Nigeria’s Lagos state plans to tokenize real estate to enable more retail investors to purchase property and boost the state revenues.
The state’s ambitious plans were revealed by local media outlets and are expected to be laid out at the Eko Revenue Summit 2024, which kicks off on September 25.
Lagos is Nigeria’s wealthiest state and it is the country’s economic nerve center. It’s home to 21 million residents, a number that’s expected to double by 2050. This rapidly growing demand has pushed the value of the state’s residential real estate sector to ₦173 trillion (US$11 billion), while the commercial sector stands at $630 million.
Tokenization has emerged as one of the solutions to Lagos’ real estate demand. Nigeria’s Ministry of Innovation, Science and Technology will lead a 16-month process to enable the state to tokenize property, allowing retail investors an opportunity to get involved. The ministry will work with other partners in the real estate and technology sector on the project, whose budget stands at ₦500 million ($314,000).
One key benefit of Lagos’ real estate tokenization is fractionalization, where expensive properties are broken down into smaller shares that retail investors can afford. This raises financial inclusion, reduces risk and offers portfolio diversification for the investors. For the property owner, it presents an easy way to raise money without having to sell the entire property.
Overall, tokenization would also stamp out the rampant corruption in Nigeria’s real estate. Corrupt government officials frequently collude with real estate firms to falsify documents and alter records, stealing billions from Nigerian investors.
With the tokens recorded on an immutable and tamper-proof blockchain, the real owners could prove their ownership easily.
The project faces some formidable challenges, including a lack of infrastructure. The Nigerian government has recently floated the idea of a sovereign national blockchain, provisionally dubbed Nigerium, but experts say it could take years before it’s ready to handle sensitive data.
Some, including the former Budget and National Planning Minister Clem Agba, have warned that regulations (or a lack of it thereof) could also hinder tokenization. While defending a similar tokenization plan by the Nigerian government two years ago, he noted that the country doesn’t have a framework to protect token sector investors.
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Source: https://coingeek.com/nigeria-lagos-state-targets-real-estate-tokenization-to-boost-revenue/