The Road Accident Fund (RAF) has announced its financial outcomes for the 2023/24 financial year, revealing a deficit of R1.6 billion. This is a marked improvement from the R8.4 billion deficit reported in the previous financial year, but the Fund continues to face significant financial hurdles.
The RAF’s financial struggles are not new, dating back to its establishment in 1946. However, the current Board has made progress in addressing these challenges through its 2020-2025 Strategic Plan. The plan aims to reduce the Fund’s growing deficit, improve claims processing, and reduce legal costs.
Since the implementation of the new operating model in the 2020/21 financial year, RAF has successfully halted and reversed the growth in short-term liabilities,
— The Road Accident Fund (@RAF_SA) September 16, 2024
One of the key successes of the plan is the reduction of the amount owed to claimants on settled claims, which has decreased from R16.2 billion in 2019/20 to R8.3 billion in 2023/24. Additionally, the RAF has saved R24 billion in legal costs over the past four years by improving claims handling processes.
#RAFMediaBriefing pic.twitter.com/2OHIx5SYpi
— The Road Accident Fund (@RAF_SA) September 16, 2024
Despite these successes, the RAF still faces challenges, including a stagnant fuel levy, which has remained at 218 cents per liter for the third consecutive year. This represents a reduction in real terms after adjusting for inflation. The Fund’s claims backlog also remains a challenge, although the growth rate has steadily reduced.
The RAF has introduced measures to improve customer experience, including a contact center, which has resolved 96% of cases registered. The Fund’s performance against predetermined objectives has also improved, with an 83% success rate in 2023/24, up from 57% in 2019/20.
SUMMARY OF KEY FINANCIAL RESULTS
However, the Auditor-General of South Africa (AGSA) has expressed concerns over the accounting treatment of claims liabilities and expenditures, resulting in a modified audit report.
While the RAF has made progress in addressing its financial challenges, there is still much work to be done. The Fund’s 2020-2025 Strategic Plan presents the best opportunity to finally set the RAF on a sustainable financial and operational path.
