HARARE (Reuters) – Zimbabwe’s unity government has  suspended and will review rules forcing foreign-owned firms in  Zimbabwe to sell a majority stake to local people, a spokesman  for Prime Minister Morgan Tsvangirai said yesterday.

Under the regulations, which took effect on March 1,  foreign-owned companies, including banks and mines, had 45 days  to submit proposals on how they planned to sell 51 per cent of  the shares in local subsidiaries to black Zimbabweans within  five years.

The deadline for submitting proposals was Thursday April 15.

“The cabinet has today declared those regulations null and  void, and they are being suspended to allow for broad-based  consultations on the best way to proceed,” spokesman James  Maridadi told Reuters.

“Nothing is going to happen until the regulations have been  reviewed to get a consensus on the way forward,” he said.

There was no immediate comment from President Robert  Mugabe’s officials, who have been leading the empowerment drive  despite warnings that this would discourage foreign investment  at a time when the new administration is trying to attract funds  to revive an economy that has suffered from a decade of decline.

Mugabe’s ZANU-PF government passed an indigenisation and  economic empowerment law, aimed at putting foreign-owned firms  under local control, in 2007, before he formed a power-sharing  administration with rival Morgan Tsvangirai last year.

The government says Zimbabwe needs at least $10 billion to  rebuild an economy that shrank by about 40 per cent in 10 years  and is struggling with dilapidated infrastructure.

Analysts say foreign donors are withholding substantial aid  while waiting for democratic reforms and the full implementation  of the power-sharing agreement.

Mugabe, Zimbabwe’s ruler since independence from Britain in  1980, has previously defended the local ownership laws, while  Tsvangirai has opposed them, citing lack of consultation and  possible impact on investment.

Key foreign players in Zimbabwe’s mining industry include  Anglo Platinum and Impala Platinum Holdings, and Rio Tinto has  gold and diamond mines in the country.

Britain’s Standard Chartered Plc, Barclays Bank Plc and a  unit of South Africa’s Standard Bank are foreign-owned banks  with operations in Zimbabwe.