R17 billion loan needed to pay outstanding RAF claims, says Mbalula

The Road Accident Fund (RAF) is looking to secure a “finance facility” to pay R17 billion in unpaid claims – some that have been outstanding for more than five years.

Transport Minister Fikile Mbalula revealed this in reply to a written parliamentary question from EFF MP Nontando Nolutshungu.

Nolutshungu wanted details on when the RAF envisaged the backlog would be cleared.

“The revenue received by the Road Accident Fund (RAF) from the fuel levy is insufficient to address its claims liability.

“Consequently, one of the plans included in the RAF’s strategic plan and annual performance plan, which is specifically aimed at addressing the unpaid claims debt, is for the RAF to secure a finance facility for this short-term debt and the securing of the finance facility to clear the backlog is targeted for the 2020-21 financial year,” Mbalula said.

Previously, Mbalula said, that as of 31 March, the RAF liability grew to R324 billion and had claims valued at R17.2 billion that had been finalised, but could not be paid due to financial cash flow challenges.

He said the cause of the liability was the increasing number of claims and high administrative costs.

New claims

Approximately 102 086 new claims were registered during 2019-2020.

Mbalula, in reply to another parliamentary question from DA MP Chris Hunsinger, said the RAF received 297 610 claims in the past three years.

He said 151, 530 of the claims received were, or are, challenged and 45,075 of the challenged claims were settled by way of a court order.

Mbalula said the exact number of the matters which went on trial could not be ascertained at the time of his response, saying:

“However, it is important to mention that a study conducted by Professor Hennie Klopper on the RAF matters set down on the court roll in the Gauteng High Court in Pretoria, revealed that 99.56% of the matters are settled at the doorstep of court and less than 1% (0.45%) proceed to trial.

“This study was done in the Pretoria High Court which has the highest number of litigated matters countrywide,” Mbalula said.

He said, although the research focused on Pretoria, the RAF’s observation was that this was reflective of the general trend in all the courts across the country.

“RAF matters get settled by both parties and the settlement agreements are then made orders of court,” he said.

According the RAF’s 2019-2020 annual performance plan, financial challenges had placed strain on the fund’s ability to carry out its mandate.

The balance of claims creditors (claims requested, but not yet paid) as at 31 March 2018, was R9 billion.

“Claims creditors are projected to grow to R11 billion by the end of the current financial year. Over the medium term expenditure framework (MTEF) period, the RAF fuel levy is projected to remain flat and, as a result, claims creditors are projected to grow to R41.4 billion by the end of the 2021-22 financial year. The RAF continues to settle claims in terms of its mandate and targets. This is despite the fact that the available funding is not sufficient for the amount required to effect payment on the settled claims,” the report read.