Expanding Property Taxation in Customary Areas in Africa

This blog was originally published by the Local Public Sector Alliance.

Property taxation is widely recognized as a cornerstone of subnational finance and a key enabler of effective decentralization worldwide. It has recently gained increased attention across African countries. Yet, it remains one of the most underutilized major local tax instruments in lower- and middle-income countries. As reform efforts gather momentum, a major challenge has come to the forefront: extending property taxation to areas characterized by customary authority and traditional land tenure systems.

A recent policy brief by the Local Government Revenue Initiative (LoGRI), titled “Extending Property Taxation in Areas of Customary Authority and Tenure”, explores this challenge in depth. It demonstrates that expanding property taxation in such areas goes beyond the implementation of technical reform and demands a nuanced understanding of local politics, power relations, trust, and historical context. The authors note that while better property taxation can enhance local revenue generation and promote greater fairness, reforms need to account for how land is owned, managed, and valued in these localities.

Drawing on examples from across Africa, the brief offers practical insights into how governments can design property tax systems that can be both administratively effective and politically feasible. It underscores the importance of government collaboration with traditional leaders and community structures to ensure that reforms are perceived as legitimate and can be sustained through public support. Ultimately, the policy brief emphasized that extending property taxation in customary areas requires building coalitions of local government and customary institutions whilst also strengthening administrative capacity for implementing property tax reform — a truly collaborative approach to local governance.

The Imperative for Expansion and the Inequity of Absence

In many African countries, there exists an historical institutional division between areas of formal state authority and areas of customary authority, where customary leaders manage collective land ownership and occupancy rights. which has often resulted in a fragmented land governance and fiscal landscape. While the degrees of influence of customary authority vary widely across African countries, reflecting colonial legacies that have produced distinct structural patterns between former French and British territories, property tax systems tend to be either weak or entirely absent in areas of customary authority. This can generate several critical challenges, including:

• Unequal tax treatment: If property taxation is weaker in areas of stronger customary authority, it may entail different tax burdens for otherwise similar properties.
• Unequal service delivery: If formal state service delivery is influenced by effective property taxation, the weakness of taxation in customary areas may lead to poorer service delivery.
• Fragmented governance: Planning processes may be somewhat separate between areas of strong customary authority and those under greater state control, undermining the development of coherent development strategies.
• Weak social contract with the formal state: The relative or total absence of taxation for some communities may contribute to them remaining comparatively disconnected from the formal state and weaken their ability to make demands on the state.

Successfully expanding property taxation into these areas has the potential to support improved service delivery thus ensuring equity in service access across areas of state and customary authority. This could enable building strong links between citizens and the formal state, and encourage inter-institutional cooperation between local government and traditional authorities.

Why is Expanding Property Taxation in Customary Areas So Challenging?

1. Legal barriers: In many countries, property taxation in customary areas is restricted either explicitly by law or indirectly through requirements for formal land titles, which are often absent. Addressing these constraints typically requires legal reforms that are politically sensitive and often slow to implement.
2. Opposition from customary authorities: Customary leaders may view property taxation as a threat to their authority over land allocation and local revenue systems, leading to resistance against reforms. Even where taxation is legally permitted, the strong legitimacy of traditional authorities can make implementation politically difficult.
3. Lack of public trust: Citizens in customary areas often have limited trust in formal local governments due to weak state presence and historically low levels of service delivery. As a result, tax compliance may be low, making enforcement costly and reducing the effectiveness of taxation efforts.
4. Conceptual challenges: Traditional justifications for property taxation – such as payment for services or taxation of property wealth – are less applicable where tenure security is weak and property markets are limited. These conditions require adapted tax policies that better reflect local realities and perceptions of fairness.

Potential Strategies for Expanding Property Taxation in Customary Areas

Expanding property taxation in customary areas requires approaches that address legal, political, and institutional constraints while fostering cooperation between state and traditional authorities. Rather than bypassing customary institutions, emerging evidence suggests that collaborative and adaptive policy innovations can support more effective and legitimate taxation systems. Several key strategies have been identified:

1. Removing legal barriers. Revising legal frameworks to permit property taxation in customary areas can create space for collaboration between local governments and traditional authorities. Allowing customary leaders to participate in decisions about how taxation is introduced can strengthen political acceptance, though reforms may face resistance due to entrenched interests.
2. Decoupling taxation from land titling. Property taxation can be implemented without requiring formal land registration by mapping properties and assigning taxpayer identifiers, reducing concerns about undermining customary tenure systems. However, even such approaches may still be perceived as steps toward formalization, and therefore require careful consultation among both governments and traditional leaders
3. Building trust through reciprocity. Institutional partnerships—such as involving customary leaders in oversight of revenue use, sharing a portion of tax revenues, or collaborating in tax administration – can strengthen legitimacy and improve compliance. Transparent communication about how revenues are used can further build citizen trust and support for taxation reforms.
4. Addressing conceptual challenges around fairness. To address conceptual challenges, governments may adapt property tax in customary areas to account for weaker tenure security and historically limited state service delivery. This can include lowering assessed values, applying reduced tax rates, or linking revenue to targeted service delivery that reflects local governance arrangements.

The Path Forward: Mutual Benefit and Political Viability

While this brief provides a high-level framework, more in-depth research is necessary to understand the challenges and potential strategies fully. Among the most critical questions is determining when and how effective collaboration between local governments and customary institutions can take root in practice.

For cooperation to succeed, three essential conditions must be met: both local governments and traditional authorities must perceive working together as mutually beneficial, politically feasible, and unlikely to undermine their legitimacy. Traditional leaders are only likely to engage when collaboration with the state can strengthen their role in local governance and improve access to public goods. Local governments are incentivized by the prospect of increased revenue and extending the arm of the state. These incentives, however, may not always align, as mistrust, political competition, or limited electoral pay-off may discourage cooperation. Therefore, understanding the political dynamics is essential to designing institutional arrangements that are not only technically sound but also politically viable.