Zimbabwe's President Robert Mugabe has signed into law a bill giving local owners the right to take majority control of foreign companies, including mines and banks, a government newspaper reported on Sunday.
Analysts fear the move could sound the death knell for an economy that has also suffered from foreign investor flight, and is struggling with the world's highest inflation rate of over 100,000 percent.
The government has sought to allay business fears of a blanket seizure of companies by saying the authorities would work with different industries to set timetables for foreign-owned firms to transfer shares to locals.
The Sunday Mail said Mugabe, who is seeking re-election in general elections on March 29, had approved the controversial bill in a seal of assent in a weekend government gazette of legal notices.
"President Mugabe has assented to the Indigenisation and Economic Empowerment Bill, paving the way for the Indigenisation of Zimbabwe's economy and the economic empowerment of the country's indigenous citizens," the weekly said.
The government gazette was not immediately available on Sunday, and the minister in charge of black empowerment was also unavailable to comment on the issue.
Mugabe's ZANU-PF party rammed the bill through parliament last September despite fierce resistance from the opposition Movement for Democratic Change which saw it as a drive to enrich a few powerful individuals and to win votes in the elections.
Mugabe's government-which critics accuse of plunging Zimbabwe into turmoil by seizing white-owned farms and handing them to inexperienced black farmers-says the bill is part of its drive to empower the country's poor majority.
Mining and business industry officials have warned the law could quicken the decline of Zimbabwe's economy, which has shrunk by at least 30 percent since 1999.
A separate bill on the key mining sector has been published and government officials expect Mugabe's ZANU-PF to push it through later this year if it is re-elected on March 29.
Mugabe, 84 and in power since independence from Britain in 1980, denies he has mismanaged one of Africa's most promising economies and has predicted a massive win for his party. The veteran Zimbabwean leader is facing a his former finance minister, Simba Makoni, and long time rival Morgan Tsvangirai of the MDC. But analysts say the divided opposition may hand victory to Mugabe.