Theory question 105
Government and BusinessCommerce 2 (essay)
(a) Explain six reasons for government participation in business enterprises
(b) State four demerits of government participation in business enterprises
Show the model answer
(a) Any six, explained: to provide essential services (water, electricity) that private firms may not provide; to prevent private monopoly and exploitation; large capital needed beyond private investors; for national security/strategic industries; to provide employment; to generate revenue for government; to ensure even development across regions; to control the economy and prices; to protect consumers' welfare.
(b) Any four: inefficiency and poor management; political interference; corruption and embezzlement; losses and burden on public funds/subsidies; bureaucracy and delay; lack of profit motive/poor service; overstaffing.
Each reason should say why private firms alone are not enough.