The International Monetary Fund (IMF) has identified property taxes as an essential but underutilized revenue source for Nigeria and other low-income countries seeking sustainable economic growth.
In a recent blog post titled “How Property Taxes Can Help Low-Income Countries to Develop,” the IMF emphasized that improved property tax frameworks, especially in urban centers like Lagos, could greatly increase local government revenues, thereby funding critical infrastructure and services.
The IMF highlighted that governments worldwide need to raise approximately $3 trillion by 2030 to meet development goals, with emerging markets requiring 4% of their GDP and low-income countries up to 16%.
For countries like Nigeria, which have limited income and wealth tax systems, property taxes could offer a more accessible revenue alternative. Current IMF data shows that property tax collection in Africa and Asia averages just 0.1% of GDP, far below the 1% or higher seen in the OECD and up to 3% in some advanced economies.
“The world’s governments must raise an additional $3 trillion to achieve sustainable and inclusive economic growth goals this decade,” the IMF stated, adding that efficient property taxation in large cities such as Delhi and Lagos could play a pivotal role in addressing local revenue needs.
The IMF also noted that local property taxes might be politically easier to implement compared to broader national taxes, as they directly link tax collection to local spending, increasing accountability and reducing social resistance.
Additionally, the IMF observed that property taxes can capture the wealth generated through urban development, which is especially important given the challenges many developing countries face in taxing mobile income and wealth.
Technologies like geographic information systems (GIS), satellite imagery, and drones can help track property changes, making tax collection more efficient. Cities like Delhi and Bangalore already use these tools to support a market-value-based tax approach, and the IMF is encouraging similar strategies for Nigeria.
The IMF recommended that, as a practical step, Nigeria should initially adopt area-based property taxes and gradually transition to value-based systems as technological capacity improves.
Such a shift would increase transparency and public acceptance of property tax reforms, helping to fund public services and boost local economic resilience.
By harnessing property taxes effectively, the IMF suggested that Nigeria could strengthen its fiscal stability, improve local services, and achieve more inclusive growth, establishing a foundation for long-term development.
