In 2021 South Africa’s Political Party Funding Act 6 of 2018 came into operation. It banned foreign funding of political parties, capped donations at R15 million per year from a single donor, and required the disclosure of the identity of any donor who gave more than R100 000 to a party in any year.

Though clearly bringing considerable transparency to party financing in South Africa, these restrictions were not good enough for the mostly US-funded non-profit company (NPC), My Vote Counts (MVC) NPC, which went back to court a couple of years ago claiming that the existing R15 million limit was too high, related parties should not be allowed to make donations, and the identities of all donors should be disclosed.

MVC NPC pushed ahead with this case despite being warned by Action SA’s Michael Beaumont, among others, that it was likely to cause serious harm to emergent opposition parties, and that the real problem now was with non-compliance by existing bad actors. In a double blow to MVC its application was dismissed by the High Court last month, and a proclamation by President Cyril Ramaphosa was gazetted raising the upper limit of donations to R30 million per annum, and lifting the disclosure limit to R200 000. (This was not a doubling in real terms as the original limits were set in 2017, and inflation has eaten away their value since then, and will continue to do so). MVC NPC may yet appeal the ruling.

Alongside the various affidavits submitted in that case, the recent Political Party Funding Annual Report 2024 released by the Independent Electoral Commission – which MVC itself did a good job analysing – highlights how deeply misconceived this court application was, and how deleterious it would have been for South African democracy had it succeeded.

The ANC, it should be remembered, was swept to political dominance in South Africa in 1994 on a tidal wave of foreign money. Its 1999 and 2009 elections were certainly bankrolled by foreign interests, and other ones may have been as well. It has also used its political power and influence to neutralise the police and prosecution services and ensure – via the BEE requirements it imposed on business – that its funding vehicles (notably the Batho Batho and Chancellor House trusts) were cut in on private sector BEE and/or parastatal procurement deals. As a result of the policy of cadre deployment the movement’s cadres are entrenched across the state and wield considerable control over the allocation of tenders etc, which provide illicit revenue streams for the different factions and (now) parties of the liberation movement.

In addition to these advantages of three decades of incumbency, the ANC has also been the major beneficiary of the massive state funding of political parties that it put in place from 1998 onwards. The IEC’s report states that the political parties represented in parliament and the provincial legislatures received R2.21 billion in state funding in 2023/24, which was mostly allocated proportionally. Of the R650 million allocated to political parties from the represented political party fund, R282.5 million went to the ANC, R119.2 million to the DA, and R80 million to the EFF. A further R1.6 billion was disbursed to parties from the national parliament and the provincial legislatures. The ANC received R905 million of this, the DA R311 million, and the EFF R179.6 million. Over and above this, parties imposed levies on the salaries of their public representatives which provided a further taxpayer-funded stream of revenue.

This all means that incumbent parties enjoy massive built-in funding advantages. A financially disciplined political party – which, fortunately, the ANC is not – should be able to fund its day-to-day operations quite comfortably off state money. Any insurgent political party receives none of this funding ahead of its first successful election, and so already starts out with a huge handicap, a point that ActionSA made in its court papers.

Though the liberation movement has now split into three different parties – the ANC, the EFF, and MKP – together they still enjoy over 60% percent of the vote. Thus, while the ANC has likely lost just under a third of its state funding following its dismal performance in the 2024 elections, the bulk of this is now going to MKP instead.

Election campaigns are expensive and here the ability of (law-abiding) opposition parties to tap into lawful sources of private funding are critical, if they are ever to successfully challenge liberation movement hegemony and all the associated criminality. However, according to the DA’s court papers, many of its major donors stopped funding the party after it could no longer guarantee their anonymity, as they feared harassment or reprisals. This also clearly has had the effect of narrowing the pool of major donors willing or able to fund the opposition – to a small group of mostly retired billionaires – thereby increasing (not decreasing) the influence of those few donors.

According to its court papers, the DA spent R322 million on the 2024 elections, down from the R550 million it spent in 2019 (a 60% fall in real terms). To be able to spend even this far more modest sum, it still needed to carefully save up donor money. In 2023/24, according to the IEC, the DA declared R156 million in donations, of which R29 million came in the form of donations below the R100 000 threshold.

What though of the ANC, MKP and the EFF? Who funded their impressive election campaigns? If their submissions to the IEC are to be believed MKP received R753 205 in donations in 2023/24 and the EFF just R2.6 million. The EFF also disclosed a R60 million loan but provided no further details as to its origins. The ANC, for its part, disclosed R57.2 million in major donations, and R11.8 million in minor ones, in 2023/24. Of the major donation income, the bulk came from two of its trusts – Batho Batho and Chancellor House – both of whom donated the maximum R15 million permitted. As the ANC’s trusts fall outside of the ambit of the 2018 Act the source of their revenue is not explained and nor do the trusts have to disclose any disbursements other than those made to the ANC’s official bank accounts. How then could a spendthrift ANC have funded its election campaign, which likely ran into several hundreds of millions of rand? This was presumably done, in large part, through the R413 469 406 in “other income” which it reported, and its auditors declared to be “outside of the ambit of the Act”. As MVC notes in its analysis “we have no indication of what the source of this money could be.”

To sum up then, five years after the Party Funding Act came into effect, we know next to nothing about who funded the election campaigns of the ANC, MKP or the EFF, or in significant part, how it was done. The current provisions of the Act, as is, have significantly affected the revenue of the Democratic Alliance, and other like-minded parties. Had MVC NPC won its court action then the effect would have been to further squeeze the ability of the DA and others to effectively contest future elections, while providing no hindrance at all to the ANC, MKP and EFF’s ongoing modes of operation.

James Myburgh is Director of Bremen Democratic Research (BRE-DE-RE), an initiative to identify and counter threats to the liberty, comity and prosperity of democratic societies through historical and comparative research.