Road Accident Fund in Crisis: Landmark Court Rulings, R500bn Debt & Reform Proposals — May 2026 Update

The Road Accident Fund (RAF) continues to dominate South African headlines in 2026, with a series of landmark court rulings, mounting financial pressures, and urgent calls for systemic reform. As South Africa’s state-run road accident compensation scheme faces what experts describe as a full-blown institutional crisis, here is a comprehensive overview of the latest developments as of May 1, 2026.

1. Landmark SCA Ruling: RAF Must Compensate All Victims — Including Undocumented Foreigners

In one of the most significant legal developments of 2026, the Supreme Court of Appeal (SCA) ruled in April that the Road Accident Fund must compensate all road accident victims in South Africa, regardless of their immigration status. The ruling dismissed the RAF’s appeal against an earlier Gauteng High Court decision that had struck down a RAF directive requiring foreign nationals to prove legal presence in the country at the time of injury.

Writing for a full bench of three judges, Judge Norman Davis stated: “These accidents don’t discriminate in respect of the victims thereof between race, gender, age or between illegal foreigners and citizens of this country.”

The SCA found that the RAF Act makes no exclusion based on immigration status, and that the phrase “any person” in the Act includes all road accident victims — citizens and non-citizens alike. The RAF’s appeal was dismissed with costs.

Parliament’s Portfolio Committee on Transport welcomed the ruling and simultaneously called for the expedited reform of the RAF Act to close legislative loopholes and modernise the compensation framework.

2. RAF Dealt Twin Blows by the SCA — With No Clear Path to Pay

The SCA handed the RAF two further defeats in March 2026, both with significant financial implications for the already cash-strapped fund.

Post-Judgment Interest Must Be Paid Automatically

In the matter of 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. 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 is handed down.

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

Sunshine Hospital: R92 Million Still Owed

In a second matter, 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 and accumulated unpaid invoices after the RAF stopped paying in March 2020. The hospital had previously obtained judgments totalling over R403 million, of which R336 million was paid before payments ceased.

Notably, the court 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. The R400bn–R500bn Debt Crisis: South Africa’s Next Big SOE Timebomb

The RAF’s financial situation has been described by analysts and parliamentarians as one of the most severe fiscal risks facing South Africa. Key figures include:

• Contingent liabilities estimated at over R400 billion, with some estimates exceeding R500 billion
• Current liabilities of approximately R100 billion
• The RAF receives roughly R50 billion per year from fuel levies, with R7 billion in overheads and R43 billion in payouts — leaving virtually no buffer
• The RAF’s fuel levy was raised to R2.25 per litre from April 1, 2026 — up from 41.5c/litre in 2008 — but experts say this is still far from sufficient
• National Treasury’s 2026 Budget Review projects RAF long-term provisions rising from R387 billion in the current financial year to R426 billion by 2028/29
• The RAF currently handles only 70,000 claims per year, down from 250,000 previously, with a backlog of over 440,000 outstanding claims

Scopa (Standing Committee on Public Accounts) chairperson Songezo Zibi described the situation starkly: “The RAF is technically insolvent… You have layer on layer of problems. The fiscus can’t deal with that.”

Zibi noted that some claims relating to accidents that occurred more than 20 years ago are only now proceeding to trial, and that legal fees per claim have quadrupled while the value per claim has increased by 70%.

4. Governance Failures and the Letsoalo Legacy

Much of the RAF’s current crisis has been 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:

• Letsoalo earned R6 million per year plus a 40% performance bonus — despite five consecutive years of disclaimed or adverse audit opinions from the Auditor-General
• The SIU uncovered RAF bank accounts containing between R1 million and R100 million
• A R79 million lease in Johannesburg linked to Letsoalo
• A 200-bed Johannesburg hospital was forced to close in May 2025 after the RAF failed to pay over R300 million in outstanding debt
• A R4 million staff party, including R40,000 spent on executive drinks
• Senior executives accused of manipulating procurement processes and splitting invoices to bypass approval limits
• The RAF accumulated over R15 billion in default judgments
• The RAF litigated against the Auditor-General for two years — a battle it has since dropped

In August 2025, Transport Minister Barbara Creecy dissolved the entire RAF board and appointed an interim board. She also wrote to President Cyril Ramaphosa requesting an expanded SIU investigation scope.

5. Calls for a Hybrid Reform Model

The Actuarial Society of South Africa (ASSA) released a major research paper in April 2026 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 is viable on its own, and recommended a hybrid solution combining elements of all three — including basic no-fault benefits for medical care and rehabilitation, supplemented by fault-based liability insurance, delivered through a public-private partnership under strong regulatory oversight.

Actuary George Schwalb, part of the ASSA research team, stated: “We conclude that none of these general systems are viable on their own, but that we do need a hybrid solution.”

6. Court Backlogs and Access to Justice Concerns

Personal injury lawyers have raised serious concerns about access to justice for road accident victims. In Gauteng, a directive making mediation mandatory for all civil trials — intended to reduce court backlogs — has been blamed for worsening delays. Advocate Justin Erasmus, chair of the Personal Injury Plaintiff Lawyers Association, has lodged a High Court application to set aside the directive, which comes to court in June 2026.

Erasmus noted that Gauteng courts deal with approximately 300 RAF matters per week, with only 25 state attorneys available. Trial dates in some jurisdictions are reportedly being set as far out as November 2033.

7. Signs of Recovery? Parliament Remains Cautiously Optimistic

Despite the grim picture, the Chairperson of the Portfolio Committee on Transport, Mr Donald Selamolela, stated in February 2026 that the RAF is showing “signs of recovery” under its new interim board. Deputy Minister of Transport Mkhuleko Hlengwa likened the reform process to “fixing an aeroplane while airborne.”

The committee called on the RAF to accelerate governance improvements, speed up direct claims processing, and urgently review the RAF legislation to close loopholes.

What This Means for Road Accident Victims in South Africa

If you or a loved one has been involved in a road accident in South Africa, here is what the current landscape means for you:

• You are entitled to claim regardless of your nationality or immigration status, following the SCA ruling
• Delays remain severe — with a backlog of over 440,000 claims, processing times can stretch for years or even decades
• Legal representation is advisable — the RAF’s track record of non-compliance and procedural delays makes professional legal assistance critical
• Legislative reform is coming — but new laws are unlikely to take effect before 2027
• The RAF cannot delay indefinitely — courts are increasingly holding the fund accountable, including directing CEOs by name to comply with payment orders

Conclusion: A Fund at a Crossroads

The Road Accident Fund stands at a critical juncture in 2026. Landmark court rulings have expanded the scope of who can claim, while simultaneously exposing the fund’s inability to pay. With a debt burden that could exceed R500 billion, a backlog of nearly half a million claims, and a legacy of governance failures, the RAF represents one of South Africa’s most urgent fiscal and social challenges.

Reform is underway — but whether it will come fast enough to prevent a full-scale fiscal catastrophe remains to be seen. South Africans, road users, and accident victims deserve a compensation system that is fair, efficient, and financially sustainable. The pressure is now firmly on Parliament, the Treasury, and the new RAF leadership to deliver.

Sources: IOL Business, Eyewitness News (EWN), Daily Maverick, Currency News, Africa24 TV, Parliament of South Africa — May 2026