Reasons for Government involvement in business

Business studies study module

The following are the major reasons for the government’s involvement and participation in business activities;

  • To prevent exploitation of the public by private businesspersons especially in the provision of essential goods and services such as sugar, transport, communication etc. the Kenya Bureau of standards (KEBS) regulates the quality of goods consumed in Kenya.
  • To provide essential goods and services in areas where private individuals and organizations are unwilling to venture because of low profits/ high risks involved.
  • To provide essential goods and services which private organizations and individuals are unable to provide due to the large amount of initial capital required b e.g. generation of electricity, establishment of airlines etc.
  • To attract foreign investment by initiating major business projects
  • To stimulate economic development in the country e.g. by providing social services
  • To provide goods and services which are too sensitive to be left in the hands of the private sector e.g. provision of firearms.
  • To create employment opportunities by initiating projects such as generation of electricity.
  • To prevent foreign dominance of the economy by investing in areas where the locals are not able to
  • To redistribute wealth where returns are very high
  • To prevent establishment of monopolies

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