South Africa: Who is to blame for a cash-strapped ANC?

By Carien du Plessis
Posted on Tuesday, 2 August 2022 10:24

South Africa's ANC party holds national policy conference
ANC President Cyril Ramaphosa gives an opening address during the African National Congress (ANC) national policy conference at the Nasrec Expo Centre in Johannesburg, South Africa, July 29, 2022. REUTERS/Siphiwe Sibeko

South Africa's governing African National Congress (ANC) has been struggling to keep up with salary payments for its staff in the past year as anti-corruption measures have funders more cautious. Some have warned that the cash crunch could ultimately collapse the party.

President Cyril Ramaphosa’s detractors have indirectly blamed the funding crunch on him. Newly-elected KwaZulu-Natal secretary Bheki Mtolo tells The Africa Report that Ramaphosa managed to raise a rumoured R1bn ($60m) for his 2017 campaign to be elected president, yet he does not appear to have the same ability to attract funding now ANC staffers are going hungry.

“I’m not sure what makes them fail to raise money,” he says, pointing out that Ramaphosa sits on the party’s financing committee with its treasurer-general Paul Mashatile. “You need around R40m to run the ANC per month.”

Mtolo blames the Political Party Funding Act, which came into effect on 1 April last year, and says it should be revamped.

Greater party funding transparency

Former minister and ANC member Valli Moosa have pushed for greater transparency in party funding for over two decades and when the law was eventually passed, it was brandished by Ramaphosa as one of the milestones in the ANC’s corruption clean-up campaign.

According to the act, parties have to declare donations and name donors who contribute more than R100,000. There is a cap of R15m on donations from any single funder. The ANC, which initially supported the passing of this law, now wants these ceilings lifted.

Together with the biggest opposition party, the Democratic Alliance (DA), the ANC has complained that the law is hampering fundraising efforts as some businesspeople are reluctant to have their names openly associated with political parties – often for fear of scrutiny or a loss of business.

So far, funding declarations by these parties have shown that Ramaphosa himself, a former businessman, has been a major funder of the ANC, as well as his brother-in-law, Patrice Motsepe, and Russian oligarch Viktor Vekselberg.

‘Reactionaries’ to blame for ANC troubles?

Mtolo says that, apart from the new law, supporters of the apartheid government before 1994, when the ANC came to power, are responsible for the party’s funding problems.

“It’s an old strategy in Africa: to defeat the liberation movement you must squeeze their funding. If you squeeze their funding, you squeeze their resources to operate,” Mtolo says. “Many people are not happy. Many people who believe in the old guard that was defeated in 1994, want to defeat the ANC [and its policies].”

He says if the ANC doesn’t have money to pay salaries, or run an elections campaign and pay for billboards, hire cars, pay for volunteers or pay for pamphlets, “then it automatically weakens”.

The party already had to trim down its 2021 local government elections campaign due to a funding squeeze, and following its conference in December where Ramaphosa is hoping to be re-elected, it will start focussing on the 2024 general elections.

The party’s approval rating according to its internal polls has remained stubbornly below 50% for the past year, indicating that it might be forced into a coalition after those elections or lose power altogether.

Mtolo hints that there are people who were placed in the ANC to destroy it from the inside. Ramaphosa’s detractors often claim that Ramaphosa’s campaign to clean up graft is not in the ANC’s best interests and that he might be trying to destroy the party on purpose.

Treasurer searching for funds

ANC treasurer-general Paul Mashatile has in the past appealed to parliament to amend the Political Party Funding Act as he blames this law for complicating fundraising. But he claims the party’s funding troubles pre-date him; meaning they existed when Jacob Zuma led the party.

“We were sitting with debts between R200 and R300m,” he told journalists at the party’s policy conference on Saturday (30 July), but he failed to say how much of that debt is still left to clear.

The party’s salary bill is around R18m a month, he said.

“You know, as an NGO, we are not a business. We don’t have an income.”

The party relies on businesses for 70% of its funding. Membership fees (12%) and the government allocation (18%) make up the rest.

Already the government has upped the amount it allocates to political parties, but Mashatile said the ANC will push for more.

The new act “made the funding environment more difficult,” he said, adding that the party managed to pay June salaries to staffers on Thursday, and hoped to pay July salaries the week after next – although at least one staffer said he would not bet on this.

Mashatile, last year in May during a closed national leadership meeting, mentioned the possibility of trimming the staff complement by half, but there was an outcry. He now says the party won’t retrench staffers, but instead, help them look for jobs at “other NGOs” if they so wish.

Gala dinner

The party managed to raise about R8m at its gala dinner on Wednesday night, ahead of the policy conference, where the six seats at President Cyril Ramaphosa’s table went for R200,000 each.

Places at tables with ministers and other ANC leaders reached R95,000 each, while the cheapest seats at an ordinary table on the occasion cost R5000. The party said it sold all the about 500 seats available.

Businesses don’t want to associate with the ANC brand anymore.

The dinner tickets were a convenient way around the political party funding laws, as the money raised here did not have to be declared.

This is because this is regarded as giving money in exchange for a service, rather than donations.

Still, at least a quarter of those who paid for seats preferred to eat at home. “Businesses don’t want to associate with the ANC brand anymore,” a businessman sympathetic to the ANC says.

He also says late or non-payments by government departments mean that businesses neither have the money nor the appetite to make countless contributions to the ANC.

Limited activities

The cash crisis has also severely hamstrung the party’s activities.

Ramaphosa told delegates that there was a “lack of sufficient resources to hold a policy conference of the size to which we are accustomed”, and this was also the reason the conference was held a month late.

The ANC has relied on a lot of intersections between state procurement and party funding.

There were only about 1500 delegates, down from the almost 4000 that usually attend national conferences like this. Serious questions are now being asked about the party’s ability to hold its elective conference in December.

For the first time, the party enforced conference registration fees, meaning public representatives and ministers had to pay between R1500 and R7000 to attend the conference to help fund it.

Political analyst and television host Lukhona Mnguni says: “The ANC has relied on a lot of intersections between state procurement and party funding”, and the new law has caused complications in this relationship. “The party is going to struggle to fundraise in the future, but it must also modernise so that it trims some fat.”

He says some retrenchments took place in the opposition DA, which allowed them to stay in the black with their funds.

If the ANC fails to get the balance right, “what might remain is a hollow ANC under [Ramaphosa’s] watch”, Mnguni says.

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