Posted by / Monday 28 November 2016 / No comments

The functions of Public Corporations

Definition of Public corporation
A Public Corporation is an entity that has been established by an Act of Parliament with the sole aim of providing services to the public at a reasonably priced rate. Some of these services include, but is not limited to, water, electricity, postal and telecommunication, public broadcast.

Creation of employment
One of the functions of a Public corporation is to create employment to the people. A Public Corporation necessary needs human resource in order to function. These human resources have to be recruited and appointed. This activity of populating the corporation generates employment to the people.

Allows for the creation of important industry
Certain areas of a country’s economy are very important to the existence of the people but to invest in such areas requires enormous amounts of capital outlay. Coupled with this is the fact that the profit from the venture may take a while to start coming in. Investors may not have the capital or the time to wait for the gestation period so they would not invest. This is where the government comes in with the necessary capital.

Ensures that prices are controlled
Another function of Public Corporation is that it ensures that the prices of the goods and services they provide are reasonable. Water and electricity, for example, are very crucial to the survival of the populace, but when it is left in the hands of private people, they may price it beyond the reach of the people.

Political considerations
The setting up of some Public Corporations is to score political points. They are sited to reward the people for voting for the ruling party, or to convince them to vote for them in an upcoming general election.

Provision of Capital
Other Public Corporations are established to provide capital to certain areas that are of importance to the country. The establishment of the Agriculture Development Bank, for example, was to ensure that capital is provided for investors in the agricultural sector.

Take control of an industry
Public Corporations are established to take control of a particular industry. In many countries, governments intend that their citizens control the retail industry. Sometimes, this is not the case so the government may establish a corporation to squeeze the players out. The establishment of the former Ghana National Trading Corporation was for Ghana to take control of the retail trade.

1. a. What is a Public Corporation? [3 marks]
    b. Advance five reasons for the establishment of Public Corporation. [12 marks]

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