect of exchange rate shocks on state obligations.
The State of the State address comes at a critical time, as states across Nigeria contend with dwindling federal allocations and rising operational costs due to macroeconomic shifts.
