(A). In every economy there is a public sector and a private sector, both contributing to its development. However, the entities in the two sectors display some differences, which include, but are not limited to:

(i) Profit motive

Public sector entities are not driven by provision of public services to impact the lives of the citizens. Pursuance of public interest is paramount in the public sector. The main objective of the private organisations is to make a profit from their operation. If it does not make a profit over the longer term, a private sector organisation is likely to cease business.

(ii) Scope of objective

Due to the nature of public services, the objectives of public sector entities are broad and sometimes undefined. Most often the objectives of private sector entities are clearer and precise�, for example to increase profitability and market share.

(iii) Establishment of entity

Public sector entities are creatures of the Constitution, an Act of National Assembly, a Legislative Instrument passed by National Assembly or an Executive Instrument. In other words, each public sector entity has a separate enabling law. However, Procedures for establishing private sector companies, involving registration with the Registrar General, are dealt with by the Companies Act.

(iv) Stewardship and accountability

All public sector entities, directly or through their Sector Ministry, are accountable to National Assembly where they obtain their mandate to operate. They answer questions on their financial propriety and operational performance to National Assembly. The accountability arrangements for private sector entities are different. In the case of companies, their managers are accountable to their shareholders and other stakeholders through their board of directors.

(v) Political context

Financial and operational decisions of public sector institutions are significantly influenced by political and social considerations. Government fiscal policy influences the operational and financial decisions of public sector entities. Even though the political environment may influence the decisions of private entities, it does not usually affect their decision-making directly. The extent to which private sector entities respond to political and social considerations is dependent on their strategy plans.

(vi) Performance measurement

In the public sector, performance is measured using varying measurements such as economy, efficiency, effectiveness and equity in service delivery. In contrast, profitability, revenue growth and market size are typical measures of performance in the private sector.

(vii) Accounting practices

Public sector transactions and events are different from the private sector and the accounting arrangements are therefore often different. In the public sector, accounting is regulated by the International Public Sector Accounting Standards (IPSAS) and the public financial management enactments. Private sector transactions and events are accounted for in accordance with the International Financial Reporting Standards (IFRS).

(viii) Financing

Public entities are financed by taxes and levies imposed by the government. Private entities are financed by capital invested by the owners and lenders.

(B). Public goods and services and private sector goods and services differ to the extent of excludability, divisibility and rivalry. Excludability is the extent to which one can be prevented from consuming the goods and services when provided. The barrier to consumption is largely price. Divisibility is the extent of deferral of consumption of goods and services. That whether individual have rights over the consumption of the goods and services. Rivalry is about the availability of substitute products to compete in the market: public sector entities do not usually have competitors, but private sector organisations (unless monopolies) do.

Public sector entities are engaged in provision of public goods and services are non-excludable, non-divisible and non-rivalry whilst private goods and services are highly excludable, divisible and competitive.

(C). Public enterprise are entities established by government for commercial objective. The International Public Sector Accounting Standards (IPSAS) referred to these entities as Government Business Enterprises. According to IPSAS 1, Government Business Enterprises means an entity that has all the following characteristics:

(i) Is an entity with the power to contract in its own name. This means that the entity is a corporate entity at law which can sue and be sued.

(ii) Has been assigned the financial and operational authority to carry on a business. The entity enjoys significant degree of autonomy in its financial and operational decisions.

(iii) Sells goods and services, in the normal course of its business, to other entities at a profit or full cost recovery. The entity is expected to make reasonable return on its investment.

(iv) Is not reliant on continuing government funding to be a going concern (other than purchases of outputs at arm’s length): the entity does not have annual appropriation but rather relies on its income from operations.

(v) Is controlled by a public sector entity. They are controlled by government through a body set up to ensure their effective functioning. For example, the Public Utility Regulatory Commission (PURC) controls the utilities companies (Zamora Water Company and Electricity Company of Zamora), which are public enterprises.