South African Road Accident Fund financial crisis

The South African Road Accident Fund (RAF) is facing a severe financial crisis, with liabilities exceeding R440 billion. This instability has prompted discussions regarding new funding models to address stagnating revenue caused by the rise of fuel-efficient vehicles.

Initially, the RAF proposed increasing the fuel levy from R2.25 to R3 per litre. This proposal met significant opposition from advocacy groups. The Automobile Association (AA) requested the government scrap the fuel levy entirely, with AA Chief Executive Bobby Ramagwede stating that “gouging the consumer is not the answer.” Additionally, the Organisation Undoing Tax Abuse (OUTA) argued that the crisis stems from mismanagement and corruption rather than insufficient funding.

In response to these pressures, Transport Minister Barbara Creecy has rejected the fuel levy increase, citing the financial strain on motorists. Instead, the government is considering alternative revenue streams, such as levies on vehicle registration, license disc fees, and charges for foreign-registered vehicles. Efforts to stabilize the fund also include legislative changes toward a no-fault compensation system and improvements to management following the appointment of a new chief executive and an interim board.