President Cyril Ramaphosa finally succumbed to pressure and announced that the Political Party Funding Act, passed by Parliament in 2018 and signed by him early in 2019, would come into force from 1 April 2021. Demands from Corruption Watch and My Vote Counts put the president to terms to declare an operative date for the act or face litigation.

The government had previously argued that some regulations proclaimed under the act needed to be amended before it could come into force – we now know that this was not the case because no regulations have been amended yet. It was but a smokescreen to obscure the lobbying by some political parties to delay the implementation of the act, or even to amend some of its key provisions on transparency.

Even those parties who voted in favour of the legislation appeared to be struck by “buyer’s remorse” and were having second thoughts about its impact on their fundraising capacity. In the case of the ruling party, there had been a change in the office of the treasurer-general, from Zweli Mkhize to Paul Mashatile.

The initiation of this legislation, somewhat surprisingly, came from the ANC during the Zuma era. Mkhize, with the late Jackson Mthembu (then ANC chief whip) and Vincent Smith (now accused of corruption in relation to Bosasa) who chaired the Ad Hoc Committee on Party Funding, steered the legislation through Parliament in the face of some opposition, not least from the Democratic Alliance.

It was a moment of great significance, lost on many, when Mkhize, with Valli Moosa alongside him, made a presentation of the ANC’s proposals to the ad hoc committee. I can recall no other time when a member of the ANC’s Top Six (other than those in the national executive) appeared before a parliamentary committee. That spoke volumes about their commitment to this legislation, which Moosa considered to be a means of rectifying a defect in our Constitution, insofar as it failed to regulate the private funding of parties.

Writing in the Sunday Times on 24 January, Moosa described the act as the “single biggest improvement to South African democracy since the adoption of the Constitution in 1996”.

Late in 2020, Mashatile, during SA’s financial crisis and the Covid-19 pandemic, was lobbying for greater public funding for parties. Clearly, the usual sources of funding were drying up – the act was having its desired effect even before coming into force. In this regard, one cannot also disregard the dampening impact on corporate donors of the revelations emanating from the Zondo Commission. For as long as donations were cloaked in secrecy, unscrupulous businesspeople were eager to grease the palms that would feed them; now they must be more circumspect.

The act regulates the receipt of funding by political parties from three sources:

1. The Represented Political Parties Fund (RPPF) allocates public funding to parties in national and provincial legislatures based on a proportional and equitable formula – under this act two thirds is allocated proportionally (based on the results of the previous election) and one-third equitably. This is an improvement on the 1997 legislation where the split was 90/10, significantly favouring the larger parties.
2. An innovative Multi-Party Democracy Fund is established to enable private donors to support all parties using the same formula as for the RPPF – it acknowledges that in a democracy parties need funding to be effective, and private donations are encouraged without any fear of a perception of seeking undue influence. The challenge is going to be to encourage corporates to contribute to this fund, an issue that the Electoral Commission of SA (IEC), which is responsible for managing the act, is already seized with.
3. Private donations (from individuals and juristic entities) will come under scrutiny for the first time. Donations above R100,000 per annum from a single source (including related parties) must be disclosed by both the party and the donor. This “belt and braces” approach is aimed at strengthening disclosure practices. Donations from a single source are capped at R15-million per annum.

Funding from any organ of state, state-owned enterprise or foreign government is not permitted. The act specifically states, “A political party may not accept a donation that it knows or ought reasonably to have known, or suspected, originates from the proceeds of crime and must report that knowledge or suspicion to the [IEC]”. In addition, donations to members of a political party are not permitted. Parties are required to designate an accounting officer who will be responsible for all funds received and who must submit audited accounts to the IEC. The accounts must include details of donations under the R100,000 threshold though these will not be made public. Parties are required to submit quarterly reports to the IEC, which will in turn report annually to Parliament on these accounts.

The Political Party Funding Act is an important piece of legislation for at least three reasons:

1. It provides the South African electorate with knowledge about the private funding of political parties, information that the Constitutional Court has declared to be integral to the fulfilment of the right to vote.
2. The transparency about the private funders of political parties will assist in the fight against graft. It is the nexus between money and politics, secretive transactions that undermine fundamental constitutional principles of accountability and openness, that has allowed corruption and State Capture to flourish.
3. The enhanced transparency and the clean-up of South African politics will engender greater confidence in politics and in democracy itself. There have been lower levels of participation in elections and voter turnout has dropped. Most concerning is that young people are shunning elections. For the 2019 national and provincial elections, about nine million people did not even register to vote, and of these, six million were aged between 18 and 29. Less than 50% of eligible voters voted in those elections.

The act is a well considered and sound platform for the regulation of private funding of political parties, but it is certainly not an end in itself. There are loopholes that will undoubtedly be exploited, and means found to circumvent the rules and regulations. One need only look at our highly regulated tax regime to see that dodgers will not easily be deterred. That is not a basis for dismissing the act. It simply means that enforcement will have to be stringent and those falling foul of the act must be penalised. Experience will also teach the IEC where weaknesses lie and how these can be overcome.

One clear arena that will require much focus is that of digital campaigning and the use of social media platforms. It is exceedingly difficult, if not impossible in some instances, to determine who is behind these messages, let alone how they are funded. Another gap in the new law is the absence of any regulation of party-owned investment vehicles. This will also need to be addressed in due course. A longer-term focus should be on regulating expenditure (as opposed to income), especially in election periods.

What is important now is to get the ball rolling, to get parties used to disclosing their financial affairs and to build a culture of transparency. DM

Lawson Naidoo is the executive secretary of the Council for the Advancement of the South African Constitution (Casac).