ACP-EU JOINT PARLIAMENTARY ASSEMBLY
ASSEMBLÉE PARLEMENTAIRE PARITAIRE ACP-UE
Committee on Political Affairs
24.10.2016
WORKING DOCUMENT
on the financing of political parties in ACP and EU countries
Co-rapporteurs: Worlea Saywah Dunnah (Liberia) and Cécile Kashetu Kyenge
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United in diversity
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1. Introduction
Political parties are a pivotal facet of democracy. In essence, they are a mechanism of
representation, and perform an important role in terms of civil society involvement and
democratic control of politics. Importantly, to fulfil these roles political parties require
substantial funds to support candidates and deliberate policy initiatives.
Moreover, the issue of political party financing is not limited to the cost of contesting
elections. Ineffective or insufficient methods of oversight often lead to illicit funding, policy
capture and entrenched governments that serve only to destabilise democracies, delegitimise
ruling governments, and weaken opposition parties.
In the words of Kofi Annan, ʽpoorly regulated political finance can diminish political
equality, provide opportunities for organised crime to purchase political influence, and
undermine public confidence in elections’1.
An OECD report in 2016 noted that the increasing concentration of economic resources in the
hands of fewer people presents a significant threat to economic and political systems. The
consequences of such exclusion and financial malpractice often lead to the ‘adoption of
inadequate policies or policies that go against the public interest, preventing inclusive growth
and decreasing trust in government’. Differences in financial capacity of political parties have
been witnessed and reported by several EU electoral observation missions.
Political parties’ financial capacity is fundamental to ensure democratic alternation, and
therefore the challenge for many countries is to implement a sustainable financial base for
parties to run on. To encourage legitimate party financing necessitates effective instruments
of transparency and accountability.
2. Sources of Political Party Finance
A possible definition of political party finance refers to the financing of ongoing political
party activities and electoral campaigns. Furthermore, funding for political parties stems from
both public and private sources. While there is no uniform or global standard for
accumulating capital, funding nonetheless often stems from similar sources, from members
donations to campaign contributions.
For many democracies the primary source of party funding stems from membership dues and
levies on party office-holders, party fund-raising events, contributions from party members,
and proceeds from party-owned businesses.
1
Annan, Kofi. Foreword to ʽFunding of Political Parties and Election Campaignsʼ, IDEA, 2014
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However, while party membership is falling across Europe and has never been a widespread
practice in many ACP countries, so are the traditional forms of funding for political parties.
In ACP countries, economic underdevelopment and resource constraints amidst development
needs have meant that public funding is minimal and is barely able to sustain political parties.
Besides high unemployment, this translates into low membership capacity to pay dues to fund
political parties’ operations. Funding of political parties is strictly limited to members’ dues,
levies on parties’ elected legislators and donations from citizens.
3. Pressing Challenges and Problems
Currently, a major challenge is to find a way for political parties to be able to collect the
financial resources they need to fully play their role in democracy. This refers to their
capacity to reach people, to convey their ideas, to meet political campaign requirements, and
to mobilise people to vote.
Another crucial challenge is to tackle illegal practices in terms of financing of political
parties. According to the OECD, current practices of private funding and public allocation
‘require special attention to ensure a level playing field for all democratic actors’.
Furthermore, in addition to the rising cost of running elections, the rapid rate of globalisation
has further complicated political party funding. As many multinational companies are heavily
integrated and have a stake in the domestic business environment of numerous countries, they
have an incentive to influence the outcomes of domestic elections.
To overcome this problem, the OECD argues that political parties must disclose a full list of
their donors, both foreign and domestic, and legislation should introduce bans or caps on
foreign contributions.
Furthermore, another obstacle many countries face is independently monitoring the financing
of political parties.
Finally, the challenge of the under-representation of women in political life is persistent. A
multitude of complex factors impedes women’s participation and leadership on an equal basis
with their male counterparts. One such factor is access to the financial resources needed for
effective participation in electoral processes as candidates. Linking public funding to gender
equality requirements could encourage parties to address women’s political empowerment.
A crucial challenge in ACP countries remains the lack of capacity of member countries to
subsidise political parties; in some countries there is also a ban on corporate donations to
political parties. In an impoverished and struggling economy where poverty is pervasive and
prevalent and where meagre state resources cannot match tremendous development needs
related to schools, clinics, roads, etc., political parties are under dire constraints and are
highly vulnerable to illicit sourcing of funds.
4. Regulation and oversight
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Within the EU and ACP countries, there is no single uniform system for the collection of
funds by political parties. This is in addition to differing oversight mechanisms and
regulations that monitor the collection of capital by parties.
Such regulations are an integral part of monitoring the financing of political parties and can
include authorisations or bans on donations from difference sources, limits on spending and
establishing provisions for public funding.
Regulations governing the financing of political parties and use of funds received from the
state or corporate bodies are crucial to preventing corruption, abuse and use of illicit funds.
They additionally provide for the effective enforcement of rules and offer the means to
sanction those who violate them. However, as has been shown, merely legislating regulations
is not a sufficient approach to tackling illicit funding practices.
According to the International Institute for Democracy and Electoral Assistance
(International IDEA), it is not regulations that deter malpractice, but how they are enforced.
IDEA highlights how some political parties, especially ruling parties, often violate
regulations with complete impunity, while certain regulations are hijacked and used as tools
to sanction parties which oppose the incumbent regime.
In addition, IDEA also states that most ACP countries have at least some formal reporting
requirement for political parties and electoral candidates.
5. Political party financing in the EU
In order to encourage a fair and competitive system, EU Member States utilise various
regulatory frameworks to ensure a level playing field for political actors. There is no
homogeneous regulation of political party finance in the EU.
Recently, in many EU Member States, there has been an emphasis on encouraging
transparency, accountability and the promotion of proportionate expenditure. Nevertheless,
despite this expansion of regulation, illicit political party funding practices are persistent.
There has been a greater emphasis on coordinating a harmonised approach to tackling illicit
political financing practices. Legislation has become more specific, consolidated and
comprehensive. This has included an expansion of the rules regulating mechanisms of public
accountability, disclosure of private donations and transparency requirements.
6. Political party financing in ACP countries
With multi-party systems less than a decade old, and with governments facing everincreasing challenges across the continent, some political systems remain fragile. Political
corruption further undermines these weak systems, erodes the confidence of citizens, and
threatens political stability in many countries.
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Although there is growing awareness of the problems of party financing in ACP countries,
solutions have not fully emerged. Most parties are severely constrained by the paucity of state
fund to subsidise them and the lack of private donations. They have to resort to mortgaging or
selling personal assets to generate campaign funds.
Approaches involving imposing the legal collection of contributions, legal restrictions on
spending, reporting requirements on fundraising and campaign spending, and public funding
for parties have failed because political parties in many ACP countries have insufficient
capacity to comply with such regulations. Therefore, debates and initiatives on political
financing should consider other parameters that may empower parties, enabling them to
legally collect and use funds in order to acquire the capacity to fully participate to the
democratic system.
7. Recommendations
a. All governments of the EU and ACP countries must ensure that the political environment
they promote in their countries is favourable for all political parties so that they can have
the capacity to collect funds.
b. Political parties must ensure that all domestic and foreign sources of money, from large
individual donations to membership levies, are disclosed to the public to ensure full
transparency.
c. Regulation aimed at combatting illicit financing of political parties requires stringent
rules and punishments that are routinely enforced. An oversight board which holds the
power to monitor these regulations and is independent from government must be the sole
body responsible for handing out any sanctions.
d. There should be a role for actors such as democracy advocates and civil society
organisations in monitoring the financing of political parties, since such actors can offer
further insight into best practices in order to generalise them, as well as denouncing any
illicit practices.
e. All governments should separate institutional resources from the ruling party’s resources,
in order to preserve the neutrality of institutions and promote a genuine environment of
competition between political parties.
f. All governments should guarantee a free political stage without intimidation of
opposition political parties, in order to allow them to constitute themselves and acquire
the capacity to collect funds. The ultimate goal of proper financing is to enable true and
meaningful competition between political parties in order to foster democracy.
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g. In their cooperation relations, EU and ACP countries should define guidelines on the
financing of political parties in a transparent manner, since only strong and capable
parties will ensure good governance in their countries.
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