(a) REASONS FOR GOVERNMENTS PARTICIPATION IN BUSINESS
(i) Government aims at generating revenue by owning and managing some businesses.
(ii) The supply of essential utilities like water, electricity is better done by the government to prevent monopoly by private providers/Increase in the standard of living.
(iii) Wasteful duplication is avoided if many companies lay water pipes in a country or town.
(iv) The economy can be under the control of the government instead of being at the mercy of foreigners/ To avoid exploitation.
(v) For security reasons, the provision of arms and ammunitions is better done by a government organisation.
(vi) Government owned businesses create more employment opportunities than those privately owned.
(vii) Better funding is assured for some industries requiring huge capital outlay if the government operates the business.
(viii) Government operates business for even developments of the country/Political reasons.
(ix) Government invest into areas individuals may be reluctant to venture into.
(b) PROBLEMS ENCOUNTER BY GOVERNMENT BUSINESSES
(i) Problem of large size - some public enterprises are too large and unwieldy for effective performance.
(ii) There is lack of competition which leads to inefficiency because there is monopoly in a particular business.
(iii) There is the problem of political interference in the affairs of the enterprise and many key posts are filled by political supporters.
(iv) Absence of profit motive encourages laziness on the part of the employees/Nonchalant attitude.
(v) Inefficient management is a problem as most of the appointments are on political patronage and accountability is lacking/Large scale corruption.
(vi) The bureaucratic system of decision making constitutes a problem to public enterprises.