Public corporation: Meaning, Functions, Characteristics and reasons for setting up

CONTENT

• Meaning, Characteristics and Reasons for setting up Public Corporations
•  Functions and Organizational Structure
• Differences between Public and Civil Service and the Control of Public Corporation

PUBLIC CORPORATION

A public corporation may be defined as a business organization, owned, managed and financed with tax payer’s money by the government of a country. The aim is not to make profit but to render essential services to the members of the public. It is established by acts of parliament and they determine their functions.

Public corporations are owned by the government but are managed by boards of directors appointed by the government. Such corporations include, the National Port Authority (N.P.A.) Nigeria National Petroleum Corporation (N.N.P.C.) Power Holding Company of Nigeria (P.H.C.N.) etc

FEATURES OF PUBLIC CORPORATION

1. It is wholly owned by the government.
2. Being created by special laws incorporating them makes it a legal entity.
3. It enjoys monopoly as it does not compete with another organization in the provision of those essential services.
4. Those who work under public corporation are not civil servants, they are known as contract men.
5. A huge amount of capital is involved in the establishment of public corporation.
6. Profit making is not the main motive of its establishment but to render essential services to members of the public.
7. It is set up by an act of parliament.

REASONS FOR SETTING UP PUBLIC CORPORATION

1. Because of the huge amount of capital that is involve in the provision of these essential services, the government therefore provide such services at minimum cost to all citizens to enjoy.
2. Public corporations provide employment for people since human labour is required in running the various services.
3. Such social services usually involve initial losses and as a result no private individual will be willing to bear such risk.
4. To avoid duplication of service.
5. To ensure government control of sectors of the economy.
6. To ensure rapid economic development.
7. To ensure a constant and regular supply of those services.

EVALUATION QUESTION

1. What is public corporation?
2. List 5 features of public corporation.

FUNCTIONS OF THE PUBLIC CORPORATION 

1. They provide essential services to the people for instance, transport , electricity etc
2. They are established to provide employment to the people.
3. They prevent exploitation of the people by few individuals.
4. They generate revenue for the government.
5. They promote economic development in the country.
6. Public corporation control basic essential industries which are life wires of the nation for example, P.H.C.N., N.R.C.
7. They help to raise the standard of living of the people through the regular provision of these services.

ORGANISATIONAL STUCTURE OF PUBLIC CORPORATION

The Board of Directors is appointed by the government. There are also managing directors who are also appointed by the government. Others are appointed by the board of directors, the chairman and the deputy chairman are appointed by the minister concerned. The above mentioned people get on with the organization of the corporation.

A corporation has the following branches; finance section, sales section, production section, administrative section, and transport and public relations divisions etc, all work towards the ultimate goal of the corporation for which it is set up.

EVALUATION QUESTION

1. List 5 functions of public corporation.
2. Explain the organizational structure of public corporation.

DIFFERENCES BETWEEN PUBLIC CORPORATION AND CIVIL SERVICE

1. Government ministries render services without profit motive, while a public corporation is established to provide services.
2. A public corporation is managed by members of board of directors, while the civil service is managed by a minister advised by the Director General (Permanent Secretary).
3. The political head of a public corporation is the chairman, while the political head of a ministry is a minister.
4. Those who work in public corporation are called public servants while those who work in civil service are known as civil servants.
5. The administrative head of a public corporation is the General Manager, while that of the civil service is known as Director General or permanent secretary.
6. Public corporations are set up to provide essential services like water, electricity for the comfort of the people, while government ministries are set up to formulate and execute government policies.
7. A public corporation takes decision quicker than a ministry.
8. Public corporation can still perform without the annual budgetary allocation, while government ministries fully depend on the annual budgetary allocation to perform.
9. Workers in public corporations enjoy better conditions of service, while workers in government ministries do not enjoy much conditions of service.

CONTROL OF PUBLIC CORPORATION

The public corporation can be controlled through the following ways;

1. Legislative Control: Public corporations are set up through acts of parliament. The legislature can control them through the following ways;
2. The laws stipulated in their acts.
3. Auditing their accounts.
4. Summoning their officials to explain any act not understood.
5. Budget allocation and approval.
6. Ministerial control: This is done by :
7. Appointment and dissolution of board of directors if they are not performing.
8. Approval of loans and expenditure.
9. Auditing of accounts
10. Issuing of directives.
11. Judicial Control: The court can declare the activities of any public corporations illegal if they go contrary to the laws establishing them.
12. Financial Control: Senior officials of the corporation can be made to appear before the legislature to explain their budget. Also annual reports of public corporation are presented to the legislature for verification.
13. Public Control: Members of the public who consume goods and services of the public corporations exercise some form of control through criticisms they level against these corporations.

EVALUATION QUESTION

1. Differentiate between public and civil service.
2. How are public corporations controlled?

GENERAL EVALUATION/REVISION QUESTION

1. State five reasons for setting up public corporation
2. Describe the organizational structure of public corporation
3. Mention six(6) examples of public corporation.
4. State 5 features of communism.
5. Highlight 5 features of feudalism.

READING ASSIGNMENT

Comprehensive Government by J.U Anyaele pages 113-116.

Essential Government by C.C. Dibie pages 121-126.

WEEKEND   ASSIGNMENT

1. A public corporation is headed by a —- (a) minister (b) permanent secretary (c) chairman.
2. Those who work in public corporation are called — (a) civil servants (b) public servants (c) political head.
3. Public corporation is set up by —- (a) the minister (b) act of parliament (c) chairman.
4. Public corporations are owned by the (a) director (b) government (c) minister.
5. All but one of the following are examples of public corporation (a) NIPOST (b) NITEL  (c) Ray Power

THEORY

1. How is a public service different from a civil service?
2. How are public corporations controlled?