Political Finance and Funding Reform

[The State of Campaign Finance in the United States. Source: http://paxonbothhouses.blogspot.co.za/2015/04/campaign-finance-reform-and-ironic-role.html]

“Under private property … Each tries to establish over the other an alien power, so as thereby to find satisfaction of his own selfish need. The increase in the quantity of objects is therefore accompanied by an extension of the realm of the alien powers to which man is subjected, and every new product represents a new potentiality of mutual swindling and mutual plundering.” [Marx. Human Requirements and Division of Labour. 1844]

A strong democracy requires healthy political parties. In turn, political parties require resources to sustain and operate a basic party structure sufficient to represent people, develop the capacity to contest elections and contribute creatively to policy debate.

Yet, how parties raise money and how transparent they are regarding the sources of funding remains crucial if policy-making is to be open and principled. Given the high levels of inequality in South Africa, those who are able to buy influence through political donations are more likely to do so, thereby drowning out the voices of the poor and marginalized.

There is a real danger that anti-progressive and anti-revolutionary forces are going to try and buy the 2019 elections through finance of the opposition in parliament. Think of the financing raised in the United States: in the last elections just passed, Republican candidate Donald Trump and Democrat candidate Hilary Clinton collectively raised over 2.5 billion dollars. The DA in our country continues to improve its electoral performance because of its access to networks of patronage and power across big capital. The DA spin-machine has done an admittedly excellent job in hiding this funding. If you want any evidence that the DA is beholden to big finance, take note of its muted response to the events at Marikana. Think of how the DA is trying to change labour laws to reward big business who would like to fire people, lower ages and get rid of the legal protections that are currently afforded to workers.

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.


We can more broadly outline the problem of ‘money in politics’:

  • No Legislation regulating private donations to political parties:

The Democratic Alliance and other anti-progressive, anti-revolutionary forces are able to raise large sums of campaign finance in order to pursue their agenda. This has been enabled by the lack of regulation or legislation in this area. Private individuals and companies are able to donate as much as they wish to in secret, leaving the door open for corruption, buying of influence and allows these donors to sink their claws into the state.

 Lack of political party finance reform enforces poverty and marginalization:

In a country already divided by high levels of inequality, wealthy individuals are able to influence policy in myriad ways thus ‘drowning out’ the voices of those living in poverty and the marginalized.

  • Political parties do need to raise finance:

Political parties do need to raise money for much-needed activities, from building research capacity to electioneering.

  • The missing link is transparency:

The major problem with getting money out of politics is that there is a strong need for transparency. In 2005 the Institute for a Democratic South Africa (IDASA) took five major political parties to court to reveal their sources of funding in terms of the Promotion of Access to Information Act. The narrow judgement from Judge Griessel in the Cape Town High Court found that political parties are private bodies and therefore there is no need for them to disclose their source of funding. However concerns about events like the Harksen issue in the Western Cape show that a lack of transparency allows companies or wealthy individuals to secretly buy influence. Knowing where political donations are coming from is crucial if political parties are serious about stated commitments to transparency in tender processes and conflicts of interest.

  • Influence of Media:

The influence of big money also plays a crucial role in determining the range of news and opinion that voters are exposed to. Given the ownership of media by largely white monopoly capital (notably in the form of Naspers-Media24) it is not difficult to make the step to acknowledging that the media is controlled by the same interests that control the opposition. Further to this the private media make most of their profits by selling advertising to businesses deeply invested in the ideology of the free market. The news reports and opinions in the media might be critical of individual companies, but will seldom threaten the hegemonic interests of big business. Moreover, the private media must target the audience whom advertisers would like to sell their products to. These middle class consumers of mainstream media are often steeped in a ‘safe consensus’, holding self-serving ‘common sense’ opinions about the desirable economic system and about a range of other policy issues (without always knowing that they do so). This allows private media outlets wanting to make a profit to provide a narrow spectrum of “diverse opinion” that cleaves narrowly to the middle ground. Reporting and complaining about ANC corruption is safe because many of the high-end consumers of news want to know about this, while many business leaders are instinctively suspicious of the ANC. But how often would the media point out that the logic of the free market condemns millions of South Africans to hunger and poverty? The mainstream media will also seldom report extensively on the lives of people living in rural areas, while often depicting the poor and marginalized as dangerous, irrational and violent, welfare scroungers or as pitiful but powerless victims in need of our patronizing, LeadSA-inspired sympathy and our handouts. 

  • The Public Funding of Represented Political Parties Act is insufficient:

The PFRPPA needs to be amended so that it includes some regulation of private donations to political parties. The PFRPPA makes provision for money from the public coffers to be allocated to political parties on a 90:10 split. Ninety percent of the funding is therefore allocated proportionately, i.e. according to the percentage of votes received in elections. The remaining ten percent is distributed equitably between parties represented in Parliament. Public funding, however, amounting to R104.8-million is insufficient and this creates the need to raise money from private sources, especially at election time. The public money spent on political parties is demonstrably insufficient as big political parties need to finance their myriad activities. South Africa is a particularly challenging country within which to contest an election – a sprawling land mass, large rural areas, eleven languages and a low literacy rate. There is already substantial public funding of political parties, and has been ever since the 1997 Public Funding of Represented Political Parties Act was passed – around R70 million in the current financial year. There have been muted calls for an increase in this figure from across the political spectrum. Some believe that this will result in less dependence on either corporate or dodgy donors. Minority parties hope that it will increase the overall amount available and therefore enhance their ability to compete. While there is a respectable case for increasing public funding as a result of the various scandals related to the funding of political parties, it is hard to imagine that the taxpayer would have much appetite for increased public funding in the continued absence of a broader framework of regulation and governance. In 2007, the ANC resolved to ‘champion the introduction of a comprehensive system of public funding of representative political parties… as part of strengthening the tenets of our new democracy. This should include putting in place an effective regulatory architecture for private funding of political parties… The incoming NEC must urgently develop guidelines and policy on public and private funding, including how to regulate investment vehicles’. 

What is to be done?

There are some specific interventions and actions we take at the present moment:

  • Implementing the Polokwane Resolution on Party Financing and Funding Transparency

The ANC’s commitment to transparency in relation to party funding was articulated in the Polokwane Resolutions.

  • Amending the Public Funding of Represented Political Parties Act:

The PFRPPA will need amendment so that private donations to public parties is regulated. Such regulation will be to ensure that donations and donors are declared. Such an amendment will also need to put into place regulations that limit donation size. Regulation should also include measures such as ensuring that public disclosure of contributions is publicly disclosed; political parties must submit funding reports on an annual basis to the National Assembly. 

  • Increasing Public Spending on Political Parties:

One of the ways in which we can fix the problem of private donations is to increase the overall amount of funding that political parties receive from the fiscus.

  • Finance raised through private donations to political parties needs to be capped:

We are not suggesting that the overall donations of private funders should be capped. Rather, what we are suggesting is that company and individual donations to political parties needs to be capped. We need to create a situation in which wealthy companies and individuals are able to put forward large amounts of financing into political parties to achieve their own ends; rather it would be preferable that political parties raise financing off of a broad base of support. 

  • Establishment of a Democracy Fund:

The Democracy Fund would act as a vehicle for all non-public sector financing. All non-public funds would have to be deposited in the democracy fund. Funding would still be earmarked for specific political parties. However, the fund would take a nominal percentage (perhaps 20%) and move this back to the public purse to be allocated to political parties in terms of the PFRPPA. Furthermore, all donations going through the Democracy Fund would need to be openly declared. A Democracy Fund will create an environment in which companies and individuals are able to make political donations and in which there is transparency regarding the amount of the donation and the donor. This will go a long way to diluting the buying of influence.

Image result for Human Requirements and Division of Labour

[The Division of Labour. Source: http://oll.libertyfund.org/pages/adam-smith-and-j-b-say-on-the-division-of-labour]


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