South Africa: Political party funding
Updated April 2019
See also FICK, G 1997 South Africa: Public Funding of Represented Political Parties Act
In 2018, the president signed into law the Political Party Funding Act, the Act seeks to fill a gap in the law where the private funding of political parties was previously unregulated.
Represented Political Parties Fund and the Multi-Party Democracy Fund
Section 44 of the Constitution affords Parliament legislative authority to pass legislation with regards to any matter, including the regulation of the private funding of political parties. To this end, Parliament passed the Political Party Funding Act of 2018. The Political Party Funding Act of 2018 repealed and replaced the Public Funding of Represented Political Parties Act of 1997.
Two funds are created by the Act, with oversight and allocation invested in the Independent Electoral Commission, for the purpose of enhancing multi-party democracy through the funding of political parties represented in Parliament or provincial legislatures (Political Party Funding Act 2018, 2 (1), 3(1)). The Represented Political Parties Fund recieves income from parliamentary appropriations while the Multi-Party Democracy Fund is funded by private donors.
The Multi-Party Democracy Fund may not receive income from (i) organs of state (ii) state-owned enterprises and (iii) foreign governments or agencies (Political Party Funding Act 2018, 3 (4)). Private donors may request to remain anonymous, alternatively they may request the amount they are donating not be disclosed.
Allocation of funds
The IEC is allocates resources from the Funds to the various political parties that are represented in the National Assembly and/ or the provincial legislatures based on the number of seats won in the respective structures (Political Party Funding Act 2018, 6 (1) -(3)). Payments to political parties are made quarterly (Political Party Funding Act 2018 7 (1)). This proportional allocation, however, must be tempered by the application of the "principle of equity", which requires that all parties must be ensured a minimum base amount above and beyond a proportional allocation. Equity in the Act is thus neither proportional nor equal, but the spitting of the allocation into proportional and equal components. The Regulations on Political Party Funding, 2017 (2-4) contained in Schedule 2 of the Act lays down the actual allocation process.
- Two thirds of the money available is allocated proportional to the total number of seats each party has in all the legislative bodies combined (Sect 2.2(a) and 3).
- One third is divided up between the legislative bodies in proportion to the number of seats in each legislature and the money allocated to each legislative body is divided up equally between the parties in that legislative body (Sect 2.2(b) and 4).
The money received from the Fund may be used "for any purpose compatible with its functioning as a political party in a modern democracy" (Political Party Funding Act 2018, 2 (1)). This includes:
- The development of the political will of people;
- Bringing the political party's influence to bear on the shaping of public opinion;
- Inspiring and furthering political education;
- Promoting active participation by individual citizens in political life;
- Exercising an influence on political trends; and;
- Ensuring continuous, vital links between the people and organs of state.
Political parties may not use the funds for the remuneration of party officials who hold elected office or people employed or contracted by the state (Political Party Funding Act 2018 7 (2)(a)). Furthermore, political parties may not finance or contribute to any matter or cause in contravention of any code of ethics binding on the members of Parliament or the provincial legislature (Political Party Funding Act 2018 7 (2)(b)). Parties may not use the funds for business related purposes or acquiring property that is not for the direct use of the political party. Party funds may also not be used to settle the legal costs for internal party disputes (Political Party Funding Act 2018 7 (2)).
Accountability for funds
The chief executive officer must provide an annual Report to Parliament and to the Auditor-General (Political Party Funding Act, 2018 22 (1(c); Electoral Commission Act 1996, 13 (3)). The accounting related information that must be supplied with the Report includes income, allocations, expenditures and the current record of the capital and liabilities of the Funds for that year.
The effect of public funding on party performance
Whether or not public funding helps or hinders the development of a multiparty democracy depends on way in which public funds are distributed amongst the various political parties. Susan Booysen & Grant Masterson have argued that public funding in South Africa has helped to consolidate the dominance of the ruling African National Congress (ANC) at the expense of other political parties. They point to the huge disparity between the amount of public money allocated to the ANC by comparison with the two largest opposition parties: "Of the R88 million that the IEC distributed to parties in 2009, R61 million went to the ANC, R10.5 million to the DA [Democratic Alliance] and R5.4 million to the Inkatha Freedom Party" (Booysen & Masterson 2009, 415). In other words the ANC received about 5½ times as much of the taxpayer's money in 2009 as the next two parties combined. The effects of public funding, added to the fruits of long incumbency, were overwhelming: "The ANC had become extremely well-resourced, also reaping benefits from beneficiaries of its period in government and investment and direct business interests - and other political parties found it hard to compete" (Booysen & Masterson 2009, 415).
Private funding of individual parties
Private funding before 2018
Until the passing of the Political Party Funding Act private direct funding of individual political parties was wholly unregulated. Tom Lodge and Ursula Scheideggar (2005, 17) observed at the time: "There are no legal limits on how much parties can spend on electioneering or any requirements for disclosure of the sources or amounts of private donations". The sources of funding in particular became a subject of increasing concern. Khabele Matlosa (2004, 5,6) summed up the unease by pointing out:
The main problem around this type of funding is simply this:
Given the above problems, the greatest danger for African democracies, including South Africa, is the corrupting tendency of undisclosed funding...
- Donations often come with strings attached;
- Donations are never ever disclosed publicly; and
- Donations are not regulated the same way as public funding.
Susan Booysen and Grant Masterson (2009, 414-415) reported that, "the practice of private funding of political parties was challenged in the Cape High Court in Cape Town in 2004 by the Institute for Democracy in South Africa (Idasa), who lodged an application to force the 'big four' political parties, the ANC, DA/DP, the Inkatha Freedom Party (IFP) and the African Christian Democratic Party (ACDP) to open their financial books to public scrutiny. The parties in question strongly opposed the motion, arguing that forcing the disclosure of financial backers would intimidate potential donors considering support for a particular party out of concern for the possible fallout of that support in the event that the party which they supported was defeated at the polls. In particular, the DA and IFP argued that they feared some of their financial backers would not be prepared to guarantee further support should such contributions be made public".
Moreover, "The case was suspended after the political parties in question agreed to legislate on the matter rather than force the judiciary to rule on a matter, which was in their view the responsibility of parliament to resolve. To date (2009), no legislation regulating private funding of political parties had been presented in or passed by the National Assembly".
2018 Political Party Funding Act regulation
Political parties may not accept donations in excess of R15 million from a single source within a given financial year (Political Party Funding Act 2018 8 (2)). Futhermore, the Political Party Funding Act, 2018 proscribed parties from receiving funding from any of the following sources (Political Party Funding Act 2018 8 (1)):
- Foreign governments or their agencies;
- foreign individuals and corporations unless for skills or policy development;
- organs of state; or
- state-owned enterprises.
Political parties must disclose all donations received above R100,000 to the IEC (Political Party Funding Act 2018 9 (1)).
Enforcement and accountability
The IEC is tasked with monitoring compliance with the Act (Political Party Funding Act 2018 14 (1)). To this end, parties must disclose relevant information including books, records, reports and other documentation needed for the IEC to monitor compliance (Political Party Funding Act 2018 14 (2)). Parties refusing to comply with requests may be taken by the IEC to the Electoral Court for an order to compel compliance with that subsection (Political Party Funding Act 2018 14 (3)).
Furthermore, if the parties fail to comply with any parts of the Act the IEC may issue a directive to a political party after affording the party an opportunity to make representations (Political Party Funding Act 2018 15 (1)). If the political party fails to comply with the directive, the IEC may, depending on the nature of that infraction, impose any of the following sanctions (Political Party Funding Act 2018 15 (2)):
- Suspension of payment of allocated money;
- recovery of money irregularly accepted or spent; or
- the imposition of an administrative fine.
Appeals may be made to the Electoral Court on any decision made by the IEC (Political Party Funding Act 2018 20 1, 2).
BOOYSEN, S & MASTERSON, G 2009 "Chapter 11: South Africa" IN Denis Kadima and Susan Booysen (eds) Compendium of Elections in Southern Africa 1989-2009: 20 Years of Multiparty Democracy, EISA, Johannesburg, 390-391.
LODGE, T & SCHEIDEGGAR, U 2005, South Africa: Country Report based on Research and Dialogue with Political Parties, International IDEA/EISA, [www] http://www.idea.int/parties/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=15063 [PDF document, opens new window] (accessed 26 Feb 2010).
MATLOSA, K 2004, "Public Funding of Political Parties" IN EISA Election Update: South Africa 2004 3 [PDF document], 2-6.
PUBLIC FUNDING OF REPRESENTED POLITICAL PARTIES ACT, 103 OF 1997, [www] http://www.elections.org.za/content/WorkArea/DownloadAsset.aspx?id=985 [PDF document, opens new window] (accessed 9 Mar 2010).