Government’s R357 billion RAF headache
The government is exposed to R357 billion of liabilities from the Road Accident Fund (RAF), which is insolvent and desperately needs funds as its provision for claims is significantly larger than its assets.
The International Monetary Fund (IMF) highlighted the RAF’s risk to the government’s finances in its Fiscal Transparency Evaluation report.
It singled out the RAF, in particular, as a significant risk because of its dire financial situation with no clear plan to turn its fortunes around.
The Fund compensates road users for losses or damages caused by motor vehicle accidents and receives its revenue from the RAF levy charged on fuel purchases.
“The financial condition of this entity is dire, with its net labilities reaching R345 billion (or 5.5% of GDP),” the IMF said.
“Provisions for claims have risen significantly as growth in claims has outstripped growth in revenues derived from fuel levies.”
This effectively means the RAF is unlikely to survive without government funds. If the state does not bail it out, the National Treasury will have to fulfil its obligations on the R357 billion debt it guarantees.
Outstanding claims from the RAF have nearly doubled as a share of GDP over the past decade, reaching 5.3% of annual GDP in 2022/23.
It could rise further over the long term, particularly if the switch to electric vehicles erodes the size of fuel levy revenues
This trend is shown in the graph below.

Research by actuary Gregory Whittaker, presented by the Actuarial Society of South Africa (ASSA), showed that the RAF could save R3 billion a year by tightening its payout conditions.
In particular, the RAF could reject opportunistic loss of income claims from individuals who suffered only minor injuries in a motor vehicle accident.
Whittaker’s research shows that by local and international standards, loss of income compensation from the RAF for non-serious injuries is excessive.
The latest data released by the RAF shows that loss of income settlements totalled R18.4 billion in the 2021/22 financial year, of which approximately 14% was paid to individuals with non-serious injuries.
In the financial year ended 31 March 2023, the RAF paid R22 billion in loss of income claims.
Whittaker explained that assuming 14% of the total loss of income claims was paid for non-serious injuries, this equates to R3 billion for the latest financial year.
One of the key changes introduced by the RAF Amendment Act of 2005 was to allow no compensation for general damages not quantifiable in monetary terms, such as pain and suffering for non-serious injuries.
Whittaker points out that the same exclusion was not applied to loss of income claims from individuals who suffered minor injuries in a car accident.
This has led to widespread abuse of the system, costing taxpayers billions of rands every year.
He noted that there has been a significant increase in the number of loss of income settlements made by the RAF over the years, making the problem worse.
In the 2008 financial year, the RAF made 5,957 individual claim payments concerning loss of income. In the 2023 financial year, this shot up to 20,957 individual claim payments.
This has contributed to the size of the RAF’s annual deficit skyrocketing as the fund continues to pay out more money than is collected by the RAF levy on fuel.
At the end of the 1994 financial year, the deficit of the RAF stood at R3.8 billion. By the end of March 2022, the deficit had grown to R344.8 billion. This sharp growth is shown in the graph below.

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