Little interest in new multi-party democracy fund, says IEC
The fund only takes effect on April 1, but the electoral commission says only one company has shown any interest so far
Only one company has so far expressed interest in donating money to SA’s new multi-party democracy fund, which is expected to play a critical role in funding political party activities as strict legislation kicks in next week.
The lack of interest in the fund, which will launch when the Political Party Funding Act takes effect on April 1, does make the Electoral Commission of SA (IEC), which is tasked with running the fund, “concerned”.
The act is seen as essential in the bid to combat corruption by requiring disclosure and transparency by political parties and their donors. This comes against the backdrop of testimony at the state-capture commission of inquiry about how donations to political parties allegedly bought influence and ensured access to lucrative state contracts.
It also comes just months before the 2021 local government elections, with parties and donors having to navigate the new legislation, as well as a dire economic climate that has seen companies close and unemployment numbers surge.
The fund was established by the legislation to deepen democracy in SA and will pay all represented political parties in parliament. While the new act requires political parties to disclose their benefactors of donations of more than R100,000 and caps annual donations at R15m per single donor, the fund does not have any such limitations.
In an interview on Thursday, George Mahlangu, the IEC’s CEO for party funding, said only one company has approached it to make a donation to the fund. Given that the fund only comes into operation in April, it could not take the offer, which was more than the R1m needed for the fund to start paying out monies to parties.
Mahlangu, however, explained that the IEC is busy taking steps to promote the fund. It has already met with Business Unity SA as well as the SA Chamber of Commerce and Industry.
Mahlangu said the IEC has also written letters to some of the top companies listed on the JSE. Some have responded, while others have to wait for board meetings to be held.
“Other than the one company, we have not received any positive response,” Mahlangu said. He added that he thinks appetite for making donations at this stage is low and that companies will likely take a wait-and-see approach as the act comes into operation.
He said it is not only “untraversed terrain” for everyone, but that the timing of the implementation of the act, given the state of the economy, is also not ideal.
He emphasised that it should not only be up to the IEC to promote the use of the funds, given how important it is for SA’s democracy to have strong political parties.
Mahlangu acknowledged that this will likely be a very tough election for political parties in terms of funding. Elections are notoriously expensive; in the last local government elections in 2016, the ANC spent R1bn on its campaign.
While the new restrictions on party funding are a major hurdle for parties and donors, the act will also close a funding avenue for political parties at a provincial level. While the Represented Political Parties Fund (RPPF) will continue disbursing funds, the provincial represented political parties’ funds will no longer be in effect.
Mahlangu said this is another setback for parties at a provincial level, which will have to decide for themselves where the money received from the national RPPF cascades down to within their structures.
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