Dear ANC, have you considered debt counselling?

How did the ANC blow R2.6bn in just five years? In pretty much the same way it destroyed state finances between 2013 and 2017, it seems.

Last week, the ANC launched a crowdfunding campaign to raise money as staff began downing tools in protest at not being paid.

It’s not the first time ANC staffers have been left out of pocket: in December 2019 the party failed to pay them on time — and it did so again in June and August 2020. When May salaries hadn’t been paid by mid-June this year, staff threatened to go on strike.

It’s now understood that they’re still waiting for pay cheques for both July and August.

The financial crunch is not new to the ANC. In his treasurer-general financial report to the Nasrec elective conference in 2017, Zweli Mkhize laid out how the party’s finances were already in the red.

According to his report, the ANC received about R2.6bn in donations between 2013 and 2017, but spent a whopping R2.5bn.

"Unfortunately, due to the high operational costs, settling of all debts and ANC events (conferences, et cetera), the entire funds raised have been spent," the report said.

The largest cost driver from 2013 to 2017 was the party’s wage bill, which stood at about R867m. It spent about R730m on elections and R938m on operational costs and debt repayment.

"The main challenge for the ANC is to create a culture of saving and investing resources as well as to reduce the high expenditure pattern," Mkhize noted.

"This requires the revamping of its administration and a review of its human resources plan. Some work has been done in this regard but [it] needs to be taken to completion. The cost of managing the organisation is high and interventions are needed to bring the cost down."

Mkhize’s report also raised concern about how the ANC’s poor public image impinges on its ability to raise funds.

In hindsight, it’s an ironic insight, given Mkhize’s role in a R150m communications contract that the health department awarded to his close associates while he was health minister — one of the biggest corruption scandals in the post-Jacob Zuma era.

"Fundraising for the ANC is a political programme dependent on the public appeal of the ‘Brand ANC’," the report continued. "As such, challenges of infighting, factionalism, misconduct and ill-discipline, perceptions of corruption, arrogance and various other ills, have a negative effect on the support the ANC receives. We need to urgently address these challenges."

Mkhize pointed out that salary costs were partly to blame for the organisation’s high running costs.

"The salary cost is a major cost driver and normally accounts for 40% of the operational cost. The salary cost has increased by R28.8m in the past five years (2013-2017). The staff complement fell from 352 to 339. More effort should be put in place to reduce the staff complement and to curtail the growth of the salary bill."

But far from improving, the situation was to become worse after the conference, with at least three former ministers — Nomvula Mokonyane, Andries Nel and Malusi Gigaba — moving from the executive to the Luthuli House payroll as they took up permanent employment there.

What it meant was that President Cyril Ramaphosa’s new administration inherited an organisation that was more than R400m in debt, including money owing to the SA Revenue Service (Sars), service providers and outstanding provident fund payments (some understood to date to 2010).

Four years later, its finances have deteriorated further. Its provident fund shortfall is thought to be about R71m, and its R80m debt to Sars has ballooned to about R100m, as interest has accrued.

In part, the party’s woes are due to a stagnant economy and the strictures of the new Political Party Funding Act. But they’re also a result of the heavy blow dealt to "Brand ANC" over personal protective equipment corruption and disillusionment with Ramaphosa’s administration, after the hope of the "new dawn".

The ANC has responded to the crisis by calling for contributions from donors, embarking on a crowdfunding initiative to raise money

The crackdown on corruption will also have had an effect. In the past, deals were often structured in such a way that they would ensure that the ANC received donations from businesses that won state contracts.

In fact, in 2015 then president Zuma warned publicly that businesses were placing their survival in jeopardy if they did not donate to the ANC.

The party survives on donations, which made up about 65% of its income back then. Payment from the Electoral Commission of SA accounts for 17% of the party’s revenue, while membership fees and levies (from public representatives, for instance) constitute just 5%.

With July salaries unpaid, ANC staff embarked on a go-slow, and then, when no money was forthcoming for August, a full-blown strike.

Staff representative Mvusi Mdala tells the FM the party’s finances have been stretched for years, but matters have now come to a head.

He complains that the families of ANC employees who died in the past two years have not received a cent in pension payouts due to the party’s failure to keep up to date with provident fund contributions.

He also notes that there are a number of employees who have worked at the organisation for more than 15 years without proper contracts or benefits; they have received just a stipend for their efforts.

According to Mdala, about 200 staffers in the party’s headquarters and its Western Cape office have downed tools. There are, however, no talks under way with management or party officials over the impasse, he says.

For its part, the ANC has responded to the crisis by calling for contributions from donors, embarking on a crowdfunding initiative to raise money. According to the party, treasurer-general Paul Mashatile has been "inundated" with requests from members and supporters who want to help.

While the ANC blames the Political Party Funding Act for its woes, Mdala says the problems predate the legislation, which regulates donor funding to political parties, requiring that the identity be made public of those who make donations of more than R100,000.

The act has indeed engendered hesitancy among potential funders — reports indicate that other parties, including the DA, have had to scale down and retrench employees due to tough economic conditions coupled with the new legislation.

Insiders attribute this to a failure by the government to increase its allocation to political parties when the funding act kicked in. That would have ensured that parties were able to stay afloat as spooked donors stayed away, scared of being publicly associated with any particular party.

On the other hand, government sources say the fiscus is already stretched and there is simply no room to manoeuvre. After all, how does one justify increases to political parties when education and police budgets have been cut and the government is attempting to provide vaccinations to bring an end to the pandemic?

The chickens, as they say, have come home to roost. The party — like the state it manages — is collapsing under the weight of years of financial mismanagement, nepotism and corruption.