Motorists pay R45 billion per year for failing road fund in South Africa

South African motorists spend between R45 billion and R48 billion every year to prop up the Road Accident Fund (RAF).

The RAF is a state-owned entity that exists to pay out third-party insurance for all road users in South Africa, covering death, injury, and loss of earning claims for individuals involved in vehicle-related accidents.

It is funded by the Road Accident Fund Levy, a fuel tax placed on every litre of petrol and diesel sold in South Africa.

In other words, anyone who fills their car up in South Africa is paying for the RAF.

Despite receiving billions of rands in revenue every year, the RAF has been in a downward spiral for several years, with mismanagement and an inadequate funding model leaving the entity technically insolvent.

The RAF’s management team says it is sitting on an immediate claims backlog estimated at R100 billion. However, parliament and the National Treasury claim the entity’s situation is far worse.

The treasury expects the RAF’s long-term liabilities to rise to between R422 billion and R426 billion by 2028, posing a threat to the country’s finances.

Right now, the RAF has around 440,000 outstanding claims, while it has historically processed around 250,000 per year.

This has slowed down dramatically in recent years to just 70,000 claims per annum, resulting in a growing backlog.

Additionally, the average value per claim has shot up by 70%.

The Organisation Undoing Tax Abuse’s (OUTA) executive manager, Julius Kleynhans, stated that the RAF has been mismanaged and abused for years.

He highlighted that bad actors within the legal fraternity have taken advantage of the system, quadrupling the fees they charge per claim, which are paid out by the RAF.

“The RAF is so important. They need to start at the basics with the current reform agenda, and that begins outside of the fund,” Kleynhans told Newzroom Afrika. 

He explained that road infrastructure needs to be maintained to minimise accidents while also improving compliance and law enforcement.

“Law enforcement has to be properly equipped and implemented across the country. There are too many vehicles in South Africa that are unreliable and should not be on the roads,” Kleynhans said. 

“There is still a significant amount of bribery that takes place with law enforcement. That has to be addressed first to minimise accidents and claims.”

Road Accident Fund in disarray

The RAF requires a massive capital injection and new management if it hopes to turn its fortunes around.

Because of this, some are calling for the RAF to be scrapped altogether and replaced with a new mandatory private-sector insurance policy for motorists.

“Fixing the RAF itself will be difficult. We know the board is looking at reform and specifically at ways to stop it from being abused,” Kleynhans said. 

“We have seen a lot of abuse, with lawyers and the legal fraternity benefitting from this and not in a positive way.”

This has resulted in billions of rands paid out for inflated legal fees over false claims, all while motorists are struggling to make legitimate claims.

The government has referred to this as “financial leakage” within the system.

“Minister Creecy has a lot of work to do. We are very positive about some of the actions she is taking as a minister,” Kleynhans said. 

Previous attempts to fix the RAF have included new administrative hurdles, making it harder so submit a successful claim.

This was led by the RAF 1 claim form, which was coupled with with admin changes requiring claims to be sent via registered mail.

The Supreme Court of Appeal declared these chages to be unconstitutional, unlawful, and invalid in May 2026.

The adverse ruling means that thousands of previously rejected claims could suddenly be reopened on the RAF’s books.

If this occurs, the RAF would experience an immediate liquidity crisis, requiring the government to step in with some form of funding to keep the entity afloat.