In a first for our democracy, political parties will be mandated to keep proper financial records of all private donations as per the Political Party Funding Act (PPFA) which is in effect as of 1 April 2021.
This comes after My Vote Counts and other civil-society organisations had for years advocated for party funding information transparency.
The Act signals a change in our political landscape and has the ability to strengthen our democracy, enhance transparency and allow us to better hold political parties accountable.
Political parties will have to disclose their private funding information on a quarterly basis to the Electoral Commission of SA (IEC).
The IEC will then prepare the information and publicly disclose it on their website and other media. Parties must also ensure that all financial records are kept for a period of five years.
The Act allows for two funds where parties will receive funds. The first is the Represented Political Party Fund which is made up of public donations.
The allocation of these funds used to be on a 90% proportional and 10% equitable basis but will now be changed to a two-thirds proportional and one-third equitable basis.
This revision in allocation will be to the benefit of smaller parties and it enhances South Africa’s multi-party democracy as required by section 236 of the Constitution.
The PPFA also establishes the new Multi-Party Democracy Fund which is made up of private donations.
Parties must disclose private donations of R100 000 and above.
Foreign donations will be prohibited unless for training, skills and policy development and will be capped at a maximum limit of R5 million in a financial year.
With the Act now in operation, it means that the first quarterly disclosure will likely be in time for the Local Government Election which is set to be held anywhere between August and November 2021.
The IEC has stated in a workshop recently that they would require around 4 weeks to prepare the information ahead of it being made public.
The regulations for the PPFA serve as a guideline for how the provisions of the Act will play out and include the responsibilities of the political parties and their accounting officers as well as the responsibilities and powers of enforcement by the IEC.
The chapter on enforcement is arguably the most important chapter in the regulations as it outlines the IEC’s monitoring and inspection powers. It also covers the IEC’s power to issue directions, their power to suspend payment of money to political parties and their power to recover money irregularly accepted or spent. In addition, it details the IEC’s power to issue fines should a political party transgress any provision of the Act.
Although the IEC plays an integral role in administering the PPFA, they have stated that they do not want to “wield a stick” towards parties when it comes to enforcing this Act. History shows that parties need to be closely monitored especially since this Act deals with their private funding.
There have been many instances over the years where political parties received money and or “gifts” from wealthy individuals or companies as detailed in a historical funding report by My Vote Counts. Some of these undue influences have been revealed in the on-going State Capture Inquiry and once again shows just how necessary party funding transparency is in South Africa.
While the PPFA seeks to regulate the private funding of political parties as a whole, it does not speak to the intra-party funding of political parties. The reason for this is the PPFA seeks to regulate the private funding of political parties; not necessarily individual members.
Chapter 3 section 10 of the PPFA states that a member of a political party may not directly receive a donation unless it is for party political purposes.
The term party political purposes needs to be clearly defined and until then, it leaves a grey area as any party member can receive funds for individual gain but officially claim it to be for a party political purpose.
This loophole — among others — has long concerned many civil-society organisations and should be investigated further to properly ensure the Act does what it seeks to achieve.
Despite these loopholes that will need to be tightened, it must be recognised that the Political Party Funding Act is a major milestone in South African politics.
Not only will the private funding of political parties be regulated; this will be the first time that South Africans will have access to this crucial information and have a greater ability to properly hold political parties accountable.
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