Mired in opacity — 10 hard truths about SA’s political party funding

A new report into the public and private money received by South African political parties, produced by the funding watchdog My Vote Counts (MVC), makes for sobering reading.

MVC dug deep into the third and final report published in April this year by the Electoral Commission of South Africa (IEC) on the implementation of the Political Party Funding Act for the 2023/2024 financial year. Here are 10 of their conclusions.

1. There was a major pre-election cash flood

Political parties raked it in during the last financial year, receiving R3,242,325,452 (R3.242-billion) in public and private funding combined. That is a significant increase on the approximately R2.03-billion received in the previous reporting period.

The reason is obvious: the May 2024 general elections.

MVC says the figure shows “the extent to which companies and individuals invested in parties in the run-up to the 2024 general elections”.

The question we should all be asking: What do they expect back?

2. Two parties combined hoover up nearly three-quarters of the funding

The funding landscape is highly concentrated: the ANC and DA together received more than 73% of all funding. This risks becoming a self-perpetuating system: the more money they receive, the harder it becomes for others to compete as political alternatives.

When the bulk of cash is concentrated in two parties, transparency and accountability around those particular flows also matter even more.

3. Taxpayers bankroll political parties more than you may realise…

Of the IEC’s total disbursement, the vast majority, R622,300,989, was from taxpayers through the Represented Political Party Fund (RPPF), with a measly further R7-million from private and corporate donations going to the Multi-Party Democracy Fund.

From these IEC-linked pots, parties collected handsomely: more than R285-million for the ANC, more than R120-million for the DA and more than R78-million for the EFF.

These funds aren’t supposed to be a slush pile. They are ring-fenced by law in terms of what the political parties are supposed to do with them.

MVC lays it out: “The funds that parties receive from the RPPF may only be used for specific purposes, including developing the political will of the people; bringing the party’s influence to bear on the shaping of public opinion; furthering political education; promoting active citizenship; complying with the Act’s provisions; and so on. The funds may not be used to, among other things, pay salaries or fees, establish a business, acquire financial interests, or defray legal costs related to internal party disputes.”

4. ...and that’s before the parliamentary pot!

Public money does not stop at the IEC. A further R905,192,171 in public funding went to the ANC via allocations from the National Assembly and provincial legislatures. The DA received more than R310-million and the EFF more than R179-million, respectively.

Add those streams to the IEC funds, and the public purse is doing substantial heavy lifting for party finances.

5. The EFF’s grassroots ATM appears to be membership fees

The EFF “recorded a remarkable R44,818,740 in membership fees and levies — more than any other party (the ANC’s total membership fees for the period fell slightly below this)”, reports MVC.

This came while the EFF “declared less than R3-million in private donations for the entire period”.

The mix suggests significant internal mobilisation of smaller contributions — but that is, of course, if the reporting is accurate.

MVC notes a general caveat at the beginning of its report: “The IEC’s data relies on political parties’ compliance with the [funding law’s] disclosure and accounting requirements.”

6. MK party claims shoestring donations

Jacob Zuma’s MK party claims it received just R2.8-million in private donations before the elections.

That figure will raise many political eyebrows, given what appeared to be a well-resourced election campaign.

7. We see only a third of private funding — and things are about to get worse

MVC’s arithmetic is blunt: “Given that the total private funding received by parties during the reporting period (excluding loans) comes to R1,054,778,069, this means that the current disclosure rules only afford us access to information about a third (31.8%) of all private funding”.

This situation is about to get significantly more opaque, because a new proclamation quietly signed into law by President Cyril Ramaphosa in August doubles the disclosure threshold for reporting private donations, meaning that only donations above R200,000 now have to be publicly disclosed.

That is going to push more political money back into the shadows.

8. What is the ANC’s ‘other income’?

We don’t know the source of almost 80% of the ANC’s private funding — a situation MVC describes as “deeply concerning”.

Here’s why: a funding category that the IEC refers to as being “other income”, out of the ambit of the political funding laws.

“In this category, the ANC disclosed a whopping R413,469,406 — meaning that 78% of its private funding for the reporting period originated in ‘other income’,” writes MVC.

The group adds: “We have no indication of what the source of this money could be.”

MVC asked the DA and the ANC where they were getting “other income” from. The DA replied that it received 15% of its private funding from this category, derived from sales of promotional material, interest on investments and small-scale fundraising events. The ANC didn’t reply.

MVC notes that it is possible that the ANC could have sold a bunch of property or assets in the financial year in question, but says it’s unlikely because Chancellor House manages the ANC’s investments and properties. MVC also isn’t convinced that the ANC could raise this much from its famous gala dinners, because those are normally arranged through its Progressive Business Forum.

9. Loans may be the easiest loophole in the game

In jurisdictions like Canada, political parties are required to disclose the source of big financial loans. That’s not the case in South Africa, and MVC is concerned that parties are majorly exploiting this loophole.

The group points to a “loan” of R60-million to the EFF, which MVC says matches News24's reporting on a R60-million loan to the Fighters from Standard Bank. That amounted to more than all the EFF’s private funding combined.

Rise Mzansi, meanwhile, received a “loan” of R22.1-million — details unknown.

(Daily Maverick asked Rise Mzansi for the details of the loan on Tuesday, but we were politely fobbed off by spokesperson Mabine Seabe, who nonetheless reassured us that Rise Mzansi does “not allow donors to dictate the political programme of the organisation, nor do we accept monies which are the proceeds of crime or other nefarious acts”.)

MVC’s concern is that loans may be obscuring transparency.

“It would be all too easy for a party to evade the disclosure requirements by receiving donations masquerading as loans, loans that have their payment terms endlessly deferred or are eventually written off years later,” the researchers write.

“Similarly, a funder who wishes to protect their identity could stand as a guarantor for a party’s loan, the party could receive the money and list the loan as a liability rather than income, and then default on the loan, allowing its donor, as guarantor, to pick up the bill.”

10. We still do not know what South African politics really costs

MVC notes that it’s almost impossible to determine the true costs of running a political party, campaigning, and so on, because parties are not required to report on how they spent the majority of the funds they received.

“This in turn hampers our ability to determine whether the R2.1-billion in public funding received by represented parties is adequate, and whether parties’ arguments for increasing the disclosure threshold and upper limit, which rely heavily on claims about the expense of running a party, are justified,” MVC warns.

How convenient. DM