HARARE — Zimbabwe Prime Minister Morgan Tsvangirai said Wednesday a new equity law forcing foreign companies to sell majority shares to local blacks is confusing investors and hurting the economy.

"The warped indigenisation policy that has eroded investor confidence created a sceptical international business community that has developed a wait-and-see attitude," Tsvangirai told a news conference in the capital.

"Our toxic politics proved to be major issues affecting investor confidence."

He said potential investors were also concerned about political violence as the country moves toward elections expected next year.

More than 700 firms missed the September 25 deadline to submit proposals to government on how they plan to cede their shares by 2015, but officials have indicated they will continue to accept proposals.

Tsvangirai said the indigenisation policy has caused divisions in the unity government with his long-time rival President Robert Mugabe.

"It has caused discord, not only the principle itself, but the implementation the legal framework" for the equity transfers, he said.

"The principle itself of broad-based empowerment or broad-based upliftment is the ideal, but still there are problems on how to achieve it."

Zimbabwe retains a lot of goodwill from foreign investors, he said, "as long as we come out with an investor-friendly model that balances the interests of the investment and need to empower the ordinary person and not a few well connected elite."

Tsvangirai formed a unity government with 87-year-old Mugabe in February 2009, after a failed presidential election the year before ended in bloodshed, mainly at the hands of pro-Mugabe militants.

The power-sharing regime has stemmed Zimbabwe's economic freefall, but the government has been hamstrung by political bickering over how to prepare for new elections.

By AFP