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Gombe State University - Lecture Notes on MPA 816/PADM 706, Public Enterprise Management

• Course offered to Masters of Public Administration and Postgraduate Diploma in Public Administration students
• Compiled by Dr. Usman Bappi in July 2021
• The course covers public enterprise management, including introduction, classification, financing, organization, management, theories, and privatization in Nigeria.

Table of Contents

• One: Public Enterprise: Introduction, overview, meaning/definition, objectives, significance, characteristics
• Two: Classification of Public Enterprise: Public/Statutory Corporations, State-Owned Companies, Public/Private Partnerships, Financial Institutions, Commercial and Industrial Companies, Regulatory or Service Boards
• Three: Reasons for Establishment of Public Enterprise
• Four: Financing of Public Enterprises: Internally Generated Revenue, External Sources of Funds, International Sources of Funds
• Five: The Organization and Management of Public Enterprises: Departmental Undertakings, Features, Merits and Limitations, Government Companies, Features, Merits and Limitations, Statutory Bodies, Features, Merits and Limitations.
• Six: The Management and Control of Public Enterprises
• Seven: Theories of Public Enterprise; Classical Theory, Liberal Theory, Infrastructure Theory, Market Failure Theory, Basic Needs Theory
• Eight: Public Enterprise & National Development: Roles of public enterprise in national development
• Nine: Privatization Policy in Nigeria: Definitions and Meaning of Privatization and Commercialization, Privatization and Public Corporation, Commercialization & its Objectives, Privatization methods, Advantages & Disadvantages of Privatisation, Conclusion: the future of public enterprise.
• Ten: Challenges of public enterprise in Nigeria
• References: List of all references used in the lecture notes.

Chapter One: Introduction

• Historically, governments focused on essential services while private entities handled most other activities.
• Public enterprises emerged due to heavy development investments and potential profit concerns of private entities.
• Public enterprises are governmental corporate bodies.
• They are components of the governmental apparatus.
• They are important in national development.
• Public enterprises are governmental companies.

Chapter Two: Classification of Public Enterprise

• Public/Statutory Corporations: Government assumes management responsibility.
• State-Owned Companies: Fully owned by the government.
• Public/Private Partnerships: Government holds majority stock.

Chapter Three: Reasons for Establishment of Public Enterprise

• Plan implementation: Assisting development plans.
• Economic independence: Securing economic freedom.
• Strategic sector control: Ensuring government control over essential sectors.
• Employment creation: Providing jobs.

Chapter Four: Financing of Public Enterprises

• Internal revenue: Trading surpluses, earnings from services.
• External sources: Government funds, financial institutions, national and international.
• Capitalization Funds: Initial capital required for public enterprises.
• Grants: Financial aid/support for specific activities.
• Subsidies: Funding to offset possible losses.
• Loans: Financial assistance from government.
• Equity: Increased capital from the government as a shareholder.

Chapter Five: Organisation and Management of Public Enterprises

• Departmental Undertakings: These are a part of the government and are managed similar to any other department.
• Statutory Corporations: These are independent corporate bodies regulated by a special act.
• Government Companies: These companies are regulated by the Companies Act and have a separate legal entity.

Chapter Six: Management and Control of Public Enterprises

• Ministerial Control: The Ministry of Finance and other departments have a role in overseeing the public enterprises.
• Auditor General: Responsible for financial audits, with varying powers across countries.
• Special Agencies: Consumers' councils, advisory committees, external experts and review committees are examples of agencies for overseeing the public enterprises activities.
• The Executive Board: A company board, comprised or a majority of in-house managers with some outside representatives, responsible for management.

Chapter Seven: Theories of Public Enterprise

• Classical Theory: Private sector is dominant with government playing a supporting role in maintaining law and order.
• Liberal Theory: Government intervention is essential in certain strategic areas because the markets fail to deliver basic needs, allocate resources efficiently or provide goods and services at a fair price for profit.
• Infrastructure Theory: Public enterprises are required to produce goods and services due to the capital investment that is required for infrastructure. Without public enterprises, natural monopolies may emerge in the private sector.
• Market Failure Theory: Markets often fail to accurately and equally allocate resources, thus requiring government intervention to address societal needs like infrastructure and basic services.
• Basic Needs Theory: Development is focused on providing basic needs for citizens like health, education and housing instead of just economic prosperity.

Chapter Eight: Public Enterprise & National Development

• Development definitions: Growth, change, and planned growth.
• Importance of public enterprises: Capacity-building, equity, and balanced regional development.
• Various roles: Promotion of efficiency, national interests, social objectives, and corrective measures.
• Types of public enterprise: Public utilities, finance institutions, and commercial and industrial companies.

Chapter Nine: Privatization Policy in Nigeria

• Definitions: Full privatization, partial privatization, and commercialization.
• Privatization versus commercialization: Factors that distinguish the two.
• Rationale for Privatization: Improved efficiency, political interference and regulating private sector monopolies.
• Methods of privatization: Public sales of shares, private placements, sale of assets and management buyouts.
• Advantages: Increased efficiency, reduced political interference, greater competition and increased revenue .
• Disadvantages: Creation of monopolies, reduced public interest, and loss of potential returns for the government.

Chapter Ten: Challenges of Public Enterprise in Nigeria

• Unclear expectations: Multiple stakeholders with differing goals.
• "Not Me" Syndrome: Passing responsibility issues.
• Confusion between Cause and Effect: Failure of effective accountability mechanisms.
• Performance Deficits: Poor performance leading to further government intervention and/or reduced performance.
• Strategic Autonomy and Operational Autonomy: Differences can lead to conflicting demands.
• Leadership Issues: Cronyism and nepotism, inadequate leadership and governance.
• Corruption: Revenue losses and lack of investor confidence.
• Labor Unions: Workers' demands for benefits can pose an issue.
• Multiple Management Concerns: Concern over many factors in the management processes.
• Low Productivity: Low morale, lack of adequate benefits and/or welfare schemes.
• Overstaffing: Surplus employees and bureaucratic issues.