Friday, June 29, 2012

Nigerian Political Parties and Investment Opportunities

With the coming into force of Electoral Act 2010 (as amended) which abolished public funding of political parties, many of the parties have been facing hard times meeting their financial needs. Even when the public grant was in place, it was insignificant considering the enormity of resources needed to fund political party administration. This development seems to have made some of the political parties to become creative and ingenious in surviving the harsh economic conditions of the country. A news report in one of Nigeria’s national newspaper, Sunday Punch of June 17, 2012 broke the news that the Peoples Democratic Party is planning to establish PDP Holding Company Ltd to hold and negotiate the interests of the party in all investments and business arrangements. Through the company, PDP hope to acquire oil and telecommunication licenses to generate revenue for the party. Other areas where the party hopes to generate incomes include real estate and the establishment of print and electronic media companies. The report observed that this was part of the revenue generation and investments strategies of the party, which was proposed by its National Financial Secretary, Mr. Bolaji Anani to the National Chairman of the party, Dr. Bamanga Tukur. The party planned to “raise short, medium and long term loans from financial institutions to fund the party’s investments and programmes with minimum risk.

The newspaper did a features story on the issue in its edition of June 24, 2012 where it sought opinions of some people on the issue. Their responses were diverse. Was the party right in wanting to set up a holding company? I would say yes. The country’s law is in full support of this. Section 225 of the 1999 Constitution of Nigeria as well as section 89 of the Electoral Act 2010 (as amended) both requires political parties to submit to INEC statement of assets and liabilities. However, parties are forbidden from holding or possessing assets or funds from outside Nigeria. More pointedly, INEC on page 7 of its Political Party Finance Handbook 2011 says “Political parties may obtain funds for their operations from the following only: (a) Membership fee (b) Income generated by property owned by political party (c) Profit from the income of the enterprises owned by political party (d) Public funding i.e. grant from the state; and (e) Contributions from legal entities and natural persons.” It is hoped that other registered political parties will follow the example of PDP and set up their investment enterprises to enhance their party funding. However, political parties must do this within the ambit of the law.