Property taxes – which often fall under the purview of local governments and have significant revenue potential – could be a valuable tool for Nigerian local governments looking to enhance their fiscal autonomy.
In Nigeria, property taxes have gone largely under-utilized and contribute less than 0.1% to the national Gross Domestic Product (GDP) on average. Developed economies, by contrast, often collect property taxes close to 2% of their GDP. Improved property tax collection could help supply cash-strapped local governments with the resources required to support their communities while reducing reliance on central government transfers.
Recognizing this potential, the Local Government Revenue Initiative (LoGRI) and the African Centre for Tax and Governance (ACTG) conducted a property tax diagnostic assessment of three Nigerian states – Kaduna, Ekiti, and Niger. The study sought to identify binding constraints on improved revenue performance, set reform priorities, and offer potential solutions.
As the diagnostic assessment concluded, LoGRI and the ACTG held a two-day stakeholder engagement conference in Abuja, Nigeria to disseminate the study’s findings to key government officials, technical advisors, and civil society organizations.
LoGRI’s Executive Director, Dr. Titilola Akindeinde, offered opening remarks from the LoGRI team. In her speech, she introduced LoGRI’s work and specific approach to property tax reform, highlighting key ingredients of successful reform initiatives such as interagency collaboration and taxpayer trust.
“Collaboration between agencies of government and tiers of government are always going to be important for success.” – Dr. Titilola Akindeinde.
To contextualize the diagnostic assessment, Doctoral Fellow Graeme Stewart-Wilson led a session outlining key steps in the property tax cycle: property identification, valuation, rate setting and billing, collection and payments, and compliance and enforcement. Drawing on LoGRI’s reform experience, he also stressed that the purpose of these diagnostic assessments is to go beyond simply describing the challenges facing local governments, and to truly understand why these challenges exist and what can be done to address them.
Following this, members from the ACTG shared the key findings from the diagnostic assessment, identifying binding constraints on improved revenue performance. This included weak intergovernmental cooperation, incomplete property discovery, inconsistent valuation and rate-setting procedures, and inadequate taxpayer sensitization. Addressing these factors could help Nigerian states unlock much-needed local revenues to improve service delivery while enhancing their fiscal autonomy.
Day two of the conference brought key decision makers from each study state together to learn from each other’s experiences, gaining valuable insights into which approaches are most successful in the broader Nigerian context and why. Representatives discussed both political and technical solutions to raising revenue in both equitable and transparent ways. For example, to ensure that all residents pay their fair share, outdated property records need to be updated. For this, participants discussed the possibility of leveraging commercial satellite imagery instead of relying on expensive drone imagery.
The event was a unique opportunity for attendees to connect with government officials, researchers, civil society, and technical advisors from across Nigeria to discuss the future of property taxation in their communities. Participants brought diverse perspectives, experiences and expertise to the table, enriching the quality of the discussions.
By bringing together participants from various states, attendees were able to identify common challenges and discuss innovative ways to surmount these barriers. This cross-pollination of ideas can help equip policymakers with the evidence and tools needed to design effective policies responsive to the on-the-ground reality.
Leveraging these insights could ultimately help improve property tax collection in these states, providing the local government with more revenue to respond to local needs while reducing their reliance on cash transfers from the central government.
Finally, we would like to thank the ACTG – without whom this event could not have taken place – and all the speakers and session attendees for their invaluable contributions to these engaging discussions.
