Road Accident Fund Crisis Deepens: Major Reforms Proposed as RAF Faces Technical Bankruptcy in 2026

RAF Declared Technically Bankrupt as Financial Crisis Escalates

The Road Accident Fund (RAF) has been officially declared technically bankrupt by the Department of Transport, marking a critical juncture for South Africa’s road accident compensation system. Transport Director General Mathabatha Mokonyama revealed to Parliament’s Standing Committee on Public Accounts that the fund would have been shut down if it were a private entity.

The stark reality facing the RAF is a massive financial gap: with approximately R20 billion in annual claims but only R4.5 billion in budget to settle them, the fund’s sustainability has reached a breaking point. “The gap just increases, and the contingent liabilities grow. It will never be manageable,” Mokonyama stated during parliamentary proceedings.

Revolutionary RABS Bill Proposes Complete System Overhaul

In response to the crisis, the Department of Transport is championing the Road Accident Benefit Scheme (RABS) Bill, which proposes fundamental changes to how road accident victims receive compensation in South Africa.

Key Features of the Proposed RABS System:

• No-fault compensation system – Victims won’t need to prove who caused the accident
• Monthly payments instead of lump sums – Moving away from one-time payouts to regular annuity payments
• Restricted eligibility – Limited to South Africans and legal foreigners with insurance
• Age limitations – Loss of income claims restricted to people under 60
• Foreign national requirements – Mandatory travel insurance for visitors entering South Africa

Deputy Transport Minister Mkhuleko Hlengwa emphasized that the bill aims to “introduce a no-fault system, to cap benefits, and to provide a schedule of defined benefits within the Act in order to regularise the system.”

Budget 2026: Fuel Levy Increases Add Financial Pressure

Finance Minister Enoch Godongwana announced a 7 cents per litre increase in the Road Accident Fund levy as part of Budget 2026, marking the first increase in five years. This decision has drawn criticism from various quarters, with opponents arguing it throws “more money at a broken system.”

The combined effect of fuel levy increases totals 21 cents per litre for both petrol and diesel, adding financial burden to South African motorists already grappling with economic pressures.

Ongoing Challenges and Reform Efforts

Massive Claims Backlog

The RAF has been working to address its enormous backlog, making over 72,000 calls to trace claimants in an attempt to clear unpaid claims. The fund has also been conducting settlement drives at various locations, including a recent initiative at Ngwelezane Hospital on February 20, 2026.

Legal and Administrative Issues

The fund continues to face multiple challenges:

• Supreme Court of Appeal dismissed RAF’s appeal against 181 court orders
• Ongoing investigation into R1 billion media contracts
• High Court Judge Mpina Mathebula facing trial over alleged theft of RAF funds
• Extended suspension of employees on full pay

Economic Impact and Road Safety Concerns

Road accidents cost South Africa between R205 billion and R260 billion annually, placing immense pressure on the RAF system. The fund relies heavily on fuel levy income, making it vulnerable to economic fluctuations and fuel consumption patterns.

Deputy Minister Hlengwa stressed the importance of viewing RAF reforms as part of a broader ecosystem: “We are not looking at reforms confined only to what happens within the RAF. We are asking how we can build an ecosystem that prevents accidents from occurring in the first place.”

Looking Ahead: Critical Decisions for 2026

As the RAF crisis deepens, several critical decisions await:

1. Parliamentary approval of the RABS Bill, previously rejected in 2020
2. Implementation timeline for the new compensation system
3. Coordination with Home Affairs on visa requirements for foreign nationals
4. Enhanced traffic law enforcement funding to prevent accidents

The Transport Committee Chair has noted that while the RAF shows “signs of recovery,” reform efforts must accelerate to address the mounting fiscal risk to both the state and claimants.

Conclusion: A System at the Crossroads

The Road Accident Fund stands at a critical crossroads in 2026. With technical bankruptcy declared and major reforms proposed, the coming months will determine whether South Africa can successfully transition to a sustainable road accident compensation system. The proposed RABS Bill represents a fundamental shift that could either resolve the current crisis or create new challenges for accident victims and the broader transport ecosystem.

As Deputy Minister Hlengwa emphasized, “shutting down the fund is not an option as it serves the poor.” The challenge now lies in implementing reforms that ensure both financial sustainability and continued support for those most in need of assistance.

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