Road Accident Fund in Crisis: Landmark Court Rulings, R400bn Debt Bomb & Calls for Reform — May 2026 Update

The Road Accident Fund (RAF) continues to dominate South African headlines in 2026, with a series of landmark court rulings, a deepening financial crisis, and growing calls for systemic reform. From the Supreme Court of Appeal delivering twin blows to the fund, to actuaries proposing a hybrid compensation model, here is everything you need to know about the latest RAF developments.

1. RAF Declared Technically Bankrupt — A R400bn Fiscal Time Bomb

The RAF’s financial situation has reached a critical point. According to the 2026 Budget Review tabled by Finance Minister Enoch Godongwana, the RAF’s long-term provisions are expected to rise from R387 billion in the current financial year to R426 billion by 2028/29. Some estimates place total contingent liabilities as high as R500 billion — nearly one-fifth of South Africa’s entire annual national budget.

The Standing Committee on Public Accounts (Scopa) chairperson, Songezo Zibi, described the situation bluntly: “The RAF is technically insolvent. On average, they get about R50 billion a year from fuel levies. Their overheads are about R7 billion, and they pay out about R43 billion.”

The fund currently has more than 430,000 outstanding claims, some dating back over a decade. It previously handled 250,000 claims per year but now processes only 70,000 annually. The value per claim has increased by 70%, and legal fees per claim have quadrupled.

National Treasury has flagged the RAF as a “significant fiscal risk”, and the Daily Maverick has described it as South Africa’s next major state-owned enterprise (SOE) crisis — one that threatens to blow a R400bn hole in the national fiscus.

2. Supreme Court of Appeal Delivers Twin Blows to the RAF

In March 2026, the Supreme Court of Appeal (SCA) handed the RAF two significant defeats on the same day, further compounding the fund’s financial woes.

Ruling 1: Automatic Post-Judgment Interest

In RAF vs Sheriff of the High Court, Pretoria East and Others, the SCA ruled unanimously that the RAF is obliged to pay interest on late judgment debts automatically — even when the original court order is silent on the subject. The court confirmed that under section 2(1) of the Prescribed Rate of Interest Act, every judgment debt bears interest from the day it becomes payable. In RAF matters, this clock starts ticking 14 days after the court order.

The RAF had argued that a 1997 amendment to interest legislation replaced this automatic mechanism. The court dismissed this argument, clarifying the distinction between pre-judgment and post-judgment interest.

Ruling 2: Sunshine Hospital Must Be Paid

In the second case, Newnet Property (Pty) Ltd t/a Sunshine Hospital vs The Road Accident Fund, the SCA reversed a Pretoria High Court ruling and ordered the RAF to pay the remaining R92 million owed to Sunshine Hospital — a private facility that had treated motor vehicle accident patients. The RAF had stopped paying the hospital in March 2020, accumulating over R403 million in unpaid invoices. The court even directed the RAF’s acting CEO, Radikwena Phora, by name to ensure compliance — a reflection of the court’s dwindling patience with institutional non-compliance.

3. Landmark SCA Ruling: RAF Must Compensate Undocumented Foreigners

In a landmark ruling on 17 April 2026, the Supreme Court of Appeal ruled that the RAF cannot refuse to pay compensation to road accident victims based on their immigration status — including undocumented or illegal foreigners.

The SCA dismissed two RAF appeals concerning section 17(1) of the RAF Act, which entitles “any person” to claim compensation for loss or damage arising from a motor vehicle accident. Judge of Appeal Ashton Schippers, writing for a unanimous full bench, stated: “Unlike other legislation which specifically excludes foreign nationals from its ambit, such as the Social Assistance Act, the [RAF] Act contains no such limitation.”

The ruling overturned a 2022 management directive by the RAF’s COO that required proof of legal status to process claims. Parliament’s Transport Committee chairperson welcomed the ruling, stating: “The RAF funding is intended for victims of road accidents, a purpose for which no one should interfere based on nationality.”

4. Governance Failures and the Letsoalo Legacy

Much of the RAF’s current crisis is attributed to the tenure of former CEO Collins Letsoalo (2020–2025), who was placed on special leave in May 2025 pending a Special Investigation Unit (SIU) probe. Key allegations include:

• Implication in a R79 million lease in Johannesburg
• A lavish R4 million staff party, including R40,000 spent on executive drinks
• A 200-bed Johannesburg hospital closed in May 2025 after the RAF failed to pay over R300 million in outstanding debt
• Senior executives accused of manipulating procurement processes and splitting invoices to bypass approval limits
• The RAF accumulated more than R15 billion in default judgments
• The Auditor-General issued disclaimed or adverse audit opinions for five consecutive years
• The SIU uncovered RAF bank accounts with between R1 million and R100 million

Letsoalo defied a parliamentary subpoena to appear before Scopa. ActionSA MP Alan Beesley called him a “sociopathic CEO” and demanded criminal charges. Transport Minister Barbara Creecy dissolved the entire RAF board in July 2025 and appointed an interim board. She also wrote to President Cyril Ramaphosa requesting an expanded SIU investigation.

5. Budget 2026: RAF Stands Out as the Worst-Performing SOE

While other major state-owned entities showed signs of improvement in the 2026 Budget Review — Eskom returned to profitability, Transnet narrowed its losses, and the UIF remained robust — the RAF stood out as the only social security fund deep in deficit.

The Budget Review noted: “Apart from the Road Accident Fund, which continues to be deep in deficit, social security funds and the Government Employees Pension Fund remain sustainable over the medium term.”

The RAF fuel levy was increased to R2.25 per litre from 1 April 2026 — up from 41.5 cents per litre in 2008, representing an annualised increase of approximately 9.8%. However, analysts argue this is still far from sufficient to address the fund’s mounting liabilities.

6. Actuarial Society Proposes Hybrid Compensation Model

In April 2026, the Actuarial Society of South Africa (ASSA) released a research paper proposing a hybrid compensation model to replace the current failing system. The study compared three options:

1. The current RAF system
2. The proposed no-fault Road Accident Benefit Scheme (RABS)
3. Compulsory third-party insurance offered by private insurers

ASSA concluded that none of these systems are viable on their own and recommended a hybrid solution combining elements of all three. Actuary George Schwalb explained: “We recommend it should have components of the current RAF, the proposed RABS and compulsory third-party insurance that is quite common in most developed countries.”

One proposed model would provide basic no-fault benefits for medical care and rehabilitation, supplemented by fault-based liability insurance for additional damages — delivered through a public-private partnership under strong regulatory oversight.

7. Courts Clogged, Victims Left Waiting

The RAF’s dysfunction is having a devastating impact on road accident victims. In Gauteng alone, courts deal with approximately 300 RAF matters per week, with only 25 state attorneys available to handle them. A mandatory mediation directive — intended to reduce court backlogs — has been blamed for worsening delays, with advocate Justin Erasmus, chair of the Personal Injury Plaintiff Lawyers Association, filing a high court application to set it aside.

Erasmus warned: “If you can get a trial date, it is for November 2033. The courts will face a tsunami soon if this is not resolved.”

Some claims relating to accidents that occurred more than 20 years ago are only now proceeding to trial. Personal injury lawyers report receiving as little as 2% of what the RAF owes their clients in monthly payments.

8. What Needs to Happen: Proposed Solutions

Scopa’s Songezo Zibi has outlined several immediate steps the RAF could take:

• Finalise matters without going to court where possible
• Appoint a panel of arbitrators to resolve disputes
• Establish an independent medical panel to assess injuries
• Cap payouts for future loss of income and medical expenses
• Move from lump-sum payments to staggered disbursements

Legislative reform is also being explored, though new laws are unlikely to come into effect before 2027. The RAF’s fuel levy — its primary income source — may also need to be significantly increased, though this carries political and economic risks.

Conclusion: A Crisis That Cannot Be Ignored

The Road Accident Fund’s crisis is no longer just a governance problem — it is a systemic fiscal emergency with real consequences for hundreds of thousands of South Africans waiting for compensation. With court rulings expanding the fund’s obligations, a debt burden approaching R500 billion, and a backlog of over 430,000 claims, the pressure on government to act decisively has never been greater.

Whether through legislative reform, a hybrid insurance model, or a fundamental restructuring of how road accident compensation is funded and administered, one thing is clear: the status quo is unsustainable.

Stay updated on the latest Road Accident Fund news and developments by bookmarking this page. If you or a loved one has been involved in a road accident in South Africa, consult a qualified personal injury attorney to understand your rights and how to lodge a claim with the RAF.

Sources: EWN, Business Day, Daily Maverick, Currency News, Inside Politic, Parliament of South Africa