Business Organization (cooperative society and public corporation)

WEEK: 4

TOPIC: BUSINESS ORGANIZATION

SUB-TOPIC: CO-OPERATIVE SOCIETY AND PUBLIC CORPORATION

Meaning of Co-operative Society

A co-operative society is a voluntary association of persons who come together to pool their resources in order to promote their economic and social interests, based on equality and mutual help.

Definition

A co-operative society is a business organisation formed and owned by members who contribute capital, participate in management, and share benefits according to agreed rules.

Features / Characteristics of Co-operative Society

1. Voluntary membership – People join freely
2. Democratic control – One member, one vote
3. Limited liability – Members’ liability is limited
4. Service motive – Main aim is service, not profit
5. Pooling of resources – Members contribute capital
6. Separate legal entity – Registered under the law
7. Perpetual succession – Continues despite death of members
8. Distribution of surplus – Shared according to patronage

Types of Co-operative Societies

1. Consumer Co-operative Society – Provides goods to members at fair prices
2. Producer Co-operative Society – Helps producers market goods
3. Credit and Thrift Co-operative Society – Provides loans to members
4. Marketing Co-operative Society – Markets members’ produce
5. Multipurpose Co-operative Society – Performs more than one function

Sources of Capital

• Members’ contributions
• Entrance fees
• Loans from banks
• Government assistance
• Retained surplus

Advantages of Co-operative Society

1. Promotes mutual help
2. Easy to form
3. Democratic management
4. Limited liability of members
5. Encourages saving among members
6. Government support

Disadvantages of Co-operative Society

1. Limited capital
2. Poor management
3. Low profit motive
4. Lack of commitment by members
5. Slow decision making

Importance of Co-operative Societies in Nigeria

1. Improves standard of living
2. Encourages savings and investment
3. Provides employment
4. Supports small-scale farmers and traders
5. Promotes economic development

PUBLIC CORPORATION

Meaning of Public Corporation

A public corporation is a business organisation owned, financed, and controlled by the government, established by an Act of Parliament to provide essential goods and services to the public.

Definition

A public corporation is a government-owned enterprise set up to carry out commercial or industrial activities on behalf of the state, with the aim of public welfare rather than profit.

Features / Characteristics of Public Corporation

1. Government ownership – Owned wholly by the government
2. Created by law – Established by an Act of Parliament
3. Separate legal entity – Can sue and be sued
4. Public service motive – Aims at welfare, not profit
5. Financial autonomy – Has its own budget and accounts
6. Perpetual succession – Continues despite change in government
7. Monopoly power – Often enjoys monopoly in its area
8. Managed by a board – Appointed by government

Sources of Capital

• Government grants
• Loans from government
• Revenue from services rendered
• Loans from financial institutions

Examples of Public Corporations in Nigeria

• Nigerian Railway Corporation (NRC)
• Nigerian Ports Authority (NPA)
• Transmission Company of Nigeria (TCN)
• Nigerian Postal Service (NIPOST)

Advantages of Public Corporation

1. Provision of essential services
2. Promotes economic development
3. Creates employment
4. Ensures public interest is protected
5. Reduces exploitation by private monopolies

Disadvantages of Public Corporation

1. Bureaucratic delays
2. Political interference
3. Inefficiency and waste
4. Poor management
5. Lack of profit incentive

Reasons for Government Ownership of Public Corporations

1. Provision of basic services
2. Control of strategic industries
3. Prevention of exploitation
4. Promotion of national development
5. Creation of employment