The Road Accident Fund (RAF) would have been shut down long ago if it were a normal company.
This was the view expressed in parliament on Wednesday by Mathabatha Mokonyama, director-general of the transport department, warning the fund is technically bankrupt.
Mokonyama said the fund is surviving largely on the fuel levy and is being crippled by a legal system that has allowed lawyers to benefit at the expense of claimants.
Speaking before the standing committee of public accounts, Mokonyama said the department has conducted a financial oversight that has shown the fund to not be stable.
“The ratios do not present a positive picture, and this is a matter that requires attention beyond the department and across government.
“Annually expenditure is about R20bn while revenue is around R4.55bn. The gap continues to grow, and contingent liabilities increase to levels that are unmanageable.”
If this were a public company, it would have been closed long ago by auditors because, technically, it is bankrupt. The only factor sustaining the fund is the guarantee provided through the fuel levy
— Mathabatha Mokonyama, transport department DG
He said another critical issue is the need to change legislation.
“There are several challenges, including the payment of general damages and foreign claims, and the fact that a significant portion of funds goes to lawyers rather than claimants. There are also revenue risks. If this were a public company, it would have been closed long ago by auditors because, technically, it is bankrupt. The only factor sustaining the fund is the guarantee provided through the fuel levy,” Mokonyama said.
Transport deputy minister Mkhuleko Hlengwa said the National Treasury has indicated the RAF funding model in its current form is unsustainable.
“As we continue increasing the fuel levy, currently about R2.17, we are adding to the strain faced by the public. There needs to be a review of the RAF funding model.
“It was my initiative to engage with National Treasury and the then CEO of the RAF to assist the entity in presenting the consequences of abrupt funding changes to avert a crisis,” he said.
One of the proposals made in the department’s presentation was to review foreign claims, considered to be another huge risk by Hlengwa.
“I do not believe being in the country illegally and becoming involved in whatever situation automatically gives one a constitutional right to full access to all rights. Rights come with responsibilities and obligations. In the first instance, one has to be in the country legally. These are all matters we need to deal with in relation to the RAF.”
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