Portfolio Committee South Africa: RAF Liquidity Crisis Raises Alarm

• The Portfolio Committee on Transport is concerned about the Road Accident Fund's severe liquidity challenges.
• The RAF currently pays out R25 billion monthly but only receives R4 billion, leading to significant claims payment delays.
• The fund is exploring new funding models, including a no-fault system, to reduce reliance on the fuel levy and costly litigation.
• The RAF Board has decided to revert to the GRAP 19 accounting standard and has withdrawn from litigation against the Auditor-General.
• While interventions are underway, the RAF expects financial stability only in the outer years, indicating continued payment delays.

This prolonged period of instability means that RAF claims payment delays are likely to persist, creating continued hardship for those dependent on the fund's payouts.

The Portfolio Committee on Transport has voiced significant apprehension regarding the persistent liquidity challenges confronting the Road Accident Fund (RAF). This concern emerged during a recent parliamentary briefing where Minister Creecy led a delegation, including representatives from the RAF, SANRAL, and ACSA, to present annual audit and performance plans as part of the ongoing budget review process. The committee heard stark figures illustrating the severity of the Road Accident Fund financial crisis: the RAF disburses approximately R25 billion each month, yet it only receives around R4 billion in monthly income.

This substantial deficit has led to a critical financial outlook, with the RAF indicating that it does not foresee a recovery from its current predicament. A direct consequence of this severe cash flow imbalance is that RAF claims payment delays have become a significant issue, with claimants experiencing extended waiting periods for their payouts. Mr. Donald Selamolela, who chairs the committee, acknowledged the department's efforts to explore new funding models for the RAF, prioritizing long-term sustainability. He also expressed optimism that the recent appointment of Waseem Carrim as the new permanent CEO, effective 1 November 2026, would aid the entity in achieving financial stability and a smoother transition.

In response to its financial woes, the Road Accident Fund is actively pursuing several strategic interventions, including a significant shift in its operational and accounting practices. Minister Creecy highlighted the RAF's intention to decrease its reliance on the fuel levy, a move prompted by the increasing prevalence of electric vehicles and the need for diversified funding models in South Africa. A key component of this strategy is the exploration of an RAF no-fault system proposal. This proposed system aims to streamline the claims process by removing the requirement to determine fault, thereby reducing the need for costly litigation that currently burdens the fund.

Further internal reforms were also brought to the committee's attention. The RAF Board has made a crucial decision to revert to the government-wide accepted GRAP 19 accounting standard RAF, indicating a move towards more standardized financial reporting. Concurrently, the fund has withdrawn from expensive litigation it was pursuing against the Auditor-General's office, a step that is expected to alleviate some financial strain and improve its relationship with oversight bodies. Despite these efforts, the committee, through Mr. Selamolela, expressed continued concern over instances of irregular expenditure within the RAF, underscoring the need for rigorous financial management.

The ongoing Portfolio Committee South Africa RAF liquidity discussions underscore the profound challenges facing the fund and its impact on accident victims. The committee was informed that while various interventions are currently underway at the RAF, the expected positive results are anticipated only in the "outer years," suggesting that immediate relief from the Road Accident Fund financial crisis is unlikely. This prolonged period of instability means that RAF claims payment delays are likely to persist, creating continued hardship for those dependent on the fund's payouts.

Despite the gravity of the situation, the South Africa transport committee RAF has pledged its unwavering support to the entity. Mr. Selamolela affirmed the committee's commitment to collaborate with the RAF as it navigates these complex issues, emphasizing a shared journey towards resolving its challenges. The push for new RAF funding models South Africa and the potential implementation of an RAF no-fault system proposal represent fundamental shifts that could redefine the landscape of accident compensation, making ongoing legislative and operational developments critical for all stakeholders.

Lawyers handling Road Accident Fund claims should anticipate continued payment delays due to the RAF's severe liquidity challenges. They must also closely monitor legislative developments regarding the proposed no-fault system, as its implementation would fundamentally alter claim procedures and the advice provided to clients.

Source: Original reporting via Parliament of South Africa