The Road Accident Fund (RAF) is heading for financial disaster, with liabilities exceeding R300 billion and fuel levy receipts falling short of covering mounting claims. The Auditor-General of South Africa (AGSA) has issued an adverse audit opinion, highlighting severe financial instability that could leave thousands of accident victims without compensation.
RAF’s Financial Woes Deepen
During a recent parliamentary briefing to the Standing Committee on Public Accounts (Scopa), AGSA representatives painted a bleak picture of the RAF’s financial health. Deputy business unit leader Nicholas Mokoena and senior audit manager Siphesihle Mlangeni confirmed that RAF’s assets are vastly insufficient to cover its current and long-term liabilities.
The fund has been surviving by paying off debts as and when funds become available, but this unsustainable approach has raised alarm bells among policymakers. The entity reported a deficit of R1.5 billion for the 2023/24 financial year—an enormous jump from just R8.4 million the previous year.
Disputed Liabilities and Accounting Controversy
At the heart of the crisis is a dispute over accounting standards. AGSA argues that RAF’s approach to recording outstanding claims does not comply with Generally Recognised Accounting Practice (GRAP). The issue stems from actuarial evaluations that estimate liabilities well over R300 billion, but due to the ongoing dispute, no final figure has been determined for the current year.
Scopa chairperson Songezo Zibi questioned whether RAF’s financial mismanagement was to blame. However, Mokoena clarified that the crisis is largely driven by the increasing number of road accidents and the cost of claims outpacing the fuel levy funding the RAF relies on.
Irregular Expenditure Raises Governance Concerns
Beyond the accounting disputes, AGSA flagged irregular expenditure of R362 million, primarily linked to Project Siyenza. No money has been recovered from this expenditure, and AGSA urged RAF to conclude outstanding investigations and implement stricter financial oversight.
The fund’s accumulated deficit now stands at R25.5 billion, with liabilities far exceeding assets—signs of a looming liquidity crisis that could cripple the RAF’s ability to settle claims.
What’s Next for the Road Accident Fund?
With an adverse audit opinion and a deepening financial hole, the RAF faces an uncertain future. The government must urgently address structural funding issues, enforce stricter financial controls, and explore alternative funding mechanisms to prevent a total collapse.
If unresolved, the crisis could leave thousands of road accident victims without financial support, further straining South Africa’s social and legal systems.
The RAF’s financial struggles are a ticking time bomb. With liabilities skyrocketing and revenue streams failing to keep up, urgent intervention is needed to prevent a full-blown disaster. Parliament and financial watchdogs must act swiftly to ensure accountability and long-term sustainability for the fund.\
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