The Department of Transport is exploring a hybrid funding model for the Road Accident Fund (RAF), combining private and public contributions to ease pressure on the national fiscus, Deputy Transport Minister Mkhuleko Hlengwa has confirmed.
Speaking on the fund’s ongoing challenges, Hlengwa said the department also intends to introduce the Road Accident Benefit Scheme Bill to Parliament this year. The proposed legislation would establish a structured, no-fault benefits framework to reform how road accident compensation is administered in South Africa.
Financial Pressures and Audit Transition
Addressing concerns about the RAF’s financial position, Hlengwa acknowledged reports of substantial contingent liabilities but cautioned that figures circulating publicly—including estimates of R400 billion to R500 billion—are not yet audited or verified.
“The entity is in a transition phase, reverting to the prescribed accounting standard following a dispute with the Auditor General over the incorrect adoption of IPSAS,” Hlengwa explained. “The books closed on 31 March, and we are currently undergoing the audit process. We will be able to speak to the numbers definitively once those outcomes are released.”
The Deputy Minister noted that the previous board’s decision to litigate the accounting standards dispute had wasted significant time and resources. The current board has since withdrawn that court action to prioritise operational stability.
Claims Backlog and Monthly Payouts
On the question of outstanding claims, Hlengwa described the number of pending claims as a “moving target,” given that new accidents are logged continuously. However, he highlighted progress in reducing the backlog.
“Since September 2025, the entity has been paying between R4.2 billion and R4.6 billion per month toward closing the backlog of claims, up from R2.1 billion in previous years,” Hlengwa stated. A progress report detailing the turnaround efforts is expected by the end of the month.
The department has also introduced mediation processes to settle claims more efficiently and revived the “RAF on the Road” programme to engage directly with communities and claimants.
Rationale for Legislative Reform
The proposed Road Accident Benefit Scheme Bill centres on three key reforms:
- No-fault system: Payouts would no longer require lengthy investigations to establish blame, accelerating support for victims.
- Standardised benefits: A defined schedule of benefits would replace the current earnings-based calculation, which Hlengwa said unduly disadvantages lower-income claimants. “We don’t want the RAF to be a money-making scheme for the rich,” he said.
- Eligibility criteria for foreign nationals: The bill seeks to require foreign visitors to hold travel insurance and restrict benefits for those in the country illegally. Hlengwa cited a claim involving Belgian doctors amounting to R100 million as an example of unsustainable liabilities.
“Our attitude is that there has to be a legality aspect. You must be in the country legally and have travel insurance,” Hlengwa emphasised. The department is appealing a Supreme Court of Appeals judgment on foreign national claims to the Constitutional Court.
Sustainable Funding in a Changing Landscape
Hlengwa outlined why the current funding model—reliant on a fuel levy of 225 cents per litre—is increasingly untenable.
“As electric vehicles are introduced and we push harder for road-to-rail initiatives, it is elementary that revenue from the fuel levy will decline,” he said. “Our gap analysis, supported by case studies, is exploring how to bridge that shortfall.”
The proposed hybrid model would retain the public fuel levy while introducing a third-party insurance component, potentially collected as a fee when motorists renew their vehicle licenses. The private sector’s role would extend beyond funding to include consequence management, such as promoting cell-phone detection technology to discourage distracted driving.
Governance and Accountability
Responding to questions about the Standing Committee on Public Accounts (SCOPA) voting 8-3 to recommend criminal charges against former RAF CEO Collins Letsoalo, Hlengwa affirmed the department’s cooperation with parliamentary oversight.
“We have fully complied with the SCOPA inquiry. Mr. Letsoalo is no longer an employee of the fund, and I would not venture into legal matters that now rest with the committee,” he said. “We await the final report through normal parliamentary processes and will apply recommendations where applicable.”
Hlengwa concluded that governance stabilisation is underway, with a new board appointment process nearing completion. “We are turning the corner. The interventions since July 2025, including addressing the trust deficit and culture of intimidation, position us to make the RAF fit for purpose.”
The department maintains that without these legislative and funding reforms, the RAF in its current form is not sustainable. The Road Accident Benefit Scheme Bill is expected to be tabled in Parliament later this year.
