Posted by Chester Morton / Tuesday 16 May 2017 / No comments
The reasons for the establishment of Public Corporations
Definition of Public corporation
A Public Corporation can be defined as an organization, set
up by an Act of Parliament and its sole purpose is to provide services to the
public at an affordable price. Services provided by a typical Public
Corporation includes, but is not limited to, water, electricity, postal and
telecommunication, and public broadcasting.
REASONS FOR ESTABLISHMENT
To create employment
One of the reasons for the establishment of a Public
corporation is to give employment to the people who, otherwise would have been
idle. A Public Corporation needs human resource in order to function. These
human resources have to be recruited and appointed. This act of getting people
to work for the Public Corporation creates employment to the citizens of a
nation.
To create an essential industry
The creation of a Public Corporation is to establish
industries in areas of the economy which the government deems necessary or very
crucial but which investors may not be willing to invest in because of the huge
capital that is required. Apart from that, it is well documented that
investment in such areas of the economy takes a long time to materialize. It is
for these reasons that Public Corporations are established to provide such
essential industries for the economy.
Ensures that prices are controlled
Another reason for establishment of Public Corporation is to
lower the prices of the goods and services they provide. Water, electricity and
other essential services are very important to the people, but when the
provision this dominated by private business men, the prices may be beyond the pockets
of the people. However, when these services are provided by the government
through the establishment of Public Corporations the prices become bearable for
the populace.
Established for political reasons
Sometimes, governments set up Public Corporations just
achieve a political aim. Such Public Corporations are therefore sited as a
reward to the people who voted for a winning party. Sometimes also it is used
to entice them to vote in a desired direction in a coming general election.
To provide capital
If Public Corporations are not established, certain areas of
the country’s economy may be starved of the capital they so need to function
though such areas of the economy are very import to the country. So one reason
why Public Corporations are established is to inject capital into areas of the
economy which the ordinary invest may shy away from. The establishment an
Agriculture Development Bank, for example, is to ensure that capital is provided
for investors in the agricultural sector.
To control an industry
Another reason for the establishment of Public Corporations
is to control an industry. In many African and Asian countries, it is the
intention of governments that the retail industry is controlled by their citizens.
Since this is not the case under many circumstances, many governments use the
establishment of Public Corporations to urge out those who compete with the
citizens. In Ghana, the government established Ghana National Trading
Corporation with the purpose of controlling the retailing industry.
SAMPLE QUESTIONS
1. a. What is a Public Corporation? [3 marks]
b.
Advance five reasons for the establishment of Public Corporations. [12 marks]
