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Understanding Public Corporations in Nigeria

Public corporations are government-owned entities established to provide essential social services and welfare to citizens, managed by appointed boards. They serve vital functions such as delivering essential services, ensuring even development, and preventing consumer exploitation, while also requiring significant capital investment. Public corporations contribute to national security, provide social amenities, and create employment opportunities, making them crucial for economic stability and growth.

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377 views2 pages

Understanding Public Corporations in Nigeria

Public corporations are government-owned entities established to provide essential social services and welfare to citizens, managed by appointed boards. They serve vital functions such as delivering essential services, ensuring even development, and preventing consumer exploitation, while also requiring significant capital investment. Public corporations contribute to national security, provide social amenities, and create employment opportunities, making them crucial for economic stability and growth.

Uploaded by

chimobivincent25
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Week 4

SS2

-Topic 1: DEFINITIONS AND REASONS OF PUBLIC CORPORATIONS

Public corporations are government owned establishments and enterprises established through the acts
of parliament or statutes, decrees or edicts to provide essential social and welfare services to the
people. Public corporations are owned by the government but managed by board of directors appointed
by the government.

Types of public corporations

There are two main types of public corporation's:

Those providing essential services like water corporations, Power Holding Company of Nigeria, Federal
Housing Authority and Nigeria Ports Plc.

Those of commercial nature like state owned banks, hotels, textile mills, insurance companies and
transport services.

REASONS FOR ESTABLIHING PUBLIC CORPORATION.

ESSENTIAL SERVICES: Public enterprises provide services which are vital to the citizens and which should
be provided without the motive of profit for the overall good of the masses.

CAPITAL REQUIREMENTS: The capital needed to establish most of the public utilities is so huge that it
cannot easily be afforded by private persons.

GOOD INFRASTRUCTURAL BASE: A good network of roads and railways, powers, communications, etc.
will lay a solid foundation for rapid economic development and progress in the country.

EVEN DEVELOPMENT: The policy of government is to encourage even development and bring about
equitable distribution of the country’s wealth. To achieve these objective the key industries and
organizations should be in the hands of the government.

SOCIAL SERVICES: If education and health matters are left in the hands of the government, it will be
possible to establish more schools and hospitals and run them for the benefit of the rich and poor alike.
SOCIAL SECURITY: Privatization of the commanding heights of the economy amounts to mortgaging the
country to private individuals who will then wield so much economic power that the country becomes a
mere pawn in the hands of profit seeking businessman. A ready example today is that if the Dangote
Group sneezes, the whole country shakes.

NATIONAL SECURITY: For reasons of national security, the government might decide that management
and control of certain industries and organizations should be in its hands. For instance, the Army and
police are under the country of the federal government.

. Government can receive income from dividend rates and fees.

PERPETUAL EXISTENCE: There is continuity in public enterprises. Death or retirement of any member
cannot bring the organization to an end.

PROVISION OF SOCIAL AMENITIES: They provide the public with social amenities at a reduced cost. Basic
infrastructure facilities that are essential for economic development such as road and electricity are
provided by public enterprises.

LARGE CAPITAL FOR EXPANSION: The government because of its large financial resources provides large
capital. This will funds available for large-scale investment.

PREVENTION OF WASTEFUL DUPLICATION OF SERVICES: For instance, if two supply of pipe borne water
is in the hands of individuals, there will be a lot of dams and pipes.

PREVENTION OF EXPLOITATION OF CONSUMERS: Public enterprises help to control price and ensure
stability. This will prevent the exploitation of the consumers by private businessmen. Most social and
essential services are provided at subsidized rate to the public.

PROVISION OF EMPLOYMENT OPPORTUNITIES: To regulate the economy of a nation and ensure full
employment of its citizens. Many public corporations provide employment for the people. The federal
government is the largest employer of labour in Nigeria.

Common questions

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Perpetual existence in public corporations means that these entities continue to function beyond the lifetime of any board member or manager, ensuring consistent service provision. This continuity implies stability and reliability in delivering public services, independent of individual tenure changes, thereby maintaining constant public goods availability .

Public corporations address the challenge of large capital requirements by leveraging government financial resources to fund the establishment and expansion of essential service projects. This capacity allows them to develop infrastructure and services to meet public demand without needing immediate returns, unlike private investments that require profitability .

Public corporations create significant employment opportunities as they are often large-scale employers that require extensive human resources to operate. By employing a substantial workforce, governments can reduce unemployment rates and stabilize the economy. Additionally, these entities regulate economic conditions by stabilizing services and adjusting supply according to public welfare rather than profit, ensuring sustained economic health .

Public corporations ensure social security by preventing economic power concentration among a few private entities, thereby maintaining a check on excessive influence over national affairs. By managing major industries, governments can stabilize services and protect citizens from the profit-driven policies of private businesses, ensuring measures for public welfare and national stability .

The significance of public corporations in national security lies in their exclusive control over industries vital to national interests. By keeping strategic sectors, such as defense and law enforcement, under government control, the risk of private influence on national safety is minimized, ensuring stability and security for the country .

The two main types of public corporations are those providing essential services and those of a commercial nature. Essential service corporations, such as water corporations and power companies, are focused on providing vital services without a profit motive, aiming to benefit the public broadly. In contrast, commercial public corporations like state-owned banks and hotels engage in business activities that generate profit while serving the public .

Public corporations contribute to even development by facilitating equitable distribution of revenue across various regions. By government ownership and control of key industries, resources are allocated not merely based on profit but also upon societal need, thus promoting overall national growth and economic balance .

Public corporations are critical for infrastructure development as they can marshal large capital resources necessary for constructing roads, communication networks, and power facilities. These infrastructures serve as a foundation for economic growth, aiding in business operations, movement of goods, and ensuring a stable environment conducive to progress .

Public corporations reduce exploitation risks by regulating prices and providing services at subsidized rates, which helps in maintaining price stability and preventing private businesses from setting exorbitant prices. This control ensures the accessibility of essential services without excessive financial burdens on consumers .

Privatizing essential services can lead to negative consequences such as economic power concentration among a few private entities, potentially resulting in exploitative practices, reduced accessibility due to cost-driven motives, and a decline in service reliability. Public corporations argue that government control ensures equity, accessibility, and consistency in essential service provision .

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