Chapter VI of the Political Parties Act, 2012 (Amendment) Act, 2023 talks about financial provisions aimed at regulating the funding and utilization of resources by political parties.

 The amendments, which include the establishment of the Political Parties Fund and disclosure requirements, are set to have a profound impact on the operations of political parties.

The most significant addition to the Act is the creation of the “Political Parties Fund,” which will be administered by the Council. This fund is intended to ensure that political parties have access to financial resources while ensuring proper oversight of their financial activities.

According to Section 35 of the Act, the sources of the Political Parties Fund will include, but not be limited to, financial allocations from the national government as approved in the national budget.

Furthermore, political parties will be allowed to receive contributions and donations from other lawful sources, provided that they are registered with the Council and made public.

 It states in section three, that “(b) contributions and donations from national non-governmental entities, corporations, companies and individuals provided that such contributions and donations shall be registered with the Council and be made public.”

The Act also permits political parties to raise funds from their members’ subscriptions, contributions from national non-governmental entities, corporations, companies, and individuals, as well as revenue from investments resulting from activities specified in the Act.

However, the Act explicitly prohibits political parties from accepting financial donations or contributions from foreign individuals or foreign entities. Any party found in violation of this provision will be committing an offense.

Moreover, the new law requires all registered political parties to annually declare their sources of funding to the Council, promoting greater financial transparency in their operations. Failure to comply with this requirement will also be considered an offense under the Act.

Regarding the distribution of the Political Parties Fund, Section 36 outlines a proportional allocation process. 80% of the Fund will be distributed based on the total number of votes secured by each political party in the preceding general election. An additional 15% will be allocated to parties based on the number of candidates from special interest groups elected in the same election. The remaining 5% will be earmarked for the administration expenses of the Fund.

However, to be eligible for funding from the Political Parties Fund, a political party must secure at least 5% of the total number of votes cast in the preceding general election.

The Act further specifies the permissible utilization of the Fund. Money allocated to political parties from the Fund must be used for purposes compatible with democracy, such as promoting the representation of women, persons with special needs, and youth in the Transitional National Legislative Assembly and State Assemblies.

Additionally, the funds should be used to cover election expenses, promote civic education in democracy, and influence public opinion on political matters. However, the Act strictly prohibits the use of allocated funds for personal benefits, establishing businesses, or any purpose incompatible with the principles of multiparty democracy and the Constitution.

To ensure accountability and transparency, political parties are required to maintain strict procurement processes. They must publish the amount of money received from the Fund and details of their expenditures in the gazette or at least two daily newspapers with nationwide circulation within ninety (90) days of the end of their financial year.

Non-compliance with the financial provisions of the Act will result in penalties, including disqualification from receiving money from the Political Parties Fund.

Furthermore, the amended Section 23 (2) in the Act prohibits political parties from engaging in business activities under their name. Nevertheless, they are allowed to invest in cultural activities, own property, newspapers, and participate in mass media activities.

The new financial provisions are expected to enhance transparency, curb corruption, and foster a more democratic political environment in the country.