The Road Accident Fund’s (RAF’s) crisis is not primarily a failure of revenue collection. It is the result of years of weak leadership, poor administration and inadequate oversight.
Redesigning how the public pays will achieve little unless the government first fixes how the fund operates.
Recent statements from the Department of Transport indicate that the government is reconsidering how the Road Accident Fund (RAF) is financed.
It argues that electric and hybrid vehicles will very gradually erode fuel-levy revenue, prompting the consideration of alternative funding via a previously failed third-party insurance scheme, while not recognising the real issues that need to be addressed.
There is nothing wrong with evaluating new models. However, it is futile to find new ways of pouring money into a scheme where funds are being wasted on a grand scale.
Electric and hybrid vehicles make up less than 1% of the current car park and will remain a small fraction of South Africa’s fleet for the next decade. That long-term policy question must not obscure the immediate crisis.
The RAF is not in trouble because the government has failed to extract enough money from motorists. Enormous revenue increases have been accompanied by maladministration, inefficient systems, weak oversight and poor leadership. Changing the collection mechanism would merely continue to feed a broken system and possibly introduce additional administration costs.
An effective collection mechanism
The fuel levy is among the simplest and least expensive ways of funding road-accident compensation. It is collected automatically, without a separate annual account or premium-collection bureaucracy.
It also approximates a user-pays system in that, the more one drives, the more one generally contributes. It is effectively calibrated as a user-pays scheme and much fairer than charging identical annual fees. Someone driving 100km a month should not pay the same as someone driving 10,000km, which would be the case with an annual third-party scheme.
The levy also spreads the burden across small payments whenever motorists fill their tanks. Replacing it with a large annual charge, or a hybrid version thereof, would create affordability problems for households and small businesses.
Electric vehicles will eventually require a supplementary contribution mechanism, and this will need to be explored without discarding a system that remains efficient for the vast majority of road users, for many years to come.
Third-party insurance model has failed before
South Africa introduced compulsory third-party motor insurance in 1942. Vehicle owners had to obtain cover from authorised private insurers, but the system produced falsification, evasion, uninsured vehicles, disputes over valid cover and gaps in protection. The government then moved to fuel-levy funding in 1986, before establishing the present RAF under the 1996 legislation.
A vehicle-based annual payment system would revive difficult questions. Who would police millions of vehicles? What happens when an uninsured vehicle causes an accident, or the driver flees? Who compensates pedestrians and passengers when a policy has expired?
South Africa already struggles to enforce vehicle licensing and roadworthiness. Compulsory insurance would require an accurate vehicle ownership database, effective policing and meaningful consequences for non-compliance. When enforcement fails, victims suffer.
The RAF has not been starved of money
In 2009, the RAF levy increased by 38%, from 46.5c to 64c a litre. It then rose well ahead of inflation, reaching R2.18 in 2025 and R2.25 in April 2026. Had it merely tracked consumer inflation, it would now be roughly R1 per litre lower.
This is the sad reality of inefficient and poorly managed government departments. When fed with significantly increased revenue flows or bailouts to address their backlogs and challenges, they introduce creative ways to spend it and waste more money along the way.
RAF revenue grew from about R12.5-billion in 2010 to more than R50-billion in 2024/25. Yet performance deteriorated.
During the same period, employee costs increased from about R590-million to R2.47-billion. Had the 2010 salary bill risen annually by inflation plus one percentage point, personnel expenditure would now be roughly R1-billion lower per annum today.
General and administrative costs also raced ahead of inflation, from R240-million to R1.5-billion, not to mention rampant increases in finance costs. These figures describe an institution whose costs have become detached from acceptable performance, not one starved of revenue.
This incessant extractive approach by the government to seek more money to feed an inefficient, bloated and broken machine must come to an end.
A liability that cannot be wished away
The greatest tragedy is the deterioration of claims management. RAF liabilities stood at R46-billion around 2010, which has ballooned ten-fold to around R450-billion.
Under former CEO Collins Letsoalo, management adopted a controversial accounting approach that sought to reduce its claims liability to around a tenth of its current realistic value. The Auditor-General rejected it, and the RAF lost its case in a costly litigation battle over the issue. The obligations and backlogs have become a major fiscal risk for the RAF.
Fortunately, and eventually, Transport Minister Barbara Creecy dissolved the RAF board in July 2025, citing persistent governance and operational failures, litigation over accounting standards, institutional instability and frequent default judgments. These problems did not arise overnight. Successive ministers and directors-general obfuscated their roles and failed to stop the decline over many years.
Reform the institution, not the invoice
The RAF operates much like a large insurer. It must assess claims, detect fraud, resist fictitious or inflated demands, quantify future liabilities and settle valid claims efficiently. That requires insurance executives, claims managers, forensic investigators, actuaries, medical experts and information-systems specialists.
The government should bring credible insurance professionals in to rebuild claims management and fraud prevention. The board must include the industry, financial, legal and actuarial expertise envisaged by the RAF Act, rather than rewarding political loyalty.
The actuarial and technical capacity lost or marginalised during Letsoalo’s tenure must be restored. An institution carrying liabilities of this magnitude cannot function without independent actuarial expertise and credible financial reporting.
Revisiting the Road Accident Benefit Scheme (Rabs) also deserves serious examination. A properly designed no-fault scheme with defined benefits, faster treatment and less litigation could lower costs and help victims faster. But it must not merely change names and payment mechanisms while administrative failures remain. The test will be a reduction in the cost to society, while treating victims fairly and delivering benefits faster.
The government should also investigate requiring foreign motorists or short-term visitors to carry suitable travel or third-party cover, as is the case in many countries. Any proposal must, however, be constitutional, enforceable and based on verified data, instead of inflated claims about foreigners “bleeding the RAF dry”.
Fix it first
Defending the fuel-levy mechanism does not mean defending permanently high fuel prices. South Africans already face heavy fuel taxes, volatile oil prices, a relatively weak currency and geopolitical instability. Once maladministration is addressed, waste reduced and claims brought under control, there should be room to reduce the levy over time and address revenue mechanisms for green-energy powered vehicles.
But the sequence matters. Establish the RAF’s true liabilities and work with the Treasury on a plan to address the backlog. Restore credible reporting. Rebuild actuarial and claims capacity. Appoint a qualified board and executive team. Modernise systems, strengthen fraud prevention and settle valid claims before they become expensive court cases.
South Africans have already given the RAF vastly more money than they did 15 years ago. Before asking for more or inventing a new collection method, the government must prove it can manage what it already receives.
The government must stop trying to rearrange the deckchairs on the Titanic. Fix the ship. DM
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