ECONS 101

PUBLIC CORPORATION

Hey Guyz, watsup? How are y'all doing, I hope you are great. I just had one of the most difficult week of my Life. I worked tirelessly hard on a project that was dear to my heart and it didn't just work out. So y'all have to be doing good cos my happiness clings on that, I find that so many times when am in a place of pain, the happiness of others heal me alot- I could just see and hear a good news about somebody else and immediately feel a surge of happiness come my way. so I can say I share in others happiness how much more the happiness and joy of my esteemed readers who have been with me from day one. so y'all be happy not just for yourselves but for others who might be like me near you. God Bless, so let's get straight to today's lesson.

Public Corporation is defined as a Large Scale Business Organisation set up, owned and financed by the government of a country mainly to provide services to the members of the public. They are directly under the control of the government  to cater for the welfare of the people. It can also be known as Public Enterprise or Statutory Corporation which are run by the government through the tax paid by the people, they are established by an act of parliament or decree. They are controlled by a Board of Directors, appointed by the Government. Examples include- Nigerian National Petroleum Corporation (NNPC), Federal Radio Corporation of Nigeria (FRCN), Nigerian Ports Authority (NPA), etc.

Features of Public Corporation:

a. Monopolistic in Nature- Some Corporations are conferred with monopoly power by an act of parliament or decree.

b. Restriction of Services- It is true that Public Corporations provide services but each one is restricted to the provision of special services, e.g. Former N.E.P.A provides electricity to the public.

c. Employees are Public Servants-  Workers in Public Corporation are called Public Servants, and are treated as such.

d. High Capital Requirement- A Public Corporation requires Large Capital to set up, which cannot be provided by private individuals.

e. Government and Tax Payers Bear the Risks- The Risks of the business are borne by the government and the tax payers, who have provided the capital for financing the business.

f. Not Profit Oriented- Public Corporations are not set up to make profit but to provide Goods and Services to the people.

g. Legal Entity- It is a Legal Entity as it can sue and be sued in its own right.

h. Objective- They are established purposely to provide essential services to the general public.

i. Accountability- The Management of Public Corporations (Board of Directors) are accountable to the government that set up the corporation.

Advantages of Public Corporation:

a. Generation of Revenue- Revenue is generated by the government from public corporations, e.g. Water Rate or Electricity Bill, to finance other projects.

b. It Caters to the Interest of Workers- In Public Corporations, the interest of the workers is catered for and the employees have a great sense of security.

c. Creation of Higher Standards- The Government enters into business in order to ensure higher standards, e.g. Provision of Educational Facilities.

d. Avoidance of Exploitation of Consumers- Public Corporations are consumer-conscious as they ensure that the exploitation of consumers is greatly reduced.

e. There is Continuity- Public Corporations can last for a long period of time. There is perpetual Existence.

f. Provision of Employment Opportunities- Public Corporations provide employment opportunities for the teeming number of the unemployed public.

g. Development of Capital Projects- Establishment of Public Corporations can ensure the development of capital projects, e.g. Rural Electrification.

Disadvantages of Public Corporation:

a. Government Interference- They can interfere in the activities of public enterprises through the appointment of unqualified and incompetent people as board of directors.

b. Bureaucratic Tendencies and Red Tapism- Decision-making may be slow because it has to pass through many people or channels before approval.

c. Lack of Privacy- Since the Annual Report must be presented to the public, such corporations have no privacy of their own.

d. Corruption and Mismanagement- Many Public Enterprises in Nigeria have become the major areas for embezzlement and mismanagement of the Nation's Resources.

e. Lack of Initiative- This is always exhibited in Public Enterprises as Government Functionaries must endorse the programmes and policies of the establishment.

Ways in which the Government participates in Economic Activities:

a. Nationalisation Policy- Government tries to make sure that state controls the ownership and management of key industries.

b. Indigenisation Policy- This is a process by which government makes the indigenes of a nation to participate actively in the running of major sectors of her economy.

c. Granting of Tax Holidays- This is being granted to Companies by way of attracting Entrepreneurs to set up businesses.

d. Import Monopoly- Government also participate in Economic Activities by exercising monopoly over certain items of importation.

e. Establishment of Financial Institutions- Financial Institutions are established to grant overdrafts and loans to private and public enterprises, e.g. Central Bank, Industrial Bank, etc.

Sources of Finance to Public Corporations:         

a. Loans and Overdrafts- This can be obtained from Financial Institutions like Commercial and Development  Banks etc.

b. Grant From International Financial Institutions- Institutions such as the International Monetary Fund (IMF), African Development Bank (ADB), etc give grants to Public Corporations.

c. Grants From Foreign Countries- Foreign Countries can also give grants or finance for the setting up of public corporations as a form of special aid.

NOTE: PARTS OF THIS POST WERE CULLED FROM TONAD ESSENTIAL ECONOMICS FOR SENIOR SECONDARY SCHOOLS BY C.E ANDE.  WE AT EDU-MADE-EASY RESPECT THIS CRAFT TOO MUCH TO DENY ITS ORIGIN. THANK YOU

Hope this was very helpful to you, leave a comment of what you think of this tutorial and your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.