Telone is an example of a Parastatal. Image credit techzim.co.zw

Telone is an example of a Parastatal. Image credit techzim.co.zw

ZIMSEC O Level Business Studies Notes: Features of 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.

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