BULAWAYO, Zimbabwe (AFP) – Zimbabwe's President Robert Mugabe on Saturday defended new rules to give locals a majority shareholding in big corporations at a lavish 86th birthday party, as the country battles to recover from 10 years of economic crisis.

"Our indigenisation policy, like the land reform programme, is meant to correct historical imbalances in the ownership of our resources," Mugabe told thousands at the celebrations in Zimbabwe's second city of Bulawayo, south west of the capital.

The huge party at an exhibition centre was attended about 7,000 people including Mugabe's ZANU-PF supporters, party officials, government ministers, diplomats while no prominent partners in the inclusive government were present.

The organisers said they raised 300,000 dollars for the party, falling short of the target of 500,000 dollars.

The party was preceded by an all-night music bash with performers including Jamaican reggae star Sizzla Kalonji who performed a rendition of Bob Marley's song, Zimbabwe, as well as artistes from South Africa, the Democratic Republic of Congo and Namibia.

Hotels reported brisk business with the majority of them fully-booked as guests arrived in their hundreds in the usually-serene city.

Jovial party supporters stuck their heads out through windows and sang as they arrived in buses from the country's 10 provinces, while officials drove to the venue in luxury cars. Three large cakes were at the centre-stage with banners saying: "Long live our President."

The feast was held as the country struggled to recover from a crisis which saw inflation peaking at 321 million percent and supermarkets running out of food.

The crisis forced Mugabe and his rival Morgan Tsvangirai to form a power-sharing government to mend the economy and ease political tensions in the aftermath of a presidential run-off election in which Mugabe was sole candidate.

But economic recovery has not been as fast as anticipated while political tensions persist.

Civil servants are on strike after they rejected the government's offer to increase their 150-dollar allowance by seven to 21 dollars.

Mugabe said the indigenisation regulations which have been rejected by the prime minister were not meant to nationalise huge corporations.

"This policy is not meant to straighforward nationalise companies but to broaden ownership of our resources. We will need partners from outside, partners of our choice, not imposed on us," he said.

"Yesterday we were downtrodden. There was slavery... Back home the people were colonised and turned into slaves and semi-slaves to do work for masters who had colonised us. It was slavery in the colonies and that is what created the imbalances."

The youth empowerment and indigenisation ministry published regulations three weeks ago to give local a 51 percent share in large companies. The passing of the regulations exposed discord in Zimbabwe's unity government as Tsvangirai said the regulations were crafted behind his back and passed without his approval.

According to the new regulations, to become effective beginning on Monday, Zimbabweans should own 51 percent shares in main companies while foreigners get the remainder.

Mugabe said the indigenisation regulations were like his controversial land reforms launched land reforms 10 years ago which led to the seizures of nearly 4,000 white-owned farms in what Mugabe said was a correction of colonial land ownership imbalances.

The often violent and haphazard land reforms were blamed for a slump in food production in the former regional breadbasket as the majority of the beneficiaries lacked the means and skills to farm.