A question may arise “What right or reason has Government in going into business or production Enterprising”? I shall treat this question in its two limbs of right and reason. Government has right to own property, so it has right to own Enterprises. We learn from ancient history on Economic ideologies[1] that Countries have always practiced socialism, capitalism or mixed economy.
A country is socialist when its Government controls all it means of production, while it is capitalist when means of production are owned by individuals. Where both elements of socialism and capitalism are in a Nations economy, that Nation is said to be practicing mixed economy. Nigeria’s economy is a perfect example. Therefore Government has right to own its own Enterprises.
Having established that the state has right to establish and own Enterprises, the following are reasons why a state may need or is obliged to own an Enterprise.
Firstly, a state may need to own a Public Enterprise because of the necessity to provide certain essential goods or services to its citizens. The State or Government has duty to provide for its citizens some goods and services which are essential to them. Services like the supply of electricity and pipe born water can best be provided for by the state. Thus, corporations like the National Electrical Power Authority [NEPA] and water boards and corporations are a must for the state.
Secondly, the state at times wades into the provision of certain goods and services in order to break private monopoly. Certain economic factors may make it impossible for a Private Enterprise to have a monopoly of the provision of certain goods and services. Some consequences of monopoly have grave economic defects. For instance, monopoly can lead to rise in price, the monopoly may decide to be producing standard goods and services since there is no one competing against him, a monopoly may be inefficient, it restricts the right of the consumer to choose his goods and services from a list of options. So the consumer suffers it all. It is this reason that at times forces or makes the Government to venture into such Enterprises to break this monopoly for the interest of the consumer. Yet experiences show us that at times the attempt of Government to break private monopoly often result in public monopoly with the same ugly consequences.
Again, the cost-intensive nature of certain business organization makes it possible for only Government to embark on it. A project may be so costly that individual funds may be inadequate to face it. For example, the construction of a steel industry, hydroelectricity generating plant or water scheme are some of such capital-intensive projects.
Also political considerations influence governmental involvement in the provision of certain social and economic services. In many African countries, development is closely associated with the provision of social services; consequently, the performance of the Government, in many of these countries, is evaluated on the basis of its ability to provide different types of public services in areas where such services do not exist.
Another reason for Governmental intervention in the provision and management of goods and services in many parts of the world is the fact that no person should be permanently deprived of the access to such facilities because of lack of finances or by reason of geographical location.
Another reason for Governmental intervention in the provision of certain goods and services relates to the indivisibility that characterizes such services. Some facilities, such as bridges, tunnels, roads, streetlights and waste disposal facilities cannot be divided or partially provided for the benefit of everybody in the community. Facilities of this type must therefore be provided publicly and financed through taxation.
Another is the consciousness of national security. Certain facilities, like the National Port Authority [NPA], immunization program   and the police, are too vital to be left at the mercy of private citizens.
Furthermore, where the state sees that too many actors in an industry may lead to an unhealthy competition, it becomes necessary that only Government itself could step in and stop the waste of resources that may result from duplication, for example, construction of railway lines where built in absurdity, dangers of avoidable accidents may become imminent. This necessitated the establishment of the Nigerian Railway Corporation [NRC].
These and many others are the reasons why states go into the business of Production Enterprises.

Until recently, the state’s scope of activities had no defined limits. In addition to its sovereign functions,[2] it was involved in economic life through direct control over the production and distribution of many goods and services. In a number of countries, the state was also responsible for managing financial institutions, as well as controlling trade and capital flow between the national economy and the rest of the world. This interventionist system, which was justified in various ways, eventually ran out of steam. For whatever reason, the outcome was in most cases, the establishment of a Government monopoly, which in time created imperfection in the market for goods and services. Thus what starts as a theoretical justification for public intervention, ended up in establishing a replica of what is to be eliminated.[3]. The state came to release the need to withdraw from the commercial sector and devote more time and resources to the delivery of essential public services. The tool for this is the Privatization of inefficient Public Enterprises. No doubt, the private sector is far better equipped than the Government to manage commercial activities effectively, because its decision making apparatus is less unwieldy and its ability to adapt changes in the environment is greater.  The state’s central task therefore becomes limited to liberalizing economic activities, promoting free Enterprises and encouraging healthy competition among businesses while eliminating economic rents and mechanisms that confer a dominant position on a firm or economic agent. A framework for allowing market forces to determine prices needs to be instituted. Such a framework would encourage competition among businesses and suppress the distortions inherent in any system of administered price control[4]. In the context of globalization, the private sector is the main engine for growth. Accordingly, its operations must be free of heavy-handed and cumbersome regulatory or bueaurocratic procedures that could show its expansions. To take full advantage of the opportunities globalization offers, the private sector needs high-quality human resources and managerial capabilities. The sector itself must assume some responsibility for the education and training of the workforce; enable workers to take advantage of potentials offered by new information and communication technologies and to benefit from the relocation of industrial businesses and services.
Instrumental and easing the path of globalization and creating a business environment that attracts and encourages private sector activities[5] is regional integration.

Before the Public Enterprises [Privatization and Commercialization] Act Cap38 Laws of the Federation of Nigeria, 2004[6] was enacted, there were over one thousand [1000] state owned companies in Nigeria and these companies were runned and funded from the Government treasure. Any discussion on why the state of things in our public corporation under  the previous regime was ineffective and in  need of improvement, must start and end with the fact that Government spend a lot and  gained  nothing  from  companies that were virtually unprofitable.
12 years ago, President Olusegun Obasanjo told the nation that successive Governments of Nigeria have invested up to Eight Hundred Billion Naira (N800, 000,000,000) in public owned Enterprises and that actual return on these huge investments have been well below 10%.[7]
These inefficiencies and, in many cases, huge losses are charged against public treasure. The effect was that instead of spending its money on providing basic amenities, Government was busy spending its fund on redundant Public Enterprises from which it received no return. This was responsible for the low standard of living expected in Nigeria.
Under the previous regime, state enterprises suffered from fundamental problems of detective capital structure, excessive bureaucratic control, political intervention, inappropriate technology, gross incompetence and mismanagement, blatant corruption and crippling complacency which monopoly brings about.
So, as it were, these short comings posed serious barrier to the growth and development of our national economy. It was these and other reasons that gave birth to the necessity for Privatization and Commercialization.

[1] cc. s. okeke Textbook on Economics 1st edition p.112
[2] E.g; security, justice, education and health care.
[3] See Pius Okigbo, A layman’s guide to privatization; modus international laws and business quarterly vol2, No3, September, 1997 at P.35.
[4] Seyni N’diaye; op. cit. at p. 19.
[5] Through harmonization of rules and procedures, free circulation of goods, people and capital and the elimination of customs barriers.
[6] As decree No.29 of 1999
[7] Statement of the president on the occasion of the inauguration of the national council on privatization.
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