SS1 Commerce Lesson Note on Public Enterprises

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TOPIC: Public Enterprises

CONTENT:

• (a) Meaning of Public enterprise
• (b) Formation and management
• (c) source of capital
• (d) Reasons for government ownership of public enterprises
• (e) Advantages and Disadvantages

Sub-Topic 1: Meaning of Public Enterprise

Public enterprise is a business set up and managed by the government with the sole aim to provide essential services to the public. It is also known as public corporation. Examples of public enterprises are NITEL, PHCN, Nigerian Airways, Nigerian Railway Corporation, etc.

Characteristics/Features of Public Enterprise

1. They are owned by government of a state or country
2. The capital used to establish public enterprise is provided by the government
3. They are established by an act of parliament or a decree under the military government.
4. They are set to not to make profit but to provide essential services to the public
5. Most of them operate as monopoly
6. They are managed by board of directors appointed by the government
7. They render essential services to the general public.

Evaluation

1. Define Public Enterprise
2. State five features of a public enterprise

Formation and Management of Public Enterprises.

Public Enterprise or Public corporations are set up by an act of parliament at the federal level and by an edict at the state level. The law establishing these corporations states the objectives, aims and specific functions and powers of the corporations. The law also states how the corporations will be managed.

The management of public corporations is vested on the boards of the corporations that are appointed by the government.

There is always a chairman and other members that constitute the board.

Also the management or executives’ management is team headed by a general manager.

The general manger reports directly to the boards of each corporation. The board under the supervision of a minister at the federal level and a commissioner at the state level.

Evaluation:

Distinguish between the formation of a cooperative society and a public enterprise.

Sub-Topic 2: Source of capital for Public Enterprises

As stated before, public enterprises are not set-up to make privet but at the same time, they are to generate funds or money to be able to sustain the corporation. The corporation charges money or fees but not as much as what will enable them to make a profit. It is these fees that they charge that they use to manage the corporations. The money generated, however, is not always enough to sustain the corporations. Therefore, they source for money/funds from other sources. These are as follows:

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