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Overview of Public Enterprises in Nigeria

Public enterprises are government-owned organizations aimed at providing services to the public, often established through legislation or nationalization of private industries. They are funded through various sources, including internal revenue and loans, and are characterized by features such as being monopolies and having public servant employees. The government owns these enterprises to promote economic development, ensure essential services, and prevent foreign dominance in the economy.

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494 views3 pages

Overview of Public Enterprises in Nigeria

Public enterprises are government-owned organizations aimed at providing services to the public, often established through legislation or nationalization of private industries. They are funded through various sources, including internal revenue and loans, and are characterized by features such as being monopolies and having public servant employees. The government owns these enterprises to promote economic development, ensure essential services, and prevent foreign dominance in the economy.

Uploaded by

noad4real
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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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PUBLIC ENTERPRISES

A public enterprise is a large-scale business organization set up, owned, and financed by the
government of a country with the aim of providing services to the members of the public.

OR

Public Enterprises are business organizations established, owned, managed and controlled by the
government. They are also referred to as Public Corporations or Statutory Corporations.
Examples of Public Enterprises in Nigeria are PHCN, NNPC, NRC, NPA etc.

FORMATION OF PUBLIC ENTERPRISES

 Public Corporation
 Quasi Government departments
 State government owned enterprise
 Local Enterprises
 Creation by Act of Legislature or a Decree
 Nationalization of private industries

Nationalization is the bringing of ownership and management of private industries under the
control of the government. Nationalized industries are therefore industries taken over from
private owners by the government.

SOURCES OF CAPITAL TO PUBLIC CORPORATIONS

 Internally generated revenue


 Grant from foreign countries
 Grant from international financial institutions
 Loans and Overdraft

FEATURES OF PUBLIC ENTERPRISES

1. They are owned and financed by the government


2. They render essential social services
3. Profit-making is not the main motive of their establishment.
4. They are usually monopolies
5. They are established by Acts of Parliament or Decrees
6. They are managed by appointed Board of Directors
7. Their employees are public servants
8. Huge amount of capital is involved in their establishment.
9. They are separate legal entities
10. Their services are restricted
11. They enjoy perpetual existence
Reasons for government ownership of Public Enterprises

 Employment opportunities
 For strategic and security reasons
 To provide infrastructural facilities
 To prevent Monopoly
 To promote Economic Development
 To ensure even distribution of income
 To prevent foreign dominance of the economy
 High capital requirement / The large capital requirement which is needed in some
business cannot be provided by private interests
 For price control and consumer protection purposes i.e. to prevent exploitation of
consumers
 To control or curtail private monopoly powers
 For strategic and security reasons
 To generate revenue for the government
 To prevent foreign dominance of the economy
 To provide essential services to the citizens at affordable prices.
 To avoid wasteful duplication of facilities and services inherent in market competition.
 To provide employment opportunities to the people
 To ensure even distribution of income.
 To ensure a constant supply of goods and services and checkmate the activities of
hoarders of goods
 To control vital economic activities e.g. NNPC, FAAN.
 To promote rapid and even economic development of the whole country e.g. Rural
industrialization
 To encourage research and development activities.
 To provide a model of efficient management in some social and economic activities e.g.
State farms, universities, schools, hospitals etc.

ADVANTAGES OF PUBLIC CORPORATION

1. There will be availability of large and sufficient capital to work with.


2. They base their decisions on the full costs and benefits involved.
3. They can be used to influence economic activity.
4. Public corporation would not abuse its market power.
5. Planning and coordination easier.
6. It is important to ensure that basic industries.
7. It serves as a creation of higher standard of living for the people.
8. It also caters for the interest of the workers.
9. There will be continuity; there is perpetual existence.
10. Avoidance of exploitation of consumers.
ASSESSMENT

1. A public corporation objective is to


(a) make profit
(b) exploit consumers
(c) to render essential service to the public
(d) to get more customers
2. The public corporation is managed and controlled by the
(a) individual
(b) the workers
(c) the taxpayers
(d) government
3. The following are examples of public corporation except
(a) Power Holding Company Of Nigeria (P.H.C.N)
(b) Guarantee Trust Bank (GTB)
(c) Nigeria Ports Authority (N.P.A)
4. All the following are advantages of public corporation except
(a) there is continuity
(b) danger of monopoly
(c) availability of large capital
(d) creation of higher standard of living
5. The employees in public corporation are regarded as
(a) public servants
(b) private servants
(c) company workers
(d) none of the above

Common questions

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Public enterprises are differentiated by management under a board of directors, which provides structured oversight akin to private corporations' governance but aligns with public service objectives rather than profit. Unlike direct government departments, they operate semi-autonomously, focusing on strategic service provisioning .

Government ownership of public enterprises facilitates price control and consumer protection by setting prices that reflect public interest and affordability rather than profit. This stewardship prevents the exploitation of consumers by monopolistic market behaviors typical in unregulated private sectors .

Public enterprises play a significant role in job creation by providing employment opportunities, particularly in sectors requiring large capital investments that private entities might avoid. Their presence supports infrastructural development, which indirectly creates additional employment opportunities .

The perpetual existence of public enterprises ensures continuous availability of essential services despite changes in market conditions or ownership. Unlike private corporations, which may dissolve due to financial difficulties or ownership changes, public enterprises guarantee service continuation due to their government backing .

Public enterprises, being government-controlled, are centrally coordinated to align resources and facilities. This coordination reduces competition-driven redundancies seen in private sectors, such as multiple infrastructures serving the same purpose, thereby optimizing capital allocation and enhancing service delivery efficiency .

Public corporations avoid the abuse of market power by focusing on providing essential services rather than profit. They have the largesse to plan and coordinate economic activities effectively and are obliged to cater to consumer protection and welfare rather than exploit consumers, unlike private enterprises focused on profit maximization .

Public enterprises contribute to economic development by providing essential infrastructure, ensuring the even distribution of income, and promoting rapid and even economic development across a country. They also prevent foreign dominance by controlling vital economic activities, and they generate revenue for the government .

The government owns public enterprises mainly to provide essential services at affordable prices, prevent monopolies, ensure an even distribution of income, and maintain economic development. Additionally, these enterprises are critical for strategic and security reasons and controlling high capital requirement sectors .

Nationalization transfers the ownership and management of private industries into government control. This shift is typically carried out by government acts or decrees and aims to ensure strategic control, prevent monopolistic behavior, and contribute to societal and economic objectives such as equitable service provision .

Ensuring a constant supply of goods and services is vital for public corporations to prevent market shortages and control activities of hoarders. This consistency stabilizes the economy, protects consumers from exploitation, and supports national security and welfare through dependable service provisions .

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