South Africa: Political party funding

Updated March 2011

South Africa is among the few African countries that provide public funding for political parties and the expenditure of public funds by political parties is carefully regulated and closely monitored. By contrast, private funding of political parties is almost wholly unregulated and public disclosure of party incomes and expenditures is entirely discretionary.

Public funding

The Public Funding of Represented Political Parties Act (1997, 2(1)), as amended by the Constitutional Matters Amendment Act 2005, established the Represented Political Parties Fund to provide finance to parties represented in parliament and in the provincial legislatures. The details of the workings of the Fund are fleshed out in the Public Funding of Represented Political Parties Regulations, 1998.

The Represented Political Parties Fund

The administration of the Represented Political Parties Fund is placed in the hands of the chief electoral officer under the oversight of the Independent Electoral Commission (IEC; Public Funding of Represented Political Parties Act 1997, 4(1)). The IEC is expected to keep full financial records and accounts for each financial year (Public Funding of Represented Political Parties Act 1997, 4(2)). These financial accounts must be submitted to the Auditor-General for auditing and then, within 30 days of the issue of the Auditor-General's report, to Parliament (Public Funding of Represented Political Parties Act 1997, 8).

Sources of income envisaged for the Fund include parliamentary appropriations, donations, interest on bank balances held, investment income and moneys accrued from other sources (Public Funding of Represented Political Parties Act 1997, 2(2)).

The Act empowers the president, acting on recommendations from a joint committee of the houses of parliament, is empowered to make and proclaim regulations for the fleshing out of details not directly prescribed by the Act (Public Funding of Represented Political Parties Act 1997, 10).

Allocation of funds

Funds are allocated to political parties that are represented in the National Assembly, or in any of the provincial legislatures, or both, in that particular financial year (Public Funding of Represented Political Parties Act 1997, 5(1)(a)). Parties that cease to qualify for funds must repay unspent moneys to the IEC within 21 days (Public Funding of Represented Political Parties Act 1997, 5(4)).

A party may use the funds any purpose "compatible with its functioning as a political party in a modern democracy", including (Public Funding of Represented Political Parties Act 1997, 5(1)(b)):

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.

The Act does not determine how much money is to be allocated to political parties or when these funds are to be distributed and these details are prescribed by Regulations. The Regulations (1998, 2(1)) determine that the amount to be allocated to parties from the fund must be published in the Gazette by the IEC within two weeks of the beginning of each financial year. The funds are paid in four equal quarterly payments, the first being made in the first four weeks of the new financial year (Regulations 1998, 5(1)).

The Act determines that funds are to be allocated according a formula that takes into account the proportion of members a party has in the National Assembly and the provincial legislatures and a minimum threshold amount to ensure equity (Public Funding of Represented Political Parties Act 1997, 5(2)(a)). Accordingly the Regulations (1998, 3) determine that 90% of the allocation of the financial year is paid in proportion to each party's aggregate seat representation in the sum of the seats of the National Assembly and Provincial legislatures. The remaining 10% is divided among the provinces proportionately to the number of seats in each province and the provincial allocations are divided equally among the parties in each legislature (Regulations (1998, 4).

Surplus funds, not expended in a particular financial year, may be carried over to the following year, though this may be restricted by the Regulations to a proportion of the allocated amount; funds carried over are not material to the calculation of allocations for the new financial year (Public Funding of Represented Political Parties Act 1997, 9(1)). According to the Regulations (1998, 9) this proportion is 50% of the total allocated. If Parliament and/or all or any of the provincial legislatures are dissolved, political parties represented in the affected bodies must close their books within 21 days before the election for those bodies and submit audited statements within 14 days to the IEC; unexpended moneys must be returned to the IEC (Public Funding of Represented Political Parties Act 1997, 9(3),(4)).

Fund use prohibitions

Parties may not use moneys allocated from the Fund to (Public Funding of Represented Political Parties Act 1997, 3):

Give any income to anyone representing the party in Parliament, provincial legislatures or local authority, or who holds any other office of profit under the State.
Finance any matter, cause, event or occasion that is in contravention of any code of ethics binding on the members of Parliament or of any provincial legislature.
Establish any business or acquiring or maintaining any right or financial interest whatsoever in any business or immovable property, except to be used by the party solely for ordinary party-political purposes.
Fund any purpose that is incompatible with a political party's functioning in a modern democracy.

Accountability for funds

Political parties that are allocated moneys from the Fund must deposit all receipts from the fund into a separate special bank account held with a South African registered bank and appoint an official or an office bearer as the accounting officer for the bank account and the moneys that flow through it (Public Funding of Represented Political Parties Act 1997, 6(1)). The accounting officer is responsible for ensuring that (Public Funding of Represented Political Parties Act 1997, 6(1)-(3), (5)):

The party complies with the requirements of the Act and especially that funds allocated are not expended for an unauthorised purpose.
Keep separate books and records of account for each financial year.
A statement is prepared showing all income from the Fund and expenditures made along with the purposes for the expenditures within two months after the end of each financial year.
The statement, and the books and records of account on which it is based, are audited by a qualified auditor.
The auditor's report and the audited statement are submitted to the IEC within three months of the end of the financial year.

The auditor's report must express an opinion as to whether or not the allocated moneys were spent for purposes not authorised by the Act (Public Funding of Represented Political Parties Act 1997, 6(4)). The Auditor-General may audit a political party's books, records of account and financial statements relating to moneys allocated at any time (Public Funding of Represented Political Parties Act 1997, 6(6)).

The Act was amended by the General Laws (Loss of Membership of National Assembly, Provincial Legislature or Municipal Council) Amendment Act, 2008. Section 6(1)(c) was added, which made political parties accountable to the Independent Electoral Commission for funds allocated to them. If the IEC has reasonable grounds to believe that a party has failed to comply with the provisions of the Act, it may suspend allocation payments and reinstitute them if it believes compliance is forthcoming (Public Funding of Represented Political Parties Act 1997, 6(7)). Before suspension of payments the IEC must inform the party of its intention to suspend payments and give its reasons for doing so in writing; the party concerned to to must be invited to give reasons, within 30 days or more, why payments should not be suspended.

Section 6(5)A was added empowering the IEC to appoint an auditor to verify reports by the auditors of the political parties and the statements of the parties submitted to the IEC, or the books and records kept where no statement was submitted by a party. Where funds have been expended in violation of the terms of the Act the accounting officer is required to repay the amounts concerned to the IEC and a civil suite may be launched by the IEC or the sums involved deducted from further payments to the party concerned (Public Funding of Represented Political Parties Act 1997, 7).

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

The Electoral Act of 1998 and the Public Funding of Represented Political Parties Act of 1997 are alike wholly silent on the subject of private funding. Tom Lodge and Ursula Scheideggar (2005, 17) observe: "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".

For all parties, party-owned business interests, membership fees and funds raised by branches represent only a small proportion of total funds. Smaller parties are highly dependent on public funding while larger parties obtain the bulk of their funding from donations from the private sector and foreign governments and companies (Lodge & Scheideggar 2005). The sources of funding in particular have become 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:
Donations often come with strings attached;
Donations are never ever disclosed publicly; and
Donations are not regulated the same way as public funding.
Given the above problems, the greatest danger for African democracies, including South Africa, is the corrupting tendency of undisclosed funding not only to the management of parties and their affairs but even to the overall governance project at the national level. It is important therefore that some form of regulation of private funding in South Africa is institutionalised.

Controversy over private funding

Extracted from: Susan Booysen and Grant Masterson 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, 414-415.

Private funding of political parties is a contentious issue in South African politics, with no applicable legislation existing that regulates the conduct of political parties in relation to private donations and funding. The only mention of private funding of political parties in the relevant legislation simply states that this practice is permitted in South Africa. However, no conditions are attached to the receipt of such contributions. Political parties are also permitted to obtain funds from their members, as well as businesses and civil society groups. In relation to public funding, all represented political parties receive public funding. Moreover, the regulations are silent on the subtle use of state resources in campaigning, by definition by governing parties.

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.

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.

References

CONSTITUTIONAL MATTERS AMENDMENT ACT, NO 15 OF 2005, [www] http://www.info.gov.za/view/DownloadFileAction?id=67867 [PDF document, opens new window] (accessed 9 Mar 2010).

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.

GENERAL LAWS (LOSS OF MEMBERSHIP OF NATIONAL ASSEMBLY, PROVINCIAL LEGISLATURE OR MUNICIPAL COUNCIL) AMENDMENT ACT, 2008, [www] http://www.info.gov.za/view/DownloadFileAction?id=94454 [PDF document, opens new window] (accessed 9 Mar 2010).

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).

PUBLIC FUNDING OF REPRESENTED POLITICAL PARTIES REGULATIONS, 1998 (includes amendments until 2005), [www] http://www.elections.org.za/content/WorkArea/DownloadAsset.aspx?id=986 [PDF document, opens new window] (accessed 7 Feb 2011).