Public Enterprises

Public Enterprises Public Enterprises, also known as Public Corporations or Statutory Corporations, are business organizations established, owned, managed, and controlled by the government in Nigeria. Notable examples include PHCN, NNPC, NRC, and NPA.   Methods of Establishing Public Enterprises Legislative Enactment: Public Enterprises are created through Acts of Legislature or Decrees. Nationalization: Private industries can […]

Public Enterprises

Public Enterprises, also known as Public Corporations or Statutory Corporations, are business organizations established, owned, managed, and controlled by the government in Nigeria. Notable examples include PHCN, NNPC, NRC, and NPA.

 

Methods of Establishing Public Enterprises

  1. Legislative Enactment: Public Enterprises are created through Acts of Legislature or Decrees.
  2. Nationalization: Private industries can be nationalized, bringing their ownership and management under government control.

 

Features of Public Enterprises

  1. Government Ownership and Financing: Public Enterprises are owned and financed by the government.
  2. Social Service Provision: They focus on rendering essential social services.
  3. Non-Profit Motive: Profit-making is not their primary objective.
  4. Monopolistic Nature: They often operate as monopolies in their respective sectors.
  5. Legal Establishment: Established by Acts of Parliament or Decrees.
  6. Board of Directors: Managed by appointed Boards of Directors.
  7. Public Servant Employees: Their employees are considered public servants.
  8. High Capital Investment: Involves a substantial amount of capital for establishment.
  9. Separate Legal Entities: They exist as distinct legal entities.
  10. Service Restriction:Their services are typically restricted.
  11. Perpetual Existence:- They enjoy perpetual existence.

 

Reasons For Government Ownership

  1. Capital Requirement: Government ownership addresses the large capital needs of certain businesses.
  2. Price Control and Consumer Protection: Prevents exploitation of consumers and regulates prices.
  3. Monopoly Control: Aims to control or curtail private monopoly powers.
  4. Strategic and Security Concerns: Ensures control over vital economic activities for strategic and security reasons.
  5. Revenue Generation: Generates revenue for the government.
  6. Preventing Foreign Dominance: Prevents foreign dominance in the economy.
  7. Affordable Essential Services: Provides essential services at affordable prices.
  8. Avoiding Duplication: Prevents wasteful duplication of facilities and services.

 

Advantages of Public Enterprises

  1. Steady Service Supply: Ensures a consistent supply of essential services.
  2. Consumer Protection: Prevents exploitation of consumers.
  3. Employment Opportunities: Creates job opportunities for the populace.
  4. Government Revenue: Generates revenue for the government.
  5. Infrastructure Development: Enhances the provision of infrastructural facilities.
  6. Anti-Duplication Measures: Prevents duplication of facilities and wasteful competition.
  7. Critical Project Development: Supports the development of critical capital-intensive projects
  8. Reasonable Cost of Services: Provides essential services at reasonable costs to the public.
  9. Control of Foreign Dominance: Acts as a safeguard against foreign domination of the economy.
  10. National Security Enhancement: Upholds and strengthens national security.
  11. Public Accountability: Public enterprises are accountable to the public, submitting annual reports/accounts to the Parliament.
  12. Capital Availability: Ensures the availability of enough capital for projects.

 

Disadvantages of Public Enterprises

  1. High Capital Requirements: Operations involve significant capital demands.
  2. Bureaucracy and Decision-Making Delays: Slow decision-making processes, bureaucracy, and red tape are prevalent.
  3. Fraud, Corruption, and Mismanagement: Large-scale fraud, corruption, and mismanagement may occur.
  4. Government Interference: Frequent government/political interference in activities and management.
  5. Politicization of Appointments: Appointments may be subject to political influence.
  6. Operational Inefficiency: Operational inefficiency leading to poor and irregular services.
  7. Inadequate Funding: Public enterprises may suffer from poor and intermittent funding by the government.
  8. Economies of Scale Issues: Diseconomies of large-scale production may be experienced.
  9. Employee Attitude and Work Issues: Nonchalant attitude, lack of commitment, laziness, and negligence among workers.
  10. Dependency on Public Treasury: Public enterprises often rely on the public treasury for funds, contributing to financial losses.
  11. Lack of Privacy: Lack of privacy due to public ownership.

 

Sources of Capital/Finance For Public Enterprises

  1. Government Grants and Subvention: Financial support from the government in the form of grants and subvention.
  2. Foreign Grants: Grants from foreign countries or international organizations.
  3. Internally Generated Revenue: Income generated internally and retained profits.
  4. Bank Loans: Loans obtained from banks or other financial institutions.
  5. Trade Credits: Credit purchases as a source of capital.
  6. Hire Purchase: Acquisition of assets through hire purchase agreements.
  7. Equipment Leasing: Leasing equipment for operational purposes.
  8. Asset Sales: Revenue generated through the sale of assets.

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