Operationalization of Political Finance Transparency (MW0007)

Brief Description of the Commitment

The commitment seeks to actualize transparency on political party and campaign financing by enabling the implementation of the Political Parties Act (2018) which require financial reporting and disclosures by political parties to the Registrar of Political parties.

Problem Definition

3. What problem does the commitment aim to address?

The commitment seeks to address the secrecy surrounding political party and campaign financing which is known to be one of the driving factors of public finance mismanagement and corruption in the public sector especially through the public procurement system. The Political Parties Act require political parties to submit financial reports to the Registrar, who is required to publish the reports and also make them available on request under the Access to Information Act. Under s.40 (2) of the Constitution, a party represented in Parliament which secured at least 10% of the national vote in the parliamentary elections is eligible for state funding through a budget vote of the National Assembly. Since 1995, eligible political parties have enjoyed state funding but without any regulation, transparency or accountability for it . The 2018 Political parties Act requires political parties to prepare and submit financial reports and subjects them to audit: The Act allows political parties to receive private funding and donations from any individual or organization, within or outside Malawi and that a political party may perform any lawful activities for the purpose of raising funds for the party. This has all along been the practice and is believed to have provided a conducive environment for corruption to finance political activities and also illicit inflows of money from outside the country. Under the Political parties Act, sources of funds and amounts received have to be disclosed through a process managed by the Registrar of political parties. However, the law is not enforced because the Office of the Registrar of Political Parties has not been operationalized. As a transitional arrangement, the Registrar General is required to discharge the mandate of the Registrar of Political parties but the office has no resources and other capacities necessary for the mandate on political parties financing and disclosure reports. Furthermore, political parties have not yet started complying. However, media reports and revelation of corruption at the level of state capture and how one businessman funded politicians and political parties for the 2019 and 2020 elections, catalyzed public demand for financial reports and disclosures of political parties. Consequently, the Malawi Law Society (MLS), acting on behalf of the people, asked the Registrar General to share the financial reports of political parties under the protocols outlined in the Access to Information Act. Subsequently, the Malawi Law Society sued the Registrar General for failure to share the reports. The gist of the matter is that groups of citizens asked for information without success because the Registrar General had not received any reports and disclosures from political parties and had not taken appropriate administrative action to enforce the law. The matter is still in court but it is hoped that the court will make determinations and orders that will compel the Registrar and political parties to comply with the law on reporting and disclosing their financial information.

4. What are the causes of the problem?

The opacity on political party and campaign financing persists due to the following factors:
a. Absence of a functional office of the Registrar of Political Parties since the enactment of the Political Parties act in 2018. The current (transitional arrangement) in which the Registrar General doubles as Registrar of political parties is sub-optimal as mandates related to political parties are not prioritized, the office is not capacitated for the tasks;
b. Enforcement mechanisms are not fully developed to ensure compliance which is currently close to zero;
c. Some (may be all) political parties are unwilling to release financial information to the Registrar due to several reasons including the fact that finances constitute a strategic resource that provides a competitive edge in elections and political mobilization; uncertainty on consequences of disclosures or the need to cover up illicit financing or preserve the anonymity of donors;
d. Political parties have claimed unfamiliarity with the financial reporting and disclosure process and procedures, the need for reporting templates and orientation

Commitment Description

4. What has been done so far to solve the problem?

1. Enactment of relevant laws (Political Parties Act and Access to Information Act) which have created a conducive legal framework for ensuring transparency and accountability for political party and campaign financing. Compliance by political parties and enforcement by the Registrar General have been sub-optimal so much that opacity on political party and campaign financing persists pretty much as if there is no law requiring otherwise;
2. Public interest litigation commenced by the Malawi Law Society (MLS) against the Registrar General in his behalf as Registrar of Political Parties for failing in his duty to make available on request disclosures of financial reports of political parties related to the 2019 general election and the 2020 Fresh Presidential election. On May 19, 2022, the court granted the MLS permission to apply for judicial review of the Registrar’s decision to omit or fail to provide information on political party financing. The action of MLS was motivated by questions from stakeholders on whether the country’s political parties were complying with provisions of the Act in declaring donations they receive, maintaining a separate bank account for the donations and providing audited financial records to the registrar. The matter is still in court. It is hoped that the determination will trigger a chain effect that will ultimately compel political parties to comply with the law or risk sanctions which include de-registration. 5. What solution are you proposing? Operationalization of the Office of the Registrar of Political Parties. This entails recruitment of the Registrar; securing a budget vote or sub-vote for the office; Functional analysis, organizational design and development; and recruitment of staff subordinate to the Registrar. The operationalization of the Office of Registrar of Political Parties will address the question of agency of enforcement and implementation of the Political Parties Act. Once in full swing, the office will develop training and orientation programs, learn best practices from other jurisdictions in terms of procedures for disclosure, templates for reports, verification and authentication of disclosures and reports made by political parties and protocols for public access to records of political parties held by the Registrar.

6. What results do we want to achieve by implementing this commitment?

Four output level results are expected. They are as follows:
a) A functional and effective office of the Registrar of Political parties;
b) Clear reporting templates and protocols for political parties to use in meeting their reporting and disclosure obligations;
c) Public awareness and empowerment to access and analyze financial reports of political parties and subsequent demands for accountability for questionable elements in the reports;
d) Improved integrity of politicians and political parties
e) Diminishing prospects of state capture by businesses that acquire defacto power through clandestine financing of politicians and political parties.

Commitment Analysis

5. How will the commitment promote transparency? How will it help improve citizens’ access to information and data? How will it make the government more transparent to citizens? The Office of the Registrar of Political Parties is, under the law, the fulcrum for transparency on political party funding and the legally mandated authority to enforce financial reporting and disclosures by political parties and designated office for public access to records on political party financing. Getting it operational activates a point of call for the public to demand correct information on political funding. Without operationalizing the Office of the Registrar of Political Parties, the legislative intent for transparency on political financing will remain unrealized.

6. How will the commitment help foster accountability? How will it help public agencies become more accountable to the public? How will it facilitate citizens’ ability to learn how the implementation is progressing? How will it support transparent monitoring and evaluation systems? The commitment will help citizens to hold political parties accountable for the ways in which they raise money. The disclosures, accessed through the Registrar of Political Parties, will provide opportunities for public and media discourse on financing of specific political parties and compel integrity; It will also enhance the performance of the accountability functions of the Registrar of Political Parties which are currently not performed at all or performed not very well performed.

7. How will the commitment improve citizen participation in defining, implementing, and monitoring solutions? How will it proactively engage citizens and citizen groups? The commitment will increase the need for the political parties to have registered members and seek donations from the members and adopt innovative and sustainable ways of financing the political party budgets; Public discourse on financial disclosure will shape the path of integrity for political parties, identify problem areas and proffer possible solutions and harness demand for changes in legislation or enforcement practices; It is also envisaged that transparency will enhance ownership of parties by the members, enhance commitment to party values and prevent plutocratic tendencies within political parties.

Commitment Milestones

Recruitment process and Appointment of Registrar of Political Parties [Advertisement; Report of Interview Panel; Report of Public Appointments Committee; Notice of appointment; Office bearer in place]

Functional Analysis, organizational design and development of the Office of the Registrar of Political Parties [Organizational Development (OD) Report; Recruitment of subordinate staff]

Fully operational Office of the Registrar of Political Parties [Political party reports and disclosures and public access to information]

Public awareness and empowerment program on access and analysis of financial reports of political parties [IEC materials Reports of capacity building initiatives]