Public Corporations – SS2 Government Lesson Note (First Term)

A public corporation is a business organisation owned, managed and financed with taxpayers’ money by the government of a country. Its main aim is to render essential services to members of the public. Profit is not its main motive. It is established by an act of parliament, and the act determines its functions.

Behavioural objectives

By the end of the lesson, students should be able to:

• define a public corporation and give examples;
• state the features of a public corporation;
• give reasons for setting up public corporations and state their functions;
• describe the organisational structure of a public corporation;
• list the differences between a public corporation and the civil service;
• explain the ways in which public corporations are controlled.

Which bodies are public corporations?

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

What are the features of a public corporation?

1. It is wholly owned by the government.
2. It is created by a special law, an act of parliament, which makes it a legal entity.
3. It enjoys a monopoly, as it does not compete with another organisation in the provision of those essential services.
4. Those who work in public corporations are not civil servants. They are known as contract men.
5. A huge amount of capital is involved in its establishment.
6. Profit-making is not the main motive of its establishment. Its purpose is to render essential services to members of the public.

Why are public corporations set up?

1. Providing these essential services needs a huge amount of capital, so the government provides them at minimum cost for all citizens to enjoy.
2. Public corporations employ people, since human labour is required in running the various services.
3. Such social services usually involve initial losses, so no private individual will be willing to bear the 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.

What are the functions of a public corporation?

1. They provide essential services to the people, for instance transport and electricity.
2. They are established to employ the people.
3. They prevent the exploitation of the people by a few individuals.
4. They generate revenue for the government.
5. They promote economic development in the country.
6. They control basic essential industries, which are the lifelines of the nation, for example P.H.C.N. and the Nigerian Railway Corporation (N.R.C.).
7. They help to raise the standard of living of the people through the regular provision of these services.

What is the organisational structure of a public corporation?

The board of directors is appointed by the government. The managing directors are also appointed by the government. Other members are appointed by the board of directors, and the chairman and the deputy chairman are appointed by the minister concerned. These people run the organisation of the corporation.

A corporation has the following branches, which all work towards the ultimate goal for which it is set up:

• finance section
• sales section
• production section
• administrative section
• transport and public relations divisions, etc.

What are the differences between a public corporation and the civil service?

How are public corporations controlled?

A public corporation can be controlled in the following ways.

Legislative control

Public corporations are set up through acts of parliament. The legislature can control them through:

• the laws stipulated in their acts;
• auditing their accounts;
• summoning their officials to explain any act not understood;
• budget allocation and approval.

Ministerial control

The minister controls a public corporation through:

• appointment and dissolution of the board of directors if they are not performing;
• approval of loans and expenditures;
• auditing of accounts;
• issuing directives.

Judicial control

The court can declare the activities of any public corporation illegal if they go contrary to the laws establishing it.

Financial control

Senior officials of the corporation can be made to appear before the legislature to explain their budget. Also, annual reports of public corporations are presented to the legislature for verification.

Public control

Members of the public who consume goods and services of public corporations exercise some

Evaluation

1. Define a public corporation and give three examples.
2. State four features of a public corporation.
3. Give four reasons why the government sets up public corporations.
4. State three differences between a public corporation and the civil service.
5. Explain two ways in which the legislature controls public corporations.

Assignment

1. List five functions of public corporations.
2. Explain any three ways in which the minister controls a public corporation.