Lesson 3 : Public and Private Sectors

The differences between the public and private sectors

In South Africa’s mixed economy, most businesses are privately owned and some businesses are state-owned. The privately owned businesses form the private sector and the state-owned businesses form part of the public sector.

Public sector
The public sector comprises of various business enterprises owned and managed by the government. It is composed of all levels of government and government-controlled
enterprises. Also known as state-owned companies/enterprises (SOCs/SOEs). These refer to businesses that are owned and controlled by the government. It does not include private companies, voluntary organisations and households.
Private sector
The private sector consists of business activity that is owned, financed and run by private individuals. Businesses in the private sector are privately owned by sole traders,
partnerships, close corporations or profit companies. Their main aim is to make a profit. Some of these businesses exist in the formal or informal sectors.

The purpose of the public and private sector

Public sector

• It provides public goods and services such as water and electricity to meet the
  needs of its people.
• Improves the general standard of living of all its citizens.
• Ensures equal distribution of wealth.
• Provides infrastructure that supports private sector development.
• Provides various kinds of job opportunities.
• Intervenes in the economy to limit anti-competitive behaviour.

Private sector

• It offers a large variety of goods and services to meet the demands
  of consumers.
• Give back by uplifting the community with Corporate Social Responsibility
  (CSR) programs. CSR relates to businesses that take responsibility for its
  impact on society and the environment.
• Provide businesses with the opportunity to create wealth for growth.
• Support public sector with a public-private-partnership agreement.
• Provide job opportunities for people who have different skills in all sectors.
• Provide employment and contributes to tax revenues.

The differences between the public and private sector.