Reasons for nationalization of firms
1. For strategic reasons: This is usually the case when there is war or when the government is trying to regulate the economy. Take for instance, if the government wants to go into war with another country, it can quickly nationalize every business owned by the opposing nation so as to limit their income.
2. To prevent exploitation: Another reason why the government might consider nationalizing a business is to prevent exploitation by those private individuals. So if the government notices that citizens are been exploited by a business, because of its monopoly, it might deside to nationalize the business.
3. Political reason: When the relationship between two nations get bad, the government of both countries can decide to nationalize businesses owned by the other nation as a way of preventing or reducing the national income of the country.
4. To avoid foreign dominance of the economy: A way of preventing dominance of the economy by foreigners is also through nationalization. For instance, if the government of Uganda take a step to nationalized Chinese companies in the country, there is going to be a large decrease in the number of Chinese people in Nigeria because, majority of them will have to travel back to their own nation.
5. Need for large capital: Another reason for nationalization is for companies to get large capital from the government. Take for instance, if a company needs capital which can only be provided by the government, it will allow the government to nationalize their business so that they can get the required capital.
6. To prevent wasteful competition: Nationalization can also be with the aim of preventing wasteful competition among companies, especially service companies. The government can come in and take over the ownership and management of such companies.
7. To provide uninterrupted services: When essential services like electricity, water supply, examination boards, etc., are owned by private individuals in a nation, the government can also nationalize those services to make sure that citizens get the best out of those services.
