The Road Accident Fund (RAF) notes the Standing Committee on Public Accounts’ (SCOPA’s) decision to institute a full committee inquiry into what they have termed “allegations of maladministration, financial mismanagement, wasteful and reckless expenditure, and related financial misconduct at the RAF”.
The RAF respects SCOPA as an accountability body which derives its functions and powers from Rule 245 of the Rules of the National Assembly. We will continue to account to the people of South Africa through this important organ of Parliament.
We reiterate and put emphasis on what we have already reported in the RAF annual reports for the last three years, that the RAF has been financially unsustainable since its establishment in 1946. It has been the subject of multiple commissions of inquiry and the common thread across all commissions’ findings has been the disconnect between the funding model and the benefit structure. It is for this reason that Judge Melamet in his 1992 Commission of Inquiry Report concluded that the only reason the RAF was able to keep going all these years was that the State was able to provide fuel levy increases to maintain what was clearly an unsustainable benefit structure, paid out in lump sums and thus creating an asset liability mismatch.
The unsustainable funding and operating models were further compounded by an increase in administrative costs, driven mainly by legal and medical costs. According to the 2018/19 audited RAF Annual Report, only R26 billion (66%) of the R39 billion claims expenditure was paid to claimants, with the balance of about R13 billion (34%) going towards administrative costs. This was a crisis that, if not addressed, would present an existential risk for the RAF and was the basis for the 2020–25 turnaround strategy. It is not in dispute that even without any fuel levy increases for the last three financial years, the audited 2023/24 RAF Annual Report clearly shows that the amount of claimant compensation increased to 83%, whilst reducing the administrative costs to 17%.
In the 2023/24 financial year, the RAF’s performance against its predetermined objectives steadily improved from 57% in 2019/20 to 85%. Importantly, the Auditor-General of South Africa’s (AGSA’s) 2023/24 Audit Report “did not identify any material findings on the reported performance information of Outcome 1 (a transformed and sustainable RAF) and Outcome 2 (system modernisation)”.
Additionally, the audit of compliance in respect of procurement and contract management, expenditure management, asset management, strategic planning and performance management were all concluded without any material findings. It is only in the audit of financial statements where the disagreement with the AGSA on the accounting policy change has resulted in adverse opinion.
Amongst the key strategic outcomes for the RAF is Outcome 3 which focuses on strengthening the control environment and governance. The RAF has internal Forensic Investigations and Ethics divisions to ensure proper and transparent management of corrupt and unethical practices. An independently managed ethics and fraud hotline is available for staff and stakeholders to anonymously report any unethical and corrupt practices. Furthermore, the introduction of the RAF Contact Centre will go a long way in ensuring that claimants’ queries are addressed. To this end, over one million claimants have been able to interact with the RAF through various channels such as calls, SMS, emails, website, social media platforms, and the WhatsApp chatbot.
Notwithstanding the positive strides made, the RAF continues to manage challenges associated with a transforming organisation. The 2025–30 Strategic Plan presents an opportunity to optimise areas that have worked and to improve where gaps still persist. To this end, the RAF proactively subjected the 2025/26 Annual Performance Plan to an independent review by the AGSA.
The RAF reiterates that the most urgent task required to ensure financial and operational sustainability for the Fund is a legislative review.