This analysis discusses the legal framework for regulating campaign finance in Nigeria including the limit on spending by political campaigns, the limit on spending by political parties on election expenses, the limit on contributions by individuals/entities and the limit on political contributions by corporations.
Financial contributions to political parties and candidates are an important source of political influence in many societies. Various attempts have been made around the world to manage campaign finance, with varying degrees of success.
The IDEA Database on Political Finance (Political Finance Database) shows that all of the 180 countries included use at least some form of regulation of the role of money in politics, such as bans on donations from certain sources, limits on spending and provisions for public funding.
The goal of such regulations is to prevent certain types of behaviour while creating transparency in how money is raised and spent in campaigning for elections.
The way and manner with which political parties finance their campaigns are critical in any democratic election to ensure that the election is free and fair. Without adequate campaign finance regulation, there will be an unfair advantage for parties in government over others.
By this, ruling parties could use public funds to strengthen their grip on power and increase their chances of winning the election. Also, this will lead to vote-buying using party and campaign funds which are undisclosed while threatening national security and stifling development. In general, the three main results of an inefficient system of campaign finance regulation are (1) funding from undesirable sources; (2) improper influence of the money over policy outcomes; and (3) financial barriers for average citizens vying for political office.
This analysis discusses the legal framework for regulating campaign finance in Nigeria including the limit on spending by political campaigns, the limit on spending by political parties on election expenses, the limit on contributions by individuals and entities and the limit on political contributions by corporations.
Framework Governing Campaign Finance in Nigeria
The Independent National Electoral Commission (INEC) is Nigeria’s elections management body. INEC was established within the framework of the Constitution as a permanent institutional body whose task is to oversee the Nigerian electoral system and also monitor the organisation and operation of the political parties, including their finances and to arrange for the annual examination and auditing of the funds and accounts of political parties, and publish a report on such examination and audit for public information.
The 1999 constitution is the foundation of all laws in Nigeria and is the starting point for the legal framework for campaign finance regulation in Nigeria. Section 225(1) states that this statement shall encompass an analysis of a party’s sources of funds and other assets, together with a statement of its expenditure and shall be in respect of the period 1st January to 31st December in each year. Section 226(1) of the Constitution states that INEC, shall every year prepare and submit to the National Assembly a report on the accounts and balance sheet of every political party.
INEC also has a duty to carry out such investigations as will enable it to form an opinion as to whether proper books of accounts and proper records have been kept by any political party, and if the Commission is of the opinion that proper books of accounts have not been kept by a political party, the Commission shall so report. Also, subsection 3 grants every member of the INEC a right of access at all times to the books and accounts and vouchers of all political parties. INEC is thus empowered to appoint external auditors to look into the accounts and books of political parties and parties are directed to submit to this supervision.
On 25th February 2022, President Muhammadu Buhari signed the Electoral Act, 2022 (“The Act”) into law. The Act repeals the Electoral Act, No. 6, 2010 and is targeted at regulating the conduct of Federal, State and Area Council Elections. The act as specific legislation on elections features certain limits on campaign funding.
Limit on spending by political campaigns
Section 87 (1) of the Electoral Act, 2022 gives INEC the power to place limitations on the amount of money that can be spent by a political campaign for the different political offices in Nigeria. The limit has been raised to five billion naira (N5,000,000,000) for a candidate at a presidential election, one billion naira (N1,000,000,000) for a candidate at a governorship election, one hundred million naira (N100,000,000) for a senatorial seat and seventy million naira (N70,000,000) for a candidate for House of Representatives, thirty million naira (N30,000,000) for a State House of Assembly seat, thirty million naira (N30,000,000) for chairmanship of a Local Area Council and five million naira (N5,000, 000) for councillorship of a Local Area Council. Violation of these limits is punishable with fines of 1% of the maximum limit permitted or imprisonment of not more than 12 months or both.
It should be noted that these sums are an increase from limits placed in Section 91 of the 2010 Electoral Act which provided for one billion naira (N1,000,000,000) for presidential candidates, two hundred million naira (N200,000,000) for Governorship, forty million naira (N40,000,000) for Senate, twenty million naira (N20,000,000) for House of Representatives, ten million naira (N10,000,000) for State Assembly, ten million naira (N10,000,000) for Chairmanship of Local Government council and one million naira (N1,000,000) for Councillorship.
Limit on spending by political parties on election expenses
It should be noted that spending by political parties on election expenses is quite different from expenses incurred by the political campaign. The Electoral Act, 2022 defines election expenses as “expenses incurred by the political party within the period from the date notice is given by the Commission (INEC) to conduct an election up to and including the polling day in respect of the particular election.”
Section 89 (2) states that INEC shall determine the limit of spending on election expenses by political parties in consultation with the political parties. Any political party that exceeds this limit shall be liable to a maximum fine of N1,000,000 and forfeiture to INEC of the exceeded amount. This limit has yet to be set by INEC for the 2023 elections as of the time of this analysis.
To enforce this, all political parties are required to submit a separate audited return within six months after an election and such return shall be signed by the political party's auditors and countersigned by the Chairman of the party and be supported by a sworn affidavit by the signatories as to the correctness of its contents. This audited return shall show the amount of money expended by or on behalf of the party on election expenses, the items of expenditure and the commercial value of goods and services received for election purposes. Any failure to submit the return will result in a maximum fine for failing to submit an accurate return or a maximum fine of N200,000 for every day same is not submitted if the political party defaults.
For purposes of transparency, the political party shall also publish this report in at least two National Newspapers and the official website of the political party. Also, the Act grants INEC a right of access at all times to the audited books and accounts and vouchers of all political parties. INEC is thus empowered to appoint external auditors to look into the accounts and books of political parties and parties are directed to submit to the supervision.
Limit on contributions by individuals to campaigns and political parties
Section 87 (1) of the Electoral Act, 2022 gives INEC the power to place limitations on the amount of money or assets that an individual can contribute to a political candidate or party and demand information on such contributions. Any individual who contravenes the limit is liable to a fine of five times the excess donated amount to be paid to INEC.
The Act states that no individual or other entity shall donate more than fifty million Naira (N50, 000,000) to any candidate or political party. This was increased from the previous limit of 1 million Naira (N1, 000,000) in Section 91(9) of the Electoral Act, 2010.
In order to ensure transparency in the electoral process, the Act states unequivocally that no political party shall accept or keep in its possession any anonymous monetary or other contributions, gifts, properties, etc. from any source whatsoever. In the same vein, Section 90(3) provides that no political party shall accept any monetary or other contribution exceeding N50,000,000 unless it can identify the source of the money or other contribution to the Commission.
To enforce this, all political parties are expected to keep an account and asset book to record (a) all monetary and other forms of contributions received by the political party and (b) the names and addresses of any person or entity that contributes any money or asset which exceeds N1,000,000.
Limit on contributions by Corporations
Section 221 of the constitution states that “no association, other than a political party, shall canvass for votes for any candidate at any election or contribute to the funds of any political party or to the election expenses of any candidate at an election.” This represents a total ban on campaign donations by associations. Section 229 defines “association” as “any body of persons corporate or unincorporated who agree to act together for any commission purpose and includes an association formed for any ethnic, social, cultural, occupational, religious purpose.’
The provisions of section 43(2) of the Companies and Allied Matters Act 2020 also expressly ban contributions by any association or corporation to any candidate or political party. It should be noted that several scholars have criticized this ban as a violation of the freedom of association granted under Section 40 of the 1999 constitution.
Unregulated campaign financing presents certain problems for modern democracy. It fails to guarantee that candidates and political parties compete on equal terms. Political competition under unregulated political financing, according to Keith Ewing, would be like ‘inviting two people to participate in the race, with one participant turning up with a bicycle, and the other with a sports car.’ Nigerians must take notice of the latest campaign finance laws in their contributions to candidates and pollical parties.
Political parties must also comply with the provisions mandating transparency in contributions and spending. INEC must continue to be vigilant in enforcing campaign finance laws to ensure a truly free, fair and equal democratic process.
For further context, sections 88, 89, 90 and 152 of the Electoral Act are most relevant.
Olakanye Oluwatobi | Research Analyst, Fiscal Policy | email@example.com
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