Want to reform politics? Ask parties where their money comes from

In Bangladesh's political landscape, money is omnipresent yet largely invisible. While transparency debates often focus mostly and only on campaign spending, it is the continuous flow of party finance that determines who wields power and how it is maintained. Campaign expenditure reveals how votes are courted, but party finance exposes how influence persists, networks are rewarded, and institutions are captured.

The Representation of the People Order (RPO), Bangladesh's main electoral law, attempts to ensure financial transparency through disclosure requirements and spending limits, mostly circling around campaign periods. Article 44B (3) restricts individual campaign expenditure to 25 lakh taka, and political parties must report total spending to the Election Commission. During the 2018 national election, the Awami League and Bangladesh Nationalist Party (BNP) officially declared modest expenditures of about 1.05 crore and 1.11 crore taka respectively. On paper, these numbers suggest discipline and compliance. In practice, they defy belief, particularly during the election; importantly, one even ignores the broader panorama of the year-long financial flow.

Each local leader thus becomes a micro-patron, presiding over a small-scale patron–client network that mirrors the national structure. Consequently, drawing upon this model, we can say that most political parties operate less as centralised bureaucracies and more as federations of semi-autonomous financial ecosystems.

During the non-electoral period, even a single national rally or gathering by either major party can cost an equivalent amount. A gathering of fifty to one hundred thousand people requires massive logistics: transportation, food, stage construction, and sound systems. Transport alone, at roughly 1,000 taka per person, could consume 50 lakh to 1 crore taka. The arithmetic reveals an obvious discrepancy. If the reported figures barely cover the cost of one rally, how are entire national campaigns financed?

File Photo: Star

The real answer lies in the informal economies that underpin political life. Beneath official records exists a vast and intricate web of patronage networks connecting business elites, mid-level organisers, and grassroots leaders. These networks function according to unwritten rules, mutual obligations, and expectations of reciprocity. Understanding them requires the analytical lens of patron–client theory, a classic framework for explaining how power and loyalty are exchanged through personal relationships rather than formal institutions.

Patron–client theory suggests that political stability in many developing democracies depends on personalised relationships. Patrons control access to resources and distribute benefits in return for loyalty, while clients reciprocate with political support, mobilisation, or legitimacy. Bangladesh's political economy exemplifies this dynamic.

At the local level, party leaders are tasked with organising rallies, processions, or conferences, in most cases without receiving funds from the central office. To finance these activities, they rely on local businesspersons. These "donations" are rarely altruistic. They are mostly strategic investments aimed at cultivating goodwill, protection, or influence. The businessperson who funds a sound system or transports supporters does so, most of the time, not for ideological reasons but to secure future access to power and economic opportunity; even if they do so out of ideological conviction, the later benefits inevitably follow.

This pattern extends deep into everyday economic life. A street vendor might contribute small sums to a local party worker to secure a trading spot or protection from eviction. In return, the party worker mediates with local authorities to safeguard the vendor's livelihood. These microtransactions form an invisible network of mutual dependence that keeps local political economies functioning between elections.

Interviews with mid-level organisers and field observations reveal that funds collected at the grassroots are usually divided into three parts: immediate event expenses, reserves for future campaigns, and daily operational costs such as fuel, meals, and volunteer stipends. Each local leader thus becomes a micro-patron, presiding over a small-scale patron–client network that mirrors the national structure. Consequently, drawing upon this model, we can say that most political parties operate less as centralised bureaucracies and more as federations of semi-autonomous financial ecosystems.

This decentralised model offers flexibility but breeds opacity. Party headquarters are often unaware of the origin or magnitude of these funds. The structure enables rapid mobilisation of resources but undermines transparency, allowing corruption and elite capture to flourish.

Over its long incumbency, the Awami League has institutionalised this hybrid system with remarkable sophistication. What began as informal patronage evolved into a semi-formal financial architecture linking business interests directly to the state. Interviews with businesspersons revealed that business figures close to the ruling party became financiers, beneficiaries, and often even officeholders. Entities such as the Centre for Research and Information (CRI) and the Prime Minister's Relief Fund served as legitimate conduits for corporate donations under the banners of "development" or "research." This arrangement maintained a façade of legality while preserving the reciprocal essence of patronage: financial support in exchange for political or economic favour.

In theory, this model balanced legality with political pragmatism. In practice, it reinforced what scholars call a hybrid regime, where democratic institutions exist but are hollowed out by personalised networks of power. The RPO monitors legality through paperwork, yet true political power circulates through relationships that evade regulation.

File Visual: Star

Centralising party finance and empowering central authorities could strengthen accountability, yet it risks alienating the grassroots intermediaries who keep party operations alive. Decentralisation, on the other hand, sustains participation but entrenches opacity and corruption. This tension lies at the heart of Bangladesh's political finance—a paradox where any reform threatens to dismantle the very mechanisms that keep the system functioning.

The consequences of informal financing extend beyond campaign bookkeeping. They shape the moral economy of politics itself. In districts where local businesses routinely finance party events, political loyalty becomes transactional. The boundary between public service and private gain blurs, producing a system of rent-seeking governance in which economic elites influence policy, and politicians rely on them for survival. It is a self-reinforcing cycle that benefits both sides while excluding those without access to networks of favour.

This informal political economy also distorts competition. Established parties with entrenched patronage networks enjoy structural advantages over smaller or newer contenders who lack similar connections. Legal spending caps, such as the 25 lakh taka limit, become symbolic gestures rather than enforceable constraints. The Election Commission audits declared expenditures, but the real financial flows remain invisible.

Centralising party finance and empowering central authorities could strengthen accountability, yet it risks alienating the grassroots intermediaries who keep party operations alive. Decentralisation, on the other hand, sustains participation but entrenches opacity and corruption. This tension lies at the heart of Bangladesh's political finance—a paradox where any reform threatens to dismantle the very mechanisms that keep the system functioning.

The disjunction between formal regulation and informal practice illustrates a broader challenge for postcolonial democracies. Legal frameworks borrowed from liberal democratic models assume transparent institutions, formal party structures, and impartial enforcement. Bangladesh's political order, however, operates within a relational economy rooted in kinship, loyalty, and obligation. Attempting to regulate it solely through disclosure requirements is akin to measuring an underground river by observing surface ripples.

The path forward lies not in idealised centralisation or passive acceptance of informality but in incremental reform that aligns incentives with transparency. Intermediate mechanisms—regional finance cells, independent auditing partnerships, or mandatory corporate donor disclosures—could acknowledge the layered nature of political financing while fostering accountability. Reforms must proceed gradually, ensuring that both central and local actors view transparency as advantageous rather than punitive.

Until such structures emerge, the official campaign finance reports or even annual party finance reports will remain elegant fictions—numbers that satisfy procedural legality while concealing the real economy beneath. In Bangladesh, as in many hybrid democracies, politics runs not only on ideology or votes but also on an invisible currency of trust, favours, and funds that the law cannot see but every politician must spend.

Ragib Anjum and Ahmudul Haque are researchers at the Public Policy Cluster of the Dacca Institute of Research and Analytics – DAiRA.

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