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PROJECT TOPIC AND MATERIAL ON INTRODUCTION TO PUBLIC ENTERPRISES MANAGEMENT
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Origin of Public Enterprise
The origin of public enterprise could be traced to early twentieth century when government intervened in economic management through departmental organizations, which did not involve creating autonomous public bodies. In the alternative, it granted license to a private enterprise for the management of natural or national monopolies and where public bodies were involved in managing economic ventures, such bodies did not enjoy financial autonomy.
Public enterprise made a very strong appearance after World War I for a variety of reasons, including managing the consequences of the war, especially the economic crisis of the 1930s. However, public enterprises sector developed rapidly because of the spread of Keynesian Interventionist.
Between the two World Wars, political and ideological consideration prompted the establishment of parastatals in the former colonial metropolis. The movement toward the establishment of public enterprises received a new impetus after World War II for reasons related to both ideological considerations and economic efficiency.
Economic nationalism and the success of the Soviet Revolution paved the way for nationalization and strong state intervention in national economic management. When the former European colonies in Africa became independent in the late 1950s and the 1960s, there were only a few public enterprises in different countries.
The public enterprise sector then developed at a tremendous pace in the immediate years after independence through the 1980s and a huge public enterprise sector was firmly established in most countries. The weakness of the private sector, the lack of infrastructure, the low level of social and human development, and the unfavourable social, economic and financial environment are some of the reasons given to explain the proliferation of public enterprises in all areas of economic and social development.
Other reasons include the urge to generate revenue to limit foreign economic domination, and to provide a substitute for private initiative where it was not forthcoming. Public enterprises in Nigeria date back to the colonial era when colonial government established some public enterprises to provide essential services like electricity, railway, and water.
The post independent era marked a watershed in the growth and spread of public corporations. At Independence in 1960, Nigeria had 50 public enterprises, 200 in the 1970s and 1,500 in 1987 when government embarked upon economic reform programmes.
The factors that account for the phenomenal increase include: the evolution of the federal administrative structures (from four units in 1950s to twelve in 1967, nineteen in 1976, twenty one in 1987, thirty in 1991 and thirty six in 1996), the oil boom, and successive governments commitment to making public enterprises an instrument of state economic intervention in the 1970s (Adamolekun, 2002).
Definition of Public Enterprise
Public enterprise can be defined as “an organization that is set up as a corporate body and as part of the governmental apparatus for entrepreneurial or entrepreneurial-like objectives.” Public enterprises are organizations which emerged as a result of government acting in the capacity of an entrepreneur (Obikeze & Anthony, 2004).
According to Malaya (n.d), “Public enterprises are autonomous or semi-autonomous corporations and companies established, owned and controlled by the state and engaged in industrial and commercial undertakings”.
Public enterprise, a business organization wholly or partly owned by the state and controlled through a public authority. Some public enterprises are placed under public ownership because, for social reasons, it is thought the service or product should be provided by a state monopoly. Utilities (gas, electricity, etc.), broadcasting, telecommunications, and certain forms of transport are examples of this kind of public enterprise.
Fubara (1990) described public enterprises as an instrument of national policy for economic development. For Adamolekun (1983), “Public enterprise ’emerged as a result of government acting on the capacity, of an entrepreneur” Governments acquire business interest through parastatalization strategy, nationalization of existing-.private entities and the establishment of fresh productive entities or joint venture schemes so as to learn certain managerial and productive skills from foreign partners.
Laleye (2002) also defined a public enterprise as an organization set up as a corporate body and as part of governmental apparatus for entrepreneurial or entrepreneurial-like objective.
The enterprise is essentially commercial, requires greater latitude than would be typical, and would acquire at least a portion of its funding in the marketplace. It is an enterprise created by law or act of parliament or a decree. The law defines its structure, functions and powers. In other words, we can define public enterprise as a state-owned enterprise created by law for the purpose of national development.
Freidmann (1954) views public enterprise as “an institution operating a service of an economic or social character on behalf of the government but has an independent legal entity, largely autonomous in its management, though responsible to the public through government and parliament and subject to some direction by the government, equipped on the other hand with independent and separate fund of its own and the legal and commercial attributes of a commercial enterprise”.
Meaning of Public Enterprise
Public enterprise essentially has the features of several individuals who act as one. The enterprise thus is viewed as an artificial person who is authorized by law to carry on particular activities and functions. It is described as a corporate body created by the legislature with defined powers and functions and independently having a clear-cut jurisdiction over a specified area or over a particular type of commercial activity (Ekhator, 2002).
Public enterprise is part of government apparatus and three implications are hereby highlighted. First, a public enterprise, by virtue of its intricate relationship with government, is an instrument of public policy and its primary mission is in connection with governmental objectives and programmes. It is therefore naturally under governmental control. Second, a public enterprise, by its nature, mostly manages public resources, especially public money and this means that attention must be paid to mechanisms for enforcing accountability.
Third, the combination of financial and economic objectives with social and political aims invariably makes it difficult to devise appropriate performance measurement instrument (Obikeze & Anthony, 2004).
Public Enterprise (also known as public corporation) is defined by Dimock (1970), as publicly-owned enterprise that has been chartered under federal, state or local government law for a particular business or financial purpose.
According to Pfiffner (1964), “A corporation is a body framed for the purpose of enabling a number of persons to act as single person.”
According to A. H. Hansen, a public enterprise denotes “state ownership and operation of industrial, agricultural, financial and commercial undertakings”.
Characteristics of Public Enterprise
(i) Financed by Government:
Public enterprises are financed by the government. They are either owned by the government or majority shares are held by the government. In some undertakings private investments are also allowed but the dominant role is played by the government only.
(ii) Government Management:
Public enterprises are managed by the government. In some cases government has started enterprises under its own departments. In other cases, government nominates persons to manage the undertakings. Even autonomous bodies are directly and indirectly controlled by the government departments.
(iii) Financial Independence:
Though investments in government undertakings are done by the government, they become financially independent. They are not dependent on the government for their day- to-day needs. These enterprises arrange and manage their own finances. An element of profitability is also considered while pricing their products. It has helped the enterprises to finance their growth themselves.
(iv) Public Services:
The primary aim of state enterprises is to provide service to the society. These enterprises are started with a service motive. A private entrepreneur will start a concern only if possibilities of earning profits exist but this is not the purpose of public enterprises.
(v) Useful for Various Sectors:
State enterprises do not serve a particular section of the society but they are useful for everybody. They serve all sectors of the economy.
(vi) Direct Channels for Using Foreign Money:
Most of the government to government aid is utilised through public enterprises. Financial and technical assistance received from industrially advanced countries is used in public enterprises.
(vii) Helpful in Implementing Government Plans:
Economic policies and plans of the government are implemented through public enterprises
(viii) Autonomous or Semi-autonomous Bodies:
These enterprises are autonomous or semi-autonomous bodies. In some cases they work under the control of government departments and in other cases they are established under statutes and under Companies Act.
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