(a) What are public corporations? (b) State any four merits of public corporations.

Answer Details

(a) Public corporations. A public corporation is a business organisation wholly owned and controlled by the government, established by a special Act of Parliament (or decree) to provide essential goods and services to the public, usually in strategic sectors. It has a legal personality separate from the government, is managed by a board appointed by the government, and its capital is provided by the state. Examples include the national electricity, railway and broadcasting corporations.

(b) Four merits of public corporations.

• Provision of essential services: they supply vital utilities (electricity, water, transport) that private firms may find unprofitable, ensuring the public is served.
• Avoids private monopoly exploitation: by running natural monopolies, the state prevents private owners from charging exploitative prices.
• Large capital and economies of scale: government backing gives them ample capital to operate on a large scale and lower unit costs.
• Serves the public interest, not just profit: services can be provided even in remote or unprofitable areas for social benefit.
• Generates revenue and employment: profitable corporations add to government revenue and create many jobs.

Examination reminder: stress that a public corporation is set up by law and pursues public welfare, which distinguishes it from a private joint-stock company.