THE PROBLEMS OF FINANCING GOVERNMENT CORPORATIONS

CHAPTER ONE

INTRODUCTION

Public corporation are enterprises, which are partly or wholly owned by the government, which private enterprises have been unable to take care of due to lack of adequate capital. Government have generally started playing a major role in economic development and in starting large enterprises in public sector.  Many parastatals come into being when it was believed that rapid economic development required the state to take on the role of an entrepreneur/should also be know that government involvement in running public sector help in shaping its economy.  Government ownership of these enterprises is to help improve its social and economic well being of her people and those amenities that the entrepreneurs cannot provide. In any organization, there are so many components put together that make for an effective performance. The problem that arises is the adequacy of the fund for effective oiling of the operations of an organisation, throughout its lifetime.  Many organisations which started well at the initial stage have failed by the wayside die to shortage of available funds. Public enterprises could be classified into four categories, according to the degree of government participation in ownership and intervention in management.  We have the governmental departments or ministries and agencies like INEC, NBTE. Government invested enterprises where the government held at least 50% of the equity and appoint management.  Subsidiary company of government invested enterprises which allow the government to invest indirectly through government invested enterprises and others.  And also government back enterprises where the government hold less than 50% of the stock.  In developing nation there is a general believe that government should own and control enterprises; and government gave majority control of them appoint top management. Over the past decades, the number and variety for public enterprises in developing country like Nigeria, the overall performance of these enterprises have been rather disappointing.  They have suffered staggering loss thereby becoming a major drain on national budgets and the principal sources of heavy external borrowing.

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