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Reflections on the efficacy of the political Party Funding Act in SA

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Picture: Themba Hadebe/AP African News Agency (ANA) – An array of election posters from various political parties on poles in Pretoria.

By Professor Bheki Mngomezulu

The spate of corruption that has engulfed South Africa in recent years has necessitated taking precautionary measures aimed at curbing the scourge. It is an irrefutable fact that both the public and private sectors have been negatively affected by corruption.

However, government is primarily responsible for ensuring that public institutions abide by the law.

Against this backdrop, in 2021, the Political Party Funding Act was promulgated. Its intended aim was to introduce a strict regulatory framework for the private funding of political parties.

This entailed setting limits for the source, size and usage of donated funds by various political parties registered with the Independent Electoral Commission (IEC).

Picture: African News Agency (ANA)

Obligations and stipulations include but are not limited to the following:

  • Political parties must disclose quarterly to the IEC all donations received which are above R100 000. This includes donations made in cash and in-kind such as transport, catering, venue, etc.
  • The R100 000 figure is cumulative. Even if the money comes from the same source, it has to be declared as soon as the donation reaches the R100 000 mark
  • Political parties may not accept donations above R15 million from the same donor per year
  • They are not allowed to accept donations from foreign governments and agencies unless such donations are meant for training and policy development
  • Political parties must set up a separate bank account to deposit all donations. This will ensure ease of reference for auditing purposes.
File picture: Pexels – With the Political Party Funding Bill, parties are expected to disclose donations above R100 000 directly paid by donors into their bank accounts.

More than a year later, the most pertinent question to address is the following: to what extent has this legislation been effective?

Put differently, has the Political Party Funding Act lived up to its expectations?

Surely, this is not an easy question to answer due to various reasons.

Some of these reasons are ventilated below.

The first issue to consider is that compliance has posed a serious challenge to the effectiveness of this legislation. While it is clear that political parties have to report their donations each and every quarter, this has not been the case.

For example, of the 14 political parties that are represented in the National Assembly, only four of them were able to comply with this legislation during the first quarter of the financial year. ActionSA reported R750 000, the ANC reported R10 000 000, the DA reported R15 977 68713, and Patriotic Alliance (PA) reported R310 000.00.

Picture: Bongani Shilubane/African News Agency (ANA) -Campaign posters with various political parties.

Noticeably, the donations that were declared by the ANC and the PA were said to be from the previous financial year and not the current one as should be the case. This frustrated the IEC which is mandated by the legislation to oversee the process. Communication had to be sent to these two parties to explain themselves.

The question becomes: what happened with the other ten political parties? Most importantly, is there any sanction that the IEC can invoke if there has been non-compliance?

If the answer is in the affirmative, then there is hope for an improved situation. Sadly, if the answer is negative, questions will be asked about the efficacy of this legislation.

Another important element of the Political Party Funding Act is that it also sets obligations to potential donors.

Among other things, the legislation compels donors to disclose to the IEC all donations above R100 000, whether in cash or in-kind or both.

They have to do this within 30 days following the payment of such donations.

As is the case with political parties, the R100 000 is also cumulative even in the case of donors. In other words, even if donations are made in different chunks, they are added together to determine the total figure.

Lastly, each donor can only donate up to R15 million to a single party in a year. Anything above this figure would be in contravention of the Act.

In principle, this sets out clear guidelines which all current and potential donors have to comply with.

However, it remains unclear if all donors have followed these guidelines and obligations as expected. Importantly, as is the case with political parties, it remains unclear if the IEC can take any punitive measures against donors who fail to comply.

If this is not done, nothing would deter other donors from disobeying the prescriptions of the Act.

The third element to this discussion is that the IEC is also obligated to do certain things in terms of this Act. Included in the list of obligations are the following:

  • The IEC must monitor the declarations by political parties of all donations received
  • It must submit annual reports to Parliament on the same
  • The IEC must ensure that all political parties do comply with the legislation
  • The IEC has the responsibility to administer the Represented Political Party Fund (RPPF) and the Multi-Party Democracy Fund (MPDF) and distribute these funds to all political parties that are represented in the National Assembly
  • Lastly and most importantly, the IEC must promote the MPDF with the view to raising funds that would subsequently be disbursed to political parties.

From a distance, this looks like a good strategy which is meant to ensure that all political parties have access to funds for their upkeep and thus do not have to engage in illicit activities in order to get money.

But while this looks good on paper, it does not take into cognisance to the size of different political parties.

The reality is that the bigger the political party, the more money it needs for its survival.

For example, in recent months, the ANC has been struggling to pay its employees. Already, it is in arrears in terms of honouring its liabilities.

With this Act in place, the ANC can only source donor funding up to the allowed threshold. This means that the ANC’s challenges are far from over. Smaller and new political parties are not affected in the same manner. Thus, this Act could later be challenged in court for failing to ensure equity among different political parties.

Another important development is the recent ruling by the Constitutional Court which declared the Executive Ethics Code unconstitutional and set it aside – mandating the President to correct the irregularity within twelve months.

In a nutshell, the Ethics Code in its current form does not require donations received for internal party campaigns to be declared. This is now set to change. In future, individuals campaigning for positions within their political parties will also have to declare sources of their funding support. This is meant to ensure transparency.

While this appears to be progressive, it might have serious negative repercussions. For example, those who are financially viable will have an edge over those who have no finances.

As the latter tries to source campaign funds up to the prescribed amounts (which are not guaranteed), those who have their own funds will start their campaigns in earnest.

By the time the other group joins the campaign, the possibility is that some voters will have already made their decision to support those who are financially stable. In any case, rich people have the propensity to attract more voters compared to those who are poor.

What one can glean from the discussion above is that the Political Party Funding Act was coined with all good intentions. Secondly, it ensured that it set clear guidelines and outlined clear obligations to be followed by all relevant stakeholders, that is political parties, donors and the IEC.

However, what is evident is that its efficacy thus far cannot be confirmed. For the Act to achieve its intended goal, all role-players have to play their part. If political parties either delay declaring their donations beyond the prescribed quarter or fail to do so entirely, then the Act will never yield any results.

Secondly, according to this legislation, the IEC is the implementing agency. It is saddled with the responsibility to oversee the entire process. Both political parties and donors have to declare to the IEC, which will then report to Parliament. Unless the IEC is given punitive powers to exercise over the other two stakeholders (political parties and donors), the Act will never be as effective as its crafters expect it to be.

So, given the fact that a year has passed by since the Act was promulgated, many lessons have been learnt. Gaps or loopholes have been identified. Therefore, it would be advisable to consider an amendment which would take into consideration all the issues that have since surfaced. The recent ruling by the Constitutional Court also bears relevance to this Act.

A number of small political parties have contended that the elections were not free and fair. Picture: Bongani Shilubane /African News Agency (ANA)

Although it concerns individuals, these individuals also belong to political parties.

Corruption is far from over. Therefore, it is of cardinal importance to open all the stops in an attempt to contain it.

Transparency is the ultimate goal. For that goal to be achieved, everyone must come on board. Thus far, the Political Party Funding Act has not performed at its optimal level!

Mngomezulu is Professor of Political Science and Deputy Dean of Research at the University of the Western Cape.

This article is original to the The African. To republish, see terms and conditions.