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Questions and Answers

Which of the following is NOT a purpose of public enterprises?

To create monopolistic markets (correct)

To promote redistribution of income and wealth

To create employment opportunities

To assist the development of small scale industries

What is one of the significant roles of public enterprises in terms of consumer protection?

To provide a basket of essential goods at fair prices (correct)

To eliminate all low-income consumer groups

To prevent citizen participation in ownership

To enforce higher prices for essential goods

Why is the government likely to establish public enterprises?

To centralize the economy completely

To eliminate regional development

To provide a regulated model for industrial development (correct)

To ensure political alignment with private investors

How do public enterprises contribute to technological advancement?

By stimulating research and development for indigenous technology Signup and view all the answers

Which of the following reflects a core significance of public enterprises?

To ensure socio-political stability while fostering economic power Signup and view all the answers

Which area is NOT mentioned as a sector beside the financial sector?

Technology Signup and view all the answers

What is a key feature of statutory corporations regarding their management structure?

Managed by a Board of Directors appointed by the government. Signup and view all the answers

What is one of the main purposes of public enterprises in developing economies?

To supplement state revenue Signup and view all the answers

In what way is a statutory corporation accountable?

It is accountable to the parliament or state legislature. Signup and view all the answers

According to the definitions provided, what primarily drives privatization?

Efficiency and financial consideration Signup and view all the answers

Which of the following is primarily responsible for the financial autonomy of statutory corporations?

They are expected to be self-sufficient financially. Signup and view all the answers

What does full privatization entail according to the content?

Transfer of all shareholding to private entities Signup and view all the answers

Which of the following statements best describes partial privatization?

Sale of some shares while retaining a government stake Signup and view all the answers

What is a possible disadvantage of the management structure in statutory corporations?

High levels of direct government interference. Signup and view all the answers

What is one major argument in favor of privatization?

Private firms have a profit incentive to increase efficiency. Signup and view all the answers

What characteristic distinguishes statutory corporations from private enterprises?

Statutory corporations have capital wholly provided by the government. Signup and view all the answers

Which issue is often associated with government-run industries?

Politically motivated management decisions. Signup and view all the answers

What is emphasized about policies in the basic and strategic sectors of the economy?

They should adapt to changing circumstances. Signup and view all the answers

According to Hemming and Mansor, what does the adoption of management styles in privatization do?

Rewards good performance and penalizes poor performance Signup and view all the answers

The deferred public offer approach is used to address what issue?

Revaluing assets to reflect current market conditions. Signup and view all the answers

How are employees recruited in statutory corporations?

As per the specific requirements determined by the Board. Signup and view all the answers

How does privatization potentially impact competition?

It can lead to increased competition and deregulation. Signup and view all the answers

What is the main outcome of transferring government-owned shares to private shareholders?

Control of public institutions shifts to private hands Signup and view all the answers

What ensures the operational flexibility of statutory corporations?

Their independence in management and financial decisions. Signup and view all the answers

What challenge do state-owned enterprises face that can lead to inefficiency?

Lack of profitability pressure. Signup and view all the answers

What role do statutory corporations play in relation to national interests?

They protect and promote national interests. Signup and view all the answers

What is a common criticism of government-managed firms regarding future investments?

They prioritize immediate gains over long-term benefits. Signup and view all the answers

What often happens to the number of employees in state enterprises due to political pressures?

Surplus workers are often retained despite inefficiencies. Signup and view all the answers

Which company is mentioned as having shown improved efficiency post-privatization?

British Telecom (BT) Signup and view all the answers

What is one benefit of selling state-owned assets to the private sector?

Short-term revenue for the government Signup and view all the answers

Why might privatization not be beneficial in the case of tap water?

It turns a natural monopoly into a private monopoly Signup and view all the answers

What is a key concern with privatizing industries that provide public services?

Profit motives may override public interest Signup and view all the answers

Which of the following describes a natural monopoly?

An industry where one firm is most efficient Signup and view all the answers

What is a potential negative outcome of privatization in the rail industry?

Creation of private monopolies needing regulation Signup and view all the answers

What is one disadvantage of losing state control over profitable companies post-privatization?

Loss of potential dividends for the government Signup and view all the answers

In what situation is it argued that public ownership is preferable to private ownership?

When the industry operates as a natural monopoly Signup and view all the answers

Which of the following is a consequence of privatization concerning future dividends?

Wealthy shareholders receive the profits Signup and view all the answers

What is considered the main goal of state development according to Chinsman?

Eliminating poverty and meeting basic needs Signup and view all the answers

How can the success of a community be assessed?

Through the availability of basic social facilities Signup and view all the answers

What does the long-term development approach focus on according to Chinsman?

Economic growth as the sole indicator of development Signup and view all the answers

Which of the following is NOT listed as a basic need for development?

Transportation facilities Signup and view all the answers

In the broad sense, how is development viewed according to the content?

As the total transformation of a system Signup and view all the answers

According to Bernard, what does development in common parlance typically mean?

Economic growth and change Signup and view all the answers

What is a common misconception about development as argued by some scholars?

Development is solely about economic growth Signup and view all the answers

What do scholars suggest is necessary for development in underdeveloped countries?

Cultural and social change alongside economic growth Signup and view all the answers

Signup and view all the answers

Study Notes

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.

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.

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