Classwork Series and Exercises {Economics – SS1}: Public Corporation

Economics, SS1, Week 3

Topic: Public Corporation

Contents:

1. Meaning of Public Corporation
2. Features and characteristics of public corporation
3. Examples of public corporation
4. Advantages of public corporation
5. Disadvantages of public corporation

Meaning of Public Corporation

Public corporation is defined as a large scale business organization that is set up, owned and financed by the Government of a country with the aim of providing services to the member of the public. Its aim is to cater for the welfare of the people.

Public corporation can also be called public Enterprise or statutory corporation which is run by the government through the money generated from the tax paid by the people. It is controlled by board of directors appointed by the Government.

Features of Public corporation

1. Objective: The major objective of a public  corporation is to provide essential services to the general public
2. Management: Public corporation is controlled and managed by the board of directors appointed by the Government
3. Ownership: It is owned and financed by the Government
4. Not profit oriented: It is not set up for the purpose of making profit but to provide goods and services for the public
5. High capital requirement: High  capital is required to set up a public corporation, this high capital cannot be provided by private individual
6. The employees are public servant: Workers in public enterprise are public servant and they are treated as one.
7. Monopolistic in Nature: Some corporations are allowed to run as a monopolistic market by the act of parliament or decree
8. Restriction of services: Every services provided by the public corporation has restrictions to the provision of special services e.g N.R.C is for railway while N.P.A is for port
9. Legal entity: public corporation is a legal entity as it can sue and be sued in it’s own right.
10. Government and tax payers bear the risks: Any risk in the business is borne by the government and the tax payers who have provided the capital available for running and maintenance of the business.

Examples of Public Corporation

Examples of Public corporation in Nigeria are listed below:

1. Nigerian Telecommunications Limited (NITEL)
2. Nigerian Ports Authority (N.P.A)
3. Nigerian Railway Corporation (N.R.C)
4. Nigerian National Petroleum Corporation (N.N.P.C)
5. Federal Radio Corporation of Nigeria (F.R.C.N)

Advantages of Public Corporation

The following points below are the advantages of public corporation

• There is continuity
• There will be provision of sufficient capital for running the business
• The public corporation helps in the provision of infrastructural development
• It helps to avoid the exploitation of the consumers
• It caters for the interest of the public and the workers
• It helps to generate revenue into the government purse e.g electricity bill, water bill, toll gate etc
• It helps to create high standard of living
• Development of capital projects

Disadvantages of Public Corporation

The following are disadvantages of Public corporation

• There is danger of monopoly
• It requires large capital to start up
• In most public corporation business; there is mismanagement of funds and corruption
• Inefficiency in operation;lack of competition can bring about inefficiency by the workers and management
• Wastage; in public enterprises waste are not usually  discourage because the loss are borne by the tax payers
• Lack of initiative: Lack of initiative always exhibited in public corporation as government functionaries must endorse the programmes and policies of the establishment
• It is not profitable; most times it run at a loss because it is big and usually lack good personnel to manage it.
• Government interference; Government can interfere in the public enterprise through the appointment of unqualified and incompetent people as board members

Test and Exercise

1. Define public corporation
2. State the advantages and disadvantages of public corporation
3. ———- is the aim of public corporation
4. List and explain the characteristics of public corporation
5. Give 5 examples of public corporation.

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