HARARE - Zimbabwe's unity government is reviewing rules forcing foreign-owned firms to sell a majority stake to locals, a cabinet minister said on Wednesday, adding that the regulations were published prematurely last month.

The regulations came into effect on Monday and give foreign-owned companies, including banks and mines, 45 days to submit proposals on how they plan to sell 51 percent of their shares to black Zimbabweans within the next five years.

Industry executives fear the empowerment drive will discourage foreign investment at a time when the new administration is seeking to attract funds to revive an economy that has suffered from a decade of decline.

"Those regulations were published prematurely," Welshman Ncube, Industry and Commerce Minister told business executives.

He said the rules had not been submitted to a cabinet committee for debate on their legality and whether they were consistent with government policy. The committee would then make recommendations to the government.

"That did not take place. It is now taking place and all the ministers will be asked to make contributions," Ncube said.

President Robert Mugabe's government in 2007 passed an indigenisation and economic empowerment law, before he formed a power-sharing administration with rival Morgan Tsvangirai last year, seeking to localise control of foreign firms.

Last week Mugabe defended the local ownership laws, while Prime Minister Tsvangirai said last month the latest rules were "null and void" because they were done without consultations in cabinet.

"We have consensus that there is need for indigenisation (but) we have no consensus yet on how we should achieve that indigenisation in a manner that empowers our people while growing the economy. We don't have that consensus in the inclusive government," said Ncube.

Industry executives said while the economy had stabilised and even registered growth in 2009, the country's financial resources were no longer enough to sustain further expansion, making foreign aid more crucial.

Zimbabwe's unity government says it needs up to $10 billion to reconstruct the economy but foreign donors are withholding critical funding until the administration demostrates committment to political and economic reforms.

The industrialists said production capacity had stagnated at between 40 and 50 percent, while government tax inflows had peaked at $100 million, a clear signal the country needed external funding or significantly higher exports to stimulate the economy further.

Local banks have only been giving companies loans for up to six months, and businesses say these are too little and too expensive.

"There is a ceiling to which you can go using your own resources. We have reached a stage were we now need long term capital," John Mangudya, head of the Bankers Association of Zimbabwe, said. - Reuters