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This is exactly what is happening in Zimbabwe today. After hyperinflating the Zim dollar by printing the money it borrowed and spent, the Zimbabwean government destroyed its ability to generate revenue through the process of inflation.
As a result, it is resorting to outright theft of privately owned assets. The legal cover for this theft is the ‘indigenisation programme,’ which forces private companies to be 51% owned by anyone “disadvantaged by unfair discrimination on the grounds of his or her race” before April 18, 1980, or the descendant of such a person.
Initially the Zim government was only after the mining sector. But now, predictably, they are going after all private assets. According to the Government Gazette, the indigenisation programme that initially targeted mines, is now a blanket plan over all sectors of the economy covering finance, tourism, arts and entertainment, engineering and construction, telecommunications and motor industry. Indigenisation minister Saviour Kasukuwere has also targeted sports facilities and sports clubs, reports Zimbabwean newspaper Newsday.
Most recently the government has taken aim at private schools, including pre-schools, primary and secondary schools, colleges and universities with an asset value of $1 a year.
Bank assets are also about to be seized. Zimbabwe has given foreign-owned banks one year to hand over 51% stakes to locals, according to a government notice, as President Robert Mugabe ramps up a drive to force all foreign-owned businesses to surrender majority control to blacks, reports Fin24.com. A government notice released last week said all foreign-owned banks with a minimum net value of $1 had one year to reduce their shareholding to 49%.
There are no property rights in Zimbabwe right now. This can be put down to the fact that the government cannot generate revenue for itself by printing money anymore. It can therefore only resort to outright theft of the productive classes to generate money.