Road Accident Fund technically bankrupt: Department of Transport warns of major fiscal risk

The Department of Transport says the Road Accident Fund is technically bankrupt and a fiscal risk.

 
Director General Mathabatha Mokonyama has on Wednesday told Parliament’s Standing Committee on Public Accounts that were it not a public company, it would have been shut down.

He and Deputy Minister Mkhuleko Hlengwa are among the last witnesses before the committee as it wraps up its probe into maladministration at the fund.

 Transport Director General Mathabatha Mokonyama says the current operating model at the Road Accident Fund is unsustainable.

With around R20 billion in claims to pay out annually, it only has a budget of around R4.5 billion to settle them. 

Mokonyama stated, "The gap just increases, and the contingent liabilities grow. It will never be manageable."

Deputy Minister Mkhuleko Hlengwa says urgent reform is required to keep the entity afloat.

Hlengwa noted, "RAF in its current form is a fiscal risk, not just for the state but for the claimants."

Hlengwa says shutting down the fund is not an option as it serves the poor. The department plans to reintroduce a reform bill to Parliament that was rejected in 2020, which aims to limit payments to lawyers and foreign nationals.

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