Public Corporations/ Parastatals

• These are entities found in the public sector
• They are owned by the local and national government and
• They exist primarily to provide an essential public service such as Refuse collection, fuel, education or street lighting.
• There is usually no profit motive although some corporations are commercialized.
• They are usually formed by an ACT of parliament for example the University of Zimbabwe Act and the Grain Marketing Board Act.
• Examples of public corporations include GMB, University of Zimbabwe, National Railways of Zimbabwe and ZESA holdings.
• Public corporations fall under the control of a ministry and its minister.
• Public corporations are separate legal entities.
• The capital is provided by the government.
• They enjoy powers set out in the legislature.

Advantages

• Provide essential services to the public which would otherwise be impossible or unprofitable to be provided privately.
• Products are sold at cost or nominal prices that are affordable to the public.
• Shares are sometimes sold publicly to everyone on the stock exchange enabling people to participate.
• Continues to exist even if the government changes.

Disadvantages

• The lack of profit motive usually means that the businesses are inefficient and poorly run.
• Often suffer from political interference and corruption
• Are often under-funded.

To access more topics go to the O Level Business Notes page.