By Khaya Sithole

The president of the ANC — Cyril Ramaphosa — has previously referred to the party as ‘accused number one’ in the country’s corruption crisis. An admission such as this undoubtedly affected the ruling party’s relationship with the donor community. It also explains the ANC’s growing hostility towards the Party Political Funding Act.

The recent 2023 Budget Speech saw significant allocations to broken parastatals such as Eskom, whose dire financial state has contributed to its inability to keep the lights on. The move to shift R254-billion from the Eskom balance sheet to the state balance sheet illustrates that the power utility’s business model – where its revenue-generation capacity is defined by regulatory processes rather than the simple wishes of the entity – is limited.

For regulated institutions, the need to be prudent while delivering on their mandate represents a litmus test of the effectiveness of their management teams. A range of bad decisions – strategically and operationally – affects the nature of transactions that can be undertaken and the appetite of various stakeholders to engage with the entities.

In the case of Eskom, a history of corruption and financial mismanagement makes it near impossible to borrow money. In the absence of the state’s intervention, the financial position enters a terminal crisis.

Such a problem is not limited to state entities, but is replicated by the country’s political parties. The ANC represents an important case study of the consequences of corruption, incompetence and flawed business models.

The governing party’s footprint across the country is unmatched. Its grassroots origins — tapping into cultural, religious and social institutions — has been an instrumental part of its electoral hegemony over the past three decades. Inherent in the model is the philosophical commitment to open access under the guise of the movement representing a broad church.

Running costs

Such a model requires that the party removes barriers to membership. One potential barrier to access — membership fees — remains a sensitive topic for the party’s leaders. As a party that espouses solidarity with the poor, the ANC has avoided implementing membership fees that could be seen as exclusionary. Therefore, the party charges a nominal fee that has diminished in relative terms over the years.

Currently, the membership fee is a mere R20. Therefore, the ANC’s only way to grow the value of its membership revenues would be to sign up more members and implement systems to facilitate collections. This is difficult, considering that the decrease in popularity of the party in general elections has translated into a decrease in paid membership over time.

In its 2022 financial report presented at its 55th national conference, the ANC indicated that it had collected R126-million in membership fees over a five-year period, which represented just 6% of its income. The bulk of the party’s income — 58% — was generated through private donations and fundraising initiatives.

As the leading party in the National Assembly, the National Council of Provinces and in eight of nine provincial legislatures, the party gets the bulk of the IEC grants to political parties, at 24% of IEC distributions.

The problem for the party is that its pervasive grassroots presence across the country comes with a hefty operational bill. During its five-year cycle, the party’s total income of R1.95-billion was swallowed up by R2.2-billion in expenses.

This resulted in a running deficit of R245-million and saw the party repeatedly fail to pay salaries on time and miss payments on its statutory obligations.

Given the fact that the liabilities of the party had already reached R255-million at the end of 2017, the trends of the ensuing five years of deficits have resulted in the party recording liabilities of R555-million at the end of 2022.

Party Political Funding Act

While these developments are consequences of a long history of the party’s preferred operational and financing model, the growing consensus within the party is that its fate has been worsened by a weakening economy and the promulgation of the Political Party Funding Act (PPFA) in 2021.

The relevance of these two developments are linked to the party’s reliance on private donations. In its recent past, the ANC enjoyed support from various donors, locally and internationally. Before 2021, the identities of these donors were not known and hence very little insight regarding the proliferation of private interests intersecting with public policymakers was available to the public.

The implementation of the act ushered in a transparency regime that called for declarations of donations to political parties, restrictions on annual contributions, restrictions on the use of foreign-sourced support, and the prohibition of state entities from supporting political parties.

The objectives of the act were aimed at strengthening the national democratic project and providing voters with important information regarding the parties they may support.

Zondo commission revelations

Unfortunately for the ANC, this coincided with the work of the Zondo commission which exposed troubling details about the relations that political parties — and the ANC, in particular — enjoyed with the donor community.

The revelations from the commission, ranging from Bosasa, Regiments, EOH, Blackhead and even the long-known story of the Chancellor House funding model, indicated that the ANC had become a party whose reliance on the discretion of donors had come with troubling practices.

The president of the ANC himself — Cyril Ramaphosa — referred to the party as “accused number one” in the country’s corruption crisis. Such an admission undoubtedly affected the ANC’s relationship with the donor community.

The party’s income from April 2018 to March 2019 reached R598-million. Just 24 months later, its income for the year ending March 2021 had collapsed to under R250-million. This rapid decline pre-dated the implementation of the PPFA and reflects the party’s credibility crisis.

Its inability to convince its traditional donor base to back it, even with public scrutiny, reflects the problem of association with the ANC, which is a party-specific rather than a universal issue.

At its 2022 national conference, the ANC resolved to lobby for an amendment to the act to change the disclosure thresholds and prohibitions on foreign funding rules. The ANC seems to hope that donors who wish to fund the party, but who would rather avoid the risk of association, will once again be galvanised if they can support the party under the cloak of secrecy.

Damaged brand

Given its strong relationships with foreign states, particularly those of communist persuasion, the ANC believes that the limitations on foreign funding have been fatal to its funding prospects. The problem with these assertions is that they neglect to reflect on these developments being the natural consequence of how the party has allowed its various members and associates to damage its political brand and create deep associations with corruption.

The amendments to the transparency regime may be cloaked under the guise of protecting democracy, but given the ANC’s perpetual inability to manage its finances even before the implementation of the act, one wonders if any of it will make a difference.

What we do know is that the proposals will be under the guise of protecting democracy at large by — ironically — limiting what voters can know about the parties that are part of the democratic project.

What we also know is that the ANC will simultaneously lobby for increased public funding of political parties under the caveat that they are publicly important institutions that must be supported from the public purse.

If this view is to be the tie that binds us as citizens to the fate of political parties, they cannot simultaneously seek to privatise the information regarding their funding mechanisms. To this end, the ANC may be seeking to have its cake and eat it – what we need to remind it is that the party is free to eat its own cake; it just needs to learn how to pay for it.


Originally published on DM.