In order to clearly distinguish how each one is managed, let’s first look at the main objective of each.
The municipality
- Serving the public. Meeting the needs of citizens (education, safety, cleanliness, housing, etc.). As far as possible, the goal is not to make a profit.
- It acts as a public administration that operates with kindness, ethics, inclusivity, and always with a citizen-centered approach.
- The money is public, which means that it comes mainly from taxes and transfers from the provincial and federal governments. All municipal expenditures are governed by law. The municipality aims to balance its budget to avoid deficits.
- It is accountable to citizens and the state (users, voters, taxpayers).
- The municipality is evaluated on citizen satisfaction, service quality, transparency, and budget balance.
Private enterprise
- Generate profit for shareholders and owners.
- It is focused on revenue, profits, and growth and has no obligation to the common good.
- Its money comes from private investments, loans, and sales. The company takes risks in order to grow its revenue and annual profit.
- It is accountable to its customers, employees, and shareholders—owners.
- The company is evaluated on its growth, market share, and return on investment.
Ultimately, the municipality has a social responsibility and must serve the common good, while the company is primarily focused on financial results to serve its shareholders.
In this respect, in many ways, ideally, the municipality behaves differently from a private company.
