Public Corporations

According to Ayebare Tumwebaze in his book1 defined public corporations as autonomous

bodies set up by statute for purposes of carrying out specific functions which would otherwise
be carried by government directly. Public Corporation is a body, which is either established by
the constitution or by a statute for purposes of carrying out specific functions of government.
Public Corporations usually enjoy exclusive powers which are provided for by the law and can
be exercised for the purposes of attaining the statutory objectives. These corporations enjoy full
independence in terms of planning, budgeting, financial control, management, but they must do all
these activities while operating under or within the law. Additionally these public corporations have a
right to sue and can also be sued in their names as they are legally registered entities for example in
Mukama vs Uganda Wildlife Authority( CA NO.75 OF 2004) [2008] UGCA 14 where Mukama took legal
action against the Uganda Wildlife Authority alleging that they were responsible for the destruction of
his property from a National Park. It was held that the Uganda Wildlife Authority was held liable for
damages caused by their failure to properly manage their activities under control.

Some of the examples of Public Corporations include the following;

a.) UNRA- Uganda National Roads Authority. This is an agency of
Government, under the Ministry of Works and Transport established by law, the
Uganda National Roads Authority Act Cap. 214, with the responsibility of
maintaining, managing and developing the national road network. The mandate of
UNRA is to advise government on general roads policy and contribute to
addressing of transport concerns.
b.) NSSF- National Social Security Fund. This is a quasi-government agency
responsible for the collection, safekeeping, responsible investment, and distribution
of retirement funds from employees of the private sector in Uganda who are not
covered by the Government Retirement Scheme. They manage mandatory or
compulsory finances and the retirement of workers in the country. 5% is basically
deducted from the salary of the workers. The company itself adds 10% on the very
salary of the workers when they decide to make a transaction of what they saved. It
is regulated by the National Social Security Fund Act Cap.230
c.) URA- Uganda Revenue Authority. The Uganda Revenue Authority is a
government revenue collection agency established by the Parliament of Uganda
operating under the Ministry of Finance, Planning and Economic Development, the
URA is responsible for enforcing, assessing, collecting, and accounting for the
various taxes imposed in Uganda. It also provides advice to the government on
1
Administrative law and practice in Uganda
matters of policy relating to all revenue sources. The Uganda Revenue Authority
Act Cap. 218 governs the Uganda Revenue Authority and Tax Appeals Tribunal
Act.
d.) NWSC- National Water and Sewerage Corporation. This is a water supply
and sanitation entity in Uganda. It is regulated by the National Water and
Sewerage Corporation Act Cap 204.
Other corporations include; National Social Security Fund, Uganda Development Corporation, Uganda
Electricity Transmission Company Limited, Uganda National Oil Company, Uganda Civil Aviation
Authority, Uganda Broadcasting Corporation among others

Objectives for the formation of the Public Corporations.

To regulate particular aspects of the government service or industry for example regulation of services
of industries require a higher degree of concentration. It also calls for technical knowledge.

To foster innovative solutions in service delivery, leveraging technology to improve efficiency and
stakeholder engagement. Embracing innovation allows public corporations to enhance their service
delivery mechanisms.

To establish accountable governance structures that promote transparency, regular reporting, and
public trust in operations. Accountability is fundamental to the public sector and Public corporations
ought to have clear mechanisms for oversight, monitoring, and feedback, thus building trust with the
citizens they serve.

To promote sustainable resource management. Public Corporations are tasked with the responsible
management of Uganda’s natural resources, such as minerals, forests, and wildlife, ensuring these
assets contribute to long term economic prosperity.

To drive robust economic development. The formation of such corporations aims to significantly
contribute to national economic growth by investing in key sectors, stimulating industrialization, and
creating sustainable job opportunities.

Public corporation are established with particular areas of concern for example Bank of Uganda to
regulate finances and advise government on currency reforms , Uganda Investment Authority for the
purposes of promoting investments in Uganda, Civil Aviation Authority which regulates their transport.

Others are established for specialized undertakings for example Uganda National Bureau of Standards,
National Curriculum Center, Uganda National Examinations Board etc. Therefore these are established
to undertake tasks which cannot be carried out anyhow by anybody but rather by technical personnel.

The statues establishing these corporations normally describe the management structure which must be
put in place. The management is given various functions ranging from disciplinary of corporation officials
to autonomous decision making .Public corporations are ’’body corporate’’ which means that they have
a right to sue and be sued in their name.
Public corporations are also given power to impose penalties according to the rules that established
them .These powers may include sanctions against any person who may breach the regulations or rules
provided under particular regulations establishing the corporation.

Characteristics of Public Corporations.

 They are established for a specific objective for example Section 3 of the Uganda
Communications Act, Cap .103 provides for the objectives of the Uganda
communications commission and how it should exercise its duties among which includes
enhancing national coverage of communication services and regulating all
communication companies in Uganda.
 They are established by statute, decree or Act of parliament spelling out the functions,
source of funds and management of the relevant corporations, for example Uganda
revenue is established under Section 2 of the Uganda Revenue Authority Act cap 218.
 Public corporations can sue and can at the same time be sued and thus have their own
name and personality. This means that corporations have their own identity and they are
separate from their directions and would be shareholders. The shareholders and owners
enjoy the benefit of limited liability where they are not liable for the company's debt or
other obligations personally. In the case of Salmon v Salmon [1897] Ac 22, Lord Mac
Naughten stated that, the corporation is at Law a different person altogether from the
subscribers. However this comes with an exception where by in cases where the directors
or shareholders engaged in fraud, misrepresentation or any misfeasance this is provided
for under Section 201(1) of the Companies Act Cap.106.
 They usually have considerable autonomy in shaping their policies. These have also
sufficient financial independence. But at the same time general principles and policies are
laid down and decided by government for example Section 3 of the National Water and
Sewerage Corporation Act Cap 204 provides that the National water and sewerage
corporation shall carry out its functions with view to exercising its powers in accordance
with the economic, social and environmental policies of the government.
 The management of corporations is appointed by the government. Generally a board is
nominated to manage the public corporations, for example the director of national water
and Sewerage Corporation is appointed by the ministry responsible for water and natural
resources as provided for under Section 8(1) of the National Water and Sewerage
Corporations Act Cap 204.

Some of the classifications of public corporations include;

1. Development corporations. These are corporations set up to promote development of
specific sectors of the economy e.g Uganda Wildlife Authority and Uganda Tourism
Board for the tourism sector. Some development corporations are set up to provide
utilities e.g National water and Sewerage corporation.
2. Regulatory corporations. For example Uganda land commission set up for the
purpose of granting, alienating and controlling public land on behalf of the government.
 National Drug Authority for the purpose of regulating the manufacture ,importation and
sale of pharmaceuticals in the country.
3. Finance corporations . This is a corporation whose sole or principal business is
providing finance to the public including the extending loans to the public. Forexample
Bank of Uganda and Uganda development bank.
4. Educational public amenities. These are corporations formed not for profit but for an
educational purpose and a. For example Law Development center, Uganda Management institute
among others.

ADVANTANGES OF PUBLIC CORPORATIONS

Autonomy in the public corporation. Public corporations , like private corporations and unlike
government agencies , have a lot of control and flexibility regarding company decisions and how the
company operates .They enjoy autonomy in planning, management, financial independence that is to
say they are not subject to the budget , accounting and audit controls. Public corporations have the
autonomy to make operational decisions and manage their day to day activities without direct
interference from the government .For example the Uganda National Roads Authority is responsible for
planning, designing, and maintaining national roads .It makes decisions related to road construction
projects and maintenance schedules based on its expertise and operational needs. Another example,
the Uganda Industrial Research Institute (UIRI) makes decisions about research and development
projects independently, focusing on innovations and technologies that align with its mandate.

Accountability. Public corporations are accountable to the public and the government .They are
subjected to scrutiny and oversight, which can help ensure that they operate in the best interests of the
public. Parliament of Uganda plays a role in holding public corporations accountable. Parliamentary
committees, such as the Public Accounts Committee, review audit reports and scrutinize the
performance and management of public corporations .For instance, parliament often reviews reports of
Uganda Roads Authority UNRA to ensure that road projects are managed effectively and funds are used
appropriately. For example in the Annual Report of the Auditor General to Parliament for the financial
year ended 30th June 2023 in line with the mandate placed into the Auditor General under Article 163 of
the 1995 Constitution of Uganda which put holes into the URA in regards to its expenditure of 60 billion

Public corporations are established to serve the public interest. They provide essential services that are
often not that profitable enough for private companies to provide. Government reviews promote public
interest where by public corporations are subject to more governmental review and regulation than
privately held corporations. This oversight helps ensure that public corporations are operating in the
best interests of the public as a whole.

Recruitment power .Public corporations in Uganda often have the authority to manage their own
recruitment processes, including defining job roles, conducting interviews, and selecting candidates. For
example, the Uganda Electricity Distribution Company Limited (UEDCL) manages its recruitment
independently to ensure that it hires individuals with the necessary technical skills and experience for its
operations. Corporations use various channels to advertise job openings and conduct recruitment
campaigns .For instance , the Uganda Development Bank (UBK) posts job vacancies on its website and in
national newspapers to reach a wide pool of candidates.

There’s Stability in public corporations. Public corporation can provide stability in essential services, as
they are not subject to the same market pressures as private companies. For example stability is seen
when public corporations have diverse sources of income, which helps mitigate risks associated with
reliance on a single product or market. Stability is also ensured through effective human resource
management. Corporations like National Water Corporations (NWSC) invest in training and development
for their staff, which enhances organizational stability and efficiency.

There’s speed in decision making. Delays in decision making is avoided and there for problems can be
solved faster, opportunities can be tapped in a better manner and overall, functioning of the
organization is improved. For example National Social Funds NSSF which manages retirement savings for
Ugandans , might need to make rapid decisions on investment opportunities or changes in fund
management strategies .For instance , in response to economic shifts , NSSF could quickly adjust its
investment portfolio to safe guard the fund’s assets.

Ease of raising funds. Since public corporations are government owned statutory bodies, they can raise
the required funds by issuing bonds. public corporations have the ability to issue bonds or shares to the
public , raising substantial funds .For instance , the Uganda Development Bank , a state owned
development bank, can issue to fund various development projects .This access to capital markets
provides a way to raise large amounts of money from investors.

Professional Management. Board of Directors of public Corporation consists of business experts and
the representatives of various groups such as labor, consumers nominated by the government.
Professional management in public corporations in Uganda can be observed through structured
governance, strategic planning, and effective operational execution. For example NSSF employs
professional management by adhering to regions investment strategies and financial management
practice. The funds is managed by board of trustees and team of experience professionals who overseas
its investments portfolio ‘ensuring that complies with regulatory standards and aims for sustainable
retunes. The introduction of the NSSF development plan is a testament to its structure approach to long
term growth and number benefit

Initiative and Flexibility .In Uganda public corporations exhibit initiative and flexibility , often adapting
to local conditions emerging opportunities .For example UDB has exhibited flexibility by adjusting its
financing strategies to support priority sectors like agriculture , manufacturing , and tourism .It has
introduced tailored financial products and initiatives such as COVID _19 Recovery Fund to assist
businesses impacted by the pandemic.

Efficient Staff .The public corporations can have their own rules and regulations can have their own rules
and regulations regarding remuneration and recruitment of employee’s .It can provide better facilities
and attractive terms of service to staff to secure efficient working from its own staff that they at that
time.

Economies of scale are enjoyed by the public corporation. Public corporations tend to be large scale
operations hat benefit from economies of scale .For example they discount pricing on products because
they can buy in bulk. These economies of scale are often passed on to the public in the form of lower
prices and improved service equality.

DEMERITS OF PUBLIC CORPORATIONS

Misuse of power .It enjoys immunity from parliamentary inquiry into its day to day functioning .Such
immunity might induce some officials to misuse their powers and indulge in corrupt practices .It takes
considerable amount of time and effort to unearth corrupt acts and he corporation loses valuable
resources . Public officials may misuse their positions to intimidate or coerce employees or stakeholders
for personal or political gain .For example a managers might use their positions to demand bribes or
preferential treatment from contractors.

There is lack of competition and hence consumer interests are ignored. Many public corporations
operate as monopolies .Absence of competition leads to lethargic functioning reduced focus on
efficiency improvements and innovation and poor customer service with the result that consumer
interests are ignored. Also without competition public corporations may lack the incentive to innovate
and improve their services. For example National Water and Sewage Corporation (NWSC) provides
water supply and sewerage services across Uganda. In the absence of competition, NWSC might not be
as responsive to consumer complaints or service demands .Issues such as intermittent water supply or
high water tariffs may persist without the pressure of competitive alternatives compelling
improvements

Increased government oversight. Public corporations subject to a high level of government oversight
that does not apply to privately held corporations .The level of oversight has increased over the last
10years in the wake of the many public corporations scandals that a harm to millions of people. The
government regulations, though often necessary, slow down and decrease the flexibility of the
operations of the public corporations. The government has implemented Anti-Corruption Act and the
establishment of the Inspectorate of Government .These bodies investigate allegations of corruption
and misconduct within public corporations .High profile cases such as the investigation of corrupt
practices in the Uganda oversight Authority demonstrate increased oversight efforts.

Financial burden. When a public corporation incurs losses, his government provides subsidies to make
good loss. Such provision of subsidies on a regular basis places a great strain on government finances,
more so in the case of a developing economy. They can be a financial burden on the government and
ultimately the tax payer, particularly if they are not run effectively. For instance public corporations
often resort to borrowing to fund their operations or expansion projects .For example if a public utility
company ,like the Uganda Electricity Transmission Company (UETCL) ,borrows excessively to build
infrastructure , the debt service costs can become a significant financial burden especially if the
revenue generated does not meet expectations .

Market Fluctuations .One of the biggest disadvantages of public corporations is that they are subject to
the whims of the market .Shares of publicly traded companies are bought and sold on a daily basis , and
public corporation cannot control the share prices .As anyone who has ever traded shares knows, he
market is not always reasonable.
Legal Requirements. Setting up and maintaining a public corporation is much more difficult than setting
up and maintaining a private corporation. Public corporations are subject to many legal requirements
that do not apply to private corporations .For example there are rules that govern how shares are
allotted.

Many Company Records are public or publically displayed. In order to protect the public and
consumers, many of the records of the public corporations are required to be open to the public. The
Auditor General of Uganda conducts audits of public corporations and releases audit reports that are
accessible to the public .These reports access the financial performance and compliance of public
entities like Uganda Electricity Distribution Company Limited. This means that the public, as well as
competitors, may have access to information that company would prefer to keep secret.

Ownership and Management is split. The ownership and management of public corporations is split.
The owners of public corporations are its shareholders who often have no contact with management.
Their only significant power is the ability to vote at annual meetings. Managers of public corporations
are often outside individuals who receive a salary, these paid managers often lack the incentive to work
hard for the company that exists in private corporations where the owners and managers are often he
same people.

Dishonest Investors. Day trading shares of public corporations opens up opportunity for dishonest
investors to utilize the market for their own gain to the detriment of the public corporation. These
dishonest investors engage in practices like fraudulent reporting, embezzlement, conflict of interests,
market manipulation. For example there have been cases where investors or senior manager’s siphon
off funds intended for corporate development or operational needs .For instance, in certain public
corporations funds meant for infrastructure projects have been embezzled by those in control.

Clash amongst divergent interest. The government appoints the board of directors and their work is to
manage and operate corporation’s .As there are many members, it is quite possible that their interests
may clash. Because of this reason, the smooth functioning of the corporation maybe hampered. For
example Uganda National Roads Authority deals with conflicts between public interests (such as
affordable and timely road construction ) and private sector interests (like construction companies
seeking higher profits ) .Disputes. Can arise over contact terms, delays and cost overruns.

Autonomy is on paper only. The autonomy and flexibility of public corporation is only for name’s sake,
practically ministers, government officials and political parties often interfere with the working of these
operations. The autonomy being only on paper is seen in various ways for example in regulatory
constraints, budgetary. Control, government interference in operations .For example The Uganda.
National Roads Authority is officially autonomous in its operations , but it frequently faces government
interference in project decisions and procurement processes .For instance the government might
influence the selection of contractors or dictate projects priorities , affecting UNRA ‘s ability to operate
independently .

The Unfair practices. The governing board of a public corporation may indulge in unfair practices .It may
charge an unduly high price to cover up efficiency which end up affecting the people who the services
are being delivered to. The unfair practices include corruption and bribery, nepotism and favoritism,
mismanagement of funds, lack of transparency, inequitable. Resource allocation and they can
undermine trust in public institutions and hinder their effectiveness in serving the community. .For
example. Public corporation in Uganda sometimes face issues with corruption for example , there have
been reports of officials accepting bribes to facilitate contracts or appointments which undermines fair
competition and can result in suboptimal service delivery.

The Rigid Structure. The objects and powers of public corporations are defined by the Act and these
can be amended only by amending the statute or the Act .Amending the act is a time consuming and
complicated task. The rigidity is seen in the hierarchical. Structure, regulatory compliance, government.
Oversight, public accountability , formal procedures and bureaucracy .These corporations must adhere
to strict regulations and guidelines set by the government .For example , the public Enterprise Reform
and Divestiture Act of 1993 outlines the management and operational frame word for public
enterprise .Compliance with such regulations enforces a rigid structure in terms of financial ,and
accountability

Control over public corporations.

Control of public corporations refers to the structures, mechanisms and processes
by which government-owned or state-controlled entities (public corporations) are
regulated, supervised, and managed to ensure their efficiency, transparency, and
accountability. Article 79(2) of the 1995 constitution of the Republic of Uganda
stipulates that the parliament has the mandate to delegate authority to other entities
in order to come up with laws. These laws set the framework within which the
public and private entities must operate. Public Corporations are controlled in
order to avoid the abuse of powers entrusted to them. They are usually controlled
in the following ways;
 Regulatory Compliance: Public corporations are subject to specific regulations

that govern their operations. This can include financial reporting standards,

employment regulations, and industry-specific guidelines (such as energy,

transportation, or telecommunications). Regulatory agencies often play a key

role in enforcing compliance.

 Board of Directors: Public corporations usually have a board of directors

responsible for setting strategic goals, making key decisions, and ensuring that
 the corporation adheres to its mandate. The board may include government

representatives and independent directors to provide a mix of expertise.

 Government Oversight: Public corporations are often overseen by government

ministries or agencies that ensure their alignment with public policy objectives.

These oversight bodies monitor performance, approve budgets, and assess the

overall effectiveness of the corporation.

 Privatization and Partnerships: Some governments may choose to privatize

parts of public corporations or enter into public-private partnerships (PPPs) to

improve efficiency, reduce costs, or bring in specialized expertise.

 Performance Audits: Many governments require regular audits of public

corporations to evaluate their financial health and operational performance.

These audits may be conducted by internal auditors or external agencies, such

as the national auditor general’s office.

 Public Accountability: Public corporations are accountable to the citizens and

taxpayers. Mechanisms such as annual reports, public hearings, and

parliamentary oversight help ensure that public corporations operate in a

transparent and accountable manner.

 Financial Control: Since public corporations often receive funding from

government budgets or public resources, financial control is key. The

 government may set limits on spending, borrowing, and investments to ensure

that resources are used efficiently.

These control measures ensure that public corporations remain focused on

delivering services that are in the public interest while maintaining financial

discipline and operational efficiency.