(a) Define public corporation. (b) Give five reasons for setting up a public corporation in your country.

Answer Details

(a) Definition of a public corporation

A public corporation is a state-owned enterprise established by an Act of Parliament or a decree, with a legal personality of its own, to provide essential goods and services to the public and/or to carry out commercial activities on behalf of the government. Examples in Nigeria include the Nigerian Ports Authority and the Power Holding Company. It is managed by a board appointed by the government but enjoys some measure of autonomy in its day-to-day operations.

(b) Reasons for setting up public corporations

1. To provide essential services: Some services (water, electricity, ports, railways) are so vital that they cannot be left entirely to private profit-seekers.
2. To avoid private monopoly and exploitation: Government ownership prevents private individuals from monopolising essential services and overcharging the public.
3. To provide services requiring huge capital: Some ventures need capital too large for private investors to raise.
4. To create employment: Public corporations provide jobs for many citizens.
5. To promote even development: Government can site corporations in less-developed areas to spread development, which private investors might avoid.

Other reasons include the desire to control strategic sectors of the economy and to generate revenue for the state.