Assessing the Political Funding Act — does it strengthen SA's sovereignty and democracy?

Daily Maverick

2 days ago

Since 1 April 2021, the Political Funding Act, 2018, regulates the funding of political parties and independent representatives, or 'political representatives' for convenience. Not only are the private and public sources of political funds regulated, but also their amounts and uses.
The act draws sustenance from the Constitution, specifically section 236. To 'enhance multiparty democracy' the Constitution anticipates legislation that 'must provide for the funding of political parties participating in national and provincial legislatures on an equitable and proportional basis'.
Drawing on the Founding Provisions in Chapter Two of the Constitution, the preamble to the Political Funding Act advances the aims of deepening multiparty democracy, protecting our sovereignty and promoting equity, proportionality and transparency. This article is about sovereignty.
Four years after its inception, it is time to ask whether the Political Funding Act, and the way it is practised, bolsters sovereignty. Is there room for improvement, gaps to be filled, safeguards to be fortified, and enforcement to be effective? First, an outline of the scheme of the act.
Two funds
The act establishes two funds: the Political Representatives Fund provides for the funding of qualifying political representatives from money appropriated by an act of Parliament. Amounts recovered from irregular expenditure, unspent monies and interest earned on investments supplement the Political Representatives Fund.
The Multi-Party Democracy Fund is established with the aim of funding represented political representatives from private sources within and outside South Africa. Any monies recovered from irregular expenditure, unspent monies and interest earned on investments are included in this fund.
The Electoral Commission of South Africa (IEC) distributes both funds according to a formula that aims to achieve both equity and proportionality.
Permitted use
The purpose for which political representatives may use the funds are explicit. In short, the funds are for campaigning, to build democracy, promote represented political parties and representatives, encourage citizens to participate in political life, connect people with organs of state, and generally comply with the Political Funding Act.
Prohibited use
Equally explicit is what the funds may not be used for. The funds cannot be used to pay remuneration or other benefits to political representatives in any of the three legislatures; nor may a person who receives remuneration from the state benefit. To fund any matter or event in breach of any code of ethics binding MPs and MECs is prohibited. So is using the funds to establish a business and defray the legal costs of internal party disputes.
Prohibited donations
Accepting donations from foreign governments and their agencies, organs of state and state-owned enterprises is prohibited, with a few exceptions. Donations from a person or entity to a political representative or candidate were capped at R15-million per annum. In 2025, Parliament voted to increase this limit to R30-million.
The threshold for disclosing donations made to a political party and representative was set at above R100,000 per annum. But Parliament has voted to double this amount too. Donations above the threshold must be disclosed to the IEC. Concomitantly, an entity that exceeds the donation threshold must also disclose their donation to the IEC. In this way the IEC can verify the link between donor and donee.
Accepting a donation while knowing or suspecting it to originate in crime, is an offence reportable to the IEC. To give a member of a political party or representative a donation and for a member to receive a donation other than on behalf of the party, is prohibited. Political representatives must keep bank accounts dedicated for receiving and reporting on all donations.
Interconnected aims
The summary outline above of the provisions of the Political Funding Act reveals a spider web of interconnecting protections and prohibitions that cumulatively seek to achieve the constitutional aims of sovereignty, equity, proportionality, transparency and deepening democracy. Tampering with, say, provisions relating to either the disclosure of funding or the funding limits, could undermine not only transparency, equity and proportionality, but also democracy and sovereignty.
Sovereignty
What is sovereignty? Like identity, sovereignty is multidimensional. At its most basic, sovereignty is characterised by power, authority, freedom and independence to make decisions on behalf of a nation state. These characteristics are partly derived from and fortified by law.
Mostly, sovereignty is earned progressively through assertiveness and the exercise of might — economic, political, religious, cultural, etc. Cultivated, developed and maintained rather than conferred, the above characteristics of sovereignty fit the profiles of monarchies, dictatorships and democracies. For now, my interest is in representative democracies.
Overlaying these characteristics may be variations between, say, parliamentary and constitutional sovereignty. Economic sovereignty would be a measure of the independence of a state to govern without international or foreign financial assistance and monopolistic private enterprises. Pluralist sovereignty signals that supreme political power vests not in the state alone, but is shared with and shifts among social, political, economic and religious groups.
Cumulatively, multiple characteristics shape sovereignty to a greater or lesser extent, depending on the balance of forces at play at any given time. However, it is up to sovereign states to choose to emphasise one or more characteristic. Indeed, to assert their sovereignty in their own best interests. Or not.
Thus, states opting for a constitutional, representative democracy — like South Africa — should jettison features of parliamentary sovereignty, but emphasise pluralist sovereignty. Economic and political sovereignty — how much a state borrows from, say, the International Monetary Fund, or permits foreign powers to fund political elections — would signify the extent to which that state chooses to risk its independence and freedom from foreign influences to make its own decisions.
PFA markers of sovereignty
Firstly, choosing to regulate political funding per se implies a declaration of sovereignty about elections for political office. It is an assertion of democracy. By establishing the Political Representatives Fund (PRF) and the Multi-Party Democracy Fund (MPDF), the state asserts the duty to fund political representatives.
Secondly, sanitising elected representatives of unfair and unjustified influences exerted by underhand funding is but one way of ensuring that voters, and not illicit influencers, dominate the national discourse. The exception to the prohibition of donations from foreign governments and their agents is that they may donate a limited amount, currently set at R5-million, for training and skills development of a political representative or for policy development.
By stipulating the sources of political funding and limiting the contributions from both foreign governments and a single donor to a political representative, the Political Funding Act seeks to curb and control the influence of both foreign and wealthy private donors on domestic politics.
Thirdly, prohibiting organs of state and state-owned enterprises from contributing to the Multi-Party Democracy Fund imports into the system all the efficiencies of receiving funding from a single state source. It is also a way of preventing incumbent representatives and political parties and their apparatchiks from diverting funds budgeted for their departments towards the Multi-Party Democracy Fund.
Fourthly, what political representatives may and may not use the Political Representatives Fund and the Multi-Party Democracy Fund for are aimed at fortifying representative democracy. For instance, funding is not meant to benefit political representatives personally. Using the funds to establish a business is illegal. This limitation must, by extension, also apply to funding an already established business.
Fifthly, the purpose of political funding prioritises the people, not just voters and their representatives. The provision of state funding is intended to 'ensure continuous and vital links between the people and organs of state'. Convincing people that state institutions exist to deliver their livelihood rights to food, water, health, housing, education and security is campaigning. Campaigning is for garnering support for both the campaigner's constituency and the democratic state.
Therefore, political representatives are funded and promoted not only as an end in themselves, but also as a means of strengthening their effectiveness as elected representatives of the people they seek to govern.
Maximising the people's participation in society cultivates legitimacy and nurtures sovereignty. Political representatives who find themselves ungirded by popular support jeopardise not only their legitimacy, but also the sovereignty of the state.
Sixthly, the aim of entrusting the administration of political funding to the IEC is to assure the integrity of the funding project. The mere whiff of bias or corruption would contaminate the IEC's integrity. Undoubtedly, this would be so if, say, the IEC accepts money for the Multi-Party Democracy Fund knowing that it is the proceeds of crime.
Correctly calculating and paying the qualifying political representatives their portions from the Political Representatives Fund and the Multi-Party Democracy Fund, reporting to Parliament and securing clean audits from the Auditor-General, are all markers pointing to the IEC doing its job well. Empowering the IEC to enforce the Political Funding Act and submit to audits by the Auditor-General are the belts and braces to ensure compliance with the act by all.
Is our sovereignty safe?
My assessment of sovereignty through the political funding lens touches on compliance; underhand funding, low polls and weak enforcement.
Compliance
Consistent with the constitutional mandate that legislation must regulate funding for national and provincial elections, the IEC has established a unit dedicated to administering the political funding project. Parliament has yet to consider whether it should regulate political funding of local government elections.
If the IEC receives illicit funding or misallocates funds, the rules are so precise that illegal transactions would be easily detected. Furthermore, receipts and allocations are made electronically, not as cash in brown paper bags. They generate an electronic trail.
Illicit transactions would show up in the annual audits. Anyone aggrieved by an allocation may ask the Electoral Court on review or appeal to correct any decision of the IEC. Annual audits by the Auditor-General and quick corrective measures by the court would mitigate the risk to the integrity of the IEC.
The IEC is a modern institution evolving in the technology-driven information age. To execute its constitutional mandate, it must be ever vigilant of its own limitations, advance its capabilities and remain responsive to a fast-changing, high risk financial environment. Building in self-correcting measures of constantly monitoring, measuring and innovating mitigates risks. If the IEC fails to self-correct, the Electoral Court could compel it to comply.
In 2024, 14 out of 15 represented political parties reported on their donations received and spent. While such a high level of formal compliance is commendable, authenticating the amount of donations actually received in both cash and kind is challenging. Political representatives do not have similar internal self-correcting mechanisms as the IEC to safeguard against underhand funding.
Underhand funding
Superficially, a political party's reporting may look compliant. However, on comparing the information in the report with the reality, it appears in some instances that the amount of donations disclosed as received and spent do not match what seems to have been spent. Donations in kind tend to escape the reporting radar.
Thus, a political representative could trigger an investigation if, e.g. it uses a posh sound system, busses in crowds, and distributes thousands of T-shirts and food hampers at a mass rally, the costs of all of which manifestly exceed the amount of the disclosed donations and expenses.
Vote buying is an internationally prohibited transaction. The prospects of finding accounting records for prohibited transactions are remote. So too is funding from foreign governments and their agencies masquerading as nonaligned organisations.
Exploiting gaps in the Political Funding Act subverts not only the letter and spirit of the law, but democracy itself. The minimum reporting threshold of above R100,000 is avoided by a donation of say, R99,000. If a donor makes several payments of R99,000, they need not appear in the reporting to the IEC. However, scrutiny of the financial statements would expose the political representatives to an investigation.
Similarly, equity, fairness and the rule prohibiting donations above R15-million from a single person or entity could be subverted when, say, members of the same family, or the CEO of an entity and the entity itself, each donate the maximum allowed to a political representative.
While these donations are legal, they could erode the purpose of the Political Funding Act to curb undue influence exerted by the elite.
Low polls
The greatest risk to sovereignty is the failure or refusal of the people to participate in elections. Whether as people standing for elections, volunteers campaigning for democracy and voters supporting their preferred representatives, their non-participation, irrespective of the reasons, would be the death of democracy.
Plummeting polls are clear evidence of the people's disillusionment. Disillusionment would follow those political representatives who misuse the funding or fail to convince the people of the benevolence, competence and capacity of state institutions to deliver their livelihood rights to food, water, health, housing, education and security.
Unless elections offer well-meaning, capable political representation as options, disillusionment in the state would ultimately erode its legitimacy.
Research by the Human Sciences Research Council found 'a sense of hopelessness and despondency with the country's democracy'. The council exposes the link between disillusioned voters and low polls. From the height of 64% in 1994, the Voter Satisfaction with Democracy Survey shows a drop to 25% in 2024.
Unlike say, Italy, South African law does not set a minimum threshold of votes for a valid election. If such a threshold existed, and was not achieved, the elections would have to be rerun.
Enforcement
Enforcement of the Political Funding Act rests with the IEC. It has powers to monitor compliance and investigate complaints. If there is a failure to disclose information, the IEC can apply to the Electoral Court to compel compliance.
However, to perform its Political Funding Act functions optimally, it is not enough for the IEC to establish a unit dedicated to administering political funding. The sources of funding for vote buying and other subversive transactions require extensive investigation to gather evidence to enable the IEC to enforce the act. Mere suspicion does not ground winnable cases in court.
Simultaneously, the IEC cannot compromise its integrity, impartiality and independence as a service provider responsible for administering political funding. Ultimately, it is the IEC that must decide whether the funding of political representatives resulted in inclusive, free and fair elections. Therefore, the IEC's investigative functions must be bolstered with forensic capacity for it to be an effective enforcer of Political Funding Act violations.
Underhand transactions require criminal investigations aimed at prosecuting offenders. Units in the police, security and prosecutorial services dedicated to electoral crimes would facilitate prosecutions. The record of a successful conviction should be allowed as prima facie proof of a Political Funding Act violation. Possibly, this would dispense with the IEC duplicating an investigation.
Whistleblowers are indispensable for monitoring compliance with the Political Funding Act. They must be protected when they report underhand transactions. They have direct evidence that is required for presenting winnable cases in court.
Donors should be urged to contribute to the Multi-Party Democracy Fund. This would enable equitable and proportional distribution of funding. Furthermore, it would avert suspicion of underhand funding and undue influence.
While low polls could singularly frustrate democracy, political funding is not the sole cause of plummeting polls. What those other causes are leaves little to the imagination. Ultimately, if most people refuse to participate in elections, sovereignty would be scorched on the pyre of democracy. DM