The Consequences of Land Expropriation without Compensation

In early 2000, Zimbabwe’s former dictator Robert Mugabe began chaotic land seizures of twenty-three million acres of privately-owned farmland. Mugabe, who ran Zimbabwe as his private fiefdom from 1980 to 2018, gave the green light to his paramilitary supporters to invade commercial farms. The property rights of commercial farmers were revoked and the state resettled the confiscated lands with small-scale agriculturalists.  

The violent theft of privately-owned commercial land had predictable results.  

Most of the new occupants of the farmland had no knowledge of commercial farming and returned, in the best of cases, to subsistence farming. With much of the land uncultivated, agricultural production dwindled. The commercial farmers left for other African countries such as Zambia, Nigeria, and Ghana, taking with them their intricate knowledge of farming practices. Food shortages devastated the Zimbabwean people as agricultural production in the nation that was once dubbed the “breadbasket” of Africa, fell 60 percent within ten years.  

Commercial farmland lost an estimated three-quarters of its aggregate value between 2000 and 2001 alone. That one-year loss exceeded by $5.3 billion all the foreign aid given by the World Bank to Zimbabwe since independence in 1980.  

The impact of the farm seizures sent destructive ripples throughout the economy. Companies that processed and packaged food, and exported agricultural produce shut their gates. Seven hundred companies closed by the end of 2001, as industrial production declined by 10.5 percent in 2001 and an estimated 17.5 percent in 2002. Zimbabwe’s export earnings collapsed. Declining domestic production deprived Zimbabwe of the ability to earn foreign currency, resulting in widespread shortages of imported goods, including food and clothing. 

Banks, which had previously used land titles as collaterals when extending credit to farmers, were suddenly saddled with a lot of bad debt and the financial system froze. Dozens of banks collapsed. With no guaranteed property rights, foreign direct investment dropped from a high of $444 million in 1998 to a low of $3.8 million in 2003. 

To meet its obligations to domestic and foreign creditors, the government ordered the Reserve Bank of Zimbabwe (RBZ) to print more money, sparking the first hyperinflation of the 21st century. In 2008, hyperinflation peaked at 89 sextillion percent and in July of that year, the daily inflation rate averaged 98 percent. That means that prices effectively doubled every 24 hours. 

The socio-economic consequences of land expropriation were extensive, and Zimbabwe experienced a miserable decade between 1998 and 2008. During that time, its economy contracted at an annual rate of -6.09 percent and per capita income fell from $1,640 to $661. As a consequence of economic contraction, Zimbabwe’s unemployment rate rose and today 95 percent of Zimbabweans are still without work.” That year, Zimbabwe’s GDP per capita collapsed to a level last seen in 1952. 

Life expectancy fell from 60 years in 1985 to 44 years in 2003, though by 2015 (the latest year for which data is available) that figure was back up to 60 years. The cholera outbreak of 2008 that afflicted thousands of people merely confirmed the obvious: Zimbabwe was a failed country. 

Other nations, which are considering similar policies, are mistaken if they believe they can escape the disastrous fate that befell Zimbabwe after its experiment of land expropriation without compensation. The economic consequences that follow the policy of land seizures will always remain unavoidable and catastrophic. 

This blog post was coauthored with Alexander Hammond.