RAF in perilous state, say officials
THE cash-strapped Road Accident Fund (RAF) yesterday painted a bleak picture of its finances, saying it had resorted to leasing furniture rather than buying it and risk having it attached by lawyers and the sheriff of the court.
RAF officials told Parliament that the entity was saddled with R15.5billion in unpaid claims, and had experienced a R262bn deficit.
Briefing the transport portfolio committee on the RAF’s annual performance plan for 2019-20, its acting chief financial officer, Victor Songelwa, said the entity’s labilities stood at R41.9bn, which far exceeded the value of its assets.
RAF projections showed the R262bn deficit would increase to R285bn in 2020 and R341bn in 2021.
“It is not a healthy situation at all. Some intervention needs to happen, and this is a challenge,” Songelwa said.
Acting chief executive Lindelwa Xingwana-Jabavu said the RAF’s financial situation had continued to deteriorate.
“We sit with R15.5bn in claims that are finalised and ready for payment, but we don’t have the resources,” Xingwana-Jabavu said.
The RAF had in the past financial year recorded 328 178 claims and finalised 229 534.
She said the entity’s liabilities had increased by 27%, to R262bn, from R214bn in the previous financial year.
Songelwa explained to the committee that the RAF had R43.9bn in revenue, but had spent up to R99bn by the end of March this year.
The deficit, he said, was at R55.7bn, up from R16.3bn.
The bulk of the RAF’s expenditure on claims stood at 92%, and at 8% on overheads.
“We pride ourselves that the money that comes from the fuel levy – most of it is spent on what it is meant for... claims,” he said.
He added: “It is worth mentioning that the more we reach out to communities and promote the RAF, the more people come in, and we don’t have enough money to honour claims that come through, hence we end up with this deficit.”
He told the committee that the entity could afford to pay R39.7bn from its revenue and, when the money ran out, it increased its liabilities.
RAF assets were at R10.9bn and non-current assets R273bn. “We are thin on non-current assets (such as) furniture and computers. If we own furniture, we notice that the sheriff comes in and attaches our assets. We (would) rather lease than own them. That is the logical thing to do.”
If we own furniture we notice that the sheriff comes in and attaches our assets Victor Songelwa RAF ACTING CHIEF FINANCIAL OFFICER