Road Accident Fund 2019/20 Annual Performance Plan; with Deputy Minister

NCOP Transport, Public Service and Administration, Public Works and Infrastructure

28 August 2019
Chairperson: Mr KM Mmoiemang (ANC, Northern Cape)
Share this page:

Meeting Summary

Government Departments & Entities 2019/20 Annual Performance Plan (APP) 

The Select Committee was briefed by the Road Accident Fund (RAF), and the Deputy Minister of Transport, on its Annual Performance Plan 2019/20. The presentation addressed performance information and achievements of the entity over the past four years, the year 2018/19 at a glance, RAF alignment to the seven apex priorities of government and strategic objectives. Members were also taken through challenges and mitigations and annual targets for the 2019/20 financial year.

The RAF reported that about +-R15 billion requested claims had been processed and were ready to be paid but the RAF was unable to pay them. Most of the RAF revenue came from the fuel levy and about 92% of its costs went towards the payment of claims.

There were 86 210 claimants engaged through community outreach in 2019/20. There was also a transition from the Road Accident Fund (RAF) to the Road Accident Benefit Scheme (RABS). 200 unemployed youth had received driver’s licences and Public Driver Permits (PDP). 3 500 caregivers were employed for servicing injured claimants and there were treatment plans introduced for all serious injuries.

The Committee questioned the status of ten people arrested in connection with fraudulent claims, provincial breakdowns of programmes, critically vacant posts and the employment of women and people with disabilities at senior management level in the RAF. There was further discussion on community centres in the municipalities, the Road Accident Benefit Scheme Bill, huge liabilities of the RAF, especially as people continued to cause accidents.

Meeting report

The Chairperson welcomed the Deputy Minister of Transport, Ms Dikeledi Magadzi, Members and delegates.

He said the interest of the Committee was the extent to which the social security programme was able to mitigate the damages (whether expenses, laws, injuries etc) suffered by the victims of motor vehicle accidents. The Committee hopes the Road Accident Fund (RAF) would take Members into their confidence in terms of its operation and changes it wants to bring in order to deal with challenges it has outlined.

Remarks by the Deputy Minister

Ms Magadzi said the RAF was a victim of its own success because the harder it worked, the more challenges it experienced. There were pay-outs to different people such as the bereaved families and people who were still alive having been in the accident. She made a comparison between the past five years and now saying there was much investment into communities and the Department appreciated it.

The challenge was that the RAF was on the verge of collapse financially because there were more debts that the entity had compared to pay outs made. There was a Bill in the National Assembly on the Road Accident Benefit Scheme and she hoped that if the Bill was being dealt with, the Department will see some of the challenges reduced.

She congratulated the board and team of the RAF on the successful programme where it went out to communities to get people who have been involved in accidents to register their claims and check progress on their claims. One of the entity’s programmes was assisting with getting wheelchairs to the victims of accidents.

Road Accident Fund APP 2019/20

Ms Lindelwa Jabavu, RAF Acting Chief Executive Officer, presented the entity’s Annual Performance Plan (APP) for the 2019/20 financial year. She began by outlining the mandate of the RAF which was to provide payment of compensation in accordance with the Road Accident Fund Act, 1996 (Act No. 56 of 1996) and RAF Amendment Act 2005 (Act No. 19 of 2005). for loss or damage wrongfully caused by the driving of a motor vehicle limited to bodily injuries and deaths and provide compulsory cover of all users of South African roads against injuries sustained or death arising from accidents involving motor vehicles within borders of South Africa. The entity provides support in respect of future treatment and rehabilitation which included future medical expenses, rehabilitation centre costs, assistive devices, treatments and other related goods and services.

Ms Jabavu agreed with the Deputy Minister that the RAF was in trouble financially. She reported to the Committee that there was about +-R15 billion of requested claims that were processed and ready to be paid but were queuing because the RAF cannot pay them.

The main revenue of the RAF came from the fuel levy and about 92% of costs go towards the payment of claims. The RAF receives about R3.5 million from the fuel levy per month. Costs are driven by the number and severity of accidents that were experienced on the road - the more a claimant is injured the more entity pays.

On performance achievements, the RAF compared its performance achievements from the 2014/15 financial year to the 2018/19 financial year. In 2014/15, it achieved 84%, 2015/16: 90%, 2016/17: 90%, 2017/18: 91% and there was a dropdown to 77% in 2018/19 because there was a shortage in medical experts. The entity went through the tender process and appointed the experts.

Ms Jabavu presented the performance of the RAF in 2018/19 at a glance (see document).

She then outlined some of the seven apex priorities as announced by the President which were relevant to the business of the RAF, namely, economic transformation and job creation, education, skills and health, social cohesion and safe communities and a capable, ethical and developmental state. Indicators associated with the priorities were discussed.

There were 86 210 claimants engaged through community outreach in 2019/20. There was also a transition from the Road Accident Fund (RAF) to the Road Accident Benefit Scheme (RABS). 200 unemployed youth had received driver’s licences and Public Driver Permits (PDP). 3 500 caregivers were employed for servicing injured claimants and there were treatment plans introduced for all serious injuries.

Moving to challenges and mitigations, challenges included:

-inadequate funding: cash constraints leading to non-payment of finalised claims; led to attachment of the RAF’s bank account and assets by sheriffs, removal and sale of its assets.

Mitigation measures: stringent cash flow management; improved efficiencies across business; promotion of direct claims to reduce third-party costs; detect fraud before payments are made and manage productivity and settlement of claims.

-continuation of the RAF dispensation based on unsustainable funding model

Mitigation: support Department of Transport with proposed policy changes  

Ms Jabavu outlined the 2019/20 APP according to the seven RAF strategic objectives, namely, efficient claims processing, providing accessible services, effective financial management, optimal ICT services, improved people management, RAF transformation and assured control environment (see document).

In conclusion, the 2015-2020 Strategic Plan and the 2019/20 APP was focused on preparing the future with emphasis on processing of claims in less time and enhancing the quality of claim processing, prudently managing available cash, ensuring good governance and management of the business and motivating for additional funding to meet real current demand.

Discussion

Mr T Brauteseth (DA, KZN) said his simple question was how the entity got where it was in terms of accidents rate. The RAF was collecting a lot of extra money from the fuel levy fund. The organogram shows the fuel levy, grants and investments but the CEO referred to R3.5 million from the fuel levy per month making no mention of grants and investments.

He asked if the RAF was telling the Committee that South Africans were having far too many accidents and the entity was out stripping its ability to raise the money to look after them. Was this really the problem?  

Mr M Rayi (ANC, Eastern Cape) was very concerned that the Committee was dealing with a final draft APP. He asked why the APP was a final draft and not the full audited APP. He compared the document given to Members and the presentation and discovered those in terms of finances (income statements, balance sheet and cash flow), the documents were totally different.  Usually when the Committee deals with the APPs, one would have years that were before the financial year under review and it would state the APP was audited. The RAF’s APP that the Committee was now dealing with did not state it was audited.

Looking at the foreword of the Minister on the document before the presentation, the matter of R1.4 billion worth of fraudulent claims was identified and it was said 10 people were arrested. He asked for the status update on the people arrested.

On the matter of backlogs in terms of claims, he asked what the turnaround time to process claims was. The Member was interested to know the challenges of the RAF and how it was going to deal with the challenges.   There were also other programmes such as the youth driver development programme and caregivers employed. The NCOP always insisted that departments and entities should give a provincial spread in terms programmes. He then asked if the RAF can provide the provincial breakdown.

Mr Rayi was concerned that two critical positions were vacant, namely, the CEO and the CFO. He asked if the RAF could indicate how long these positions were vacant, what the effect was with regards to administration and finances of the entity and when are they going to be filled.

Mr Rayi struggled to find the actual programmes of the RAF in the APP. Usually one would see programme one: administration under which fell human resources, finances etc and percentages would be displayed for vacancies, employees with disabilities etc but the RAF presentation did not mention and also did not mention women representation at a senior management level. What was the RAF’s audit outcome for the 2017/18 financial year?

Ms B Mathevula (EFF, Limpopo) said the RAF had not mentioned anything about strategic plans that were put in place to ensure that community centres are all over municipalities. On permanent employment, she asked how many women and people living with disabilities were employed so far. She asked if caregivers were employed permanently or temporary.  Was the employment aligned with the minimum wage or how much was paid per caregiver?

Mr M Dangor (ANC, Gauteng) asked if the RAF should be providing services instead of giving benefits to the people who are actually involved in accidents. He suggested more consideration on caregivers instead of funding going back to beneficiaries.

Ms S Boshoff  (DA, Mpumalanga) commented on the Bill previously tabled in the National Assembly noting that the RAF ranked on 38 with regard to road fatalities and she finds it highly inappropriate to contemplate introduction of a new Bill where there would be a no-fault system. There was no way that a person that caused an accident could walk away without being held liable for the accident caused – this could be seen as human rights violation because the rights of the victim were taken away. This could also create more litigation against RABS in such an incident.  

Ms Boshoff said the fact that the RAF wanted to introduce the system where one kept a “salary” of R3 500 also does not bode well for example in the case of losing or injuring a leg.  Given that minors qualify for compensation when they reach the age of 18, who pays for the medical bills etc when an accident was caused and the minor was injured and does not have a medical scheme?

Looking at the Department of Transport, 35% of the increased fuel levy would only be a starting point but there were many more taxes to come with little offerings in return - this was something to be discussed. Currently, the RAF sat on R215 billion liabilities and Finance Minister said the fuel levy increase was not enough to match the liability. How is the Committee going to match that liability? The Committee had not spoken about anything with regards to that. How would the RAF address all matters spoken to in the media and other platforms?

Mr E Landsman (ANC, North West) agreed with Mr Brauteseth that the money cannot reach the population’s demands and the needs. He said there were instances of corruption and negligence. The matter of who to pay and not pay was a long court battle and some things were not even resolved. He used the example of his father who was a claimant who fought in court for 19 years and got paid after 21 years.

On the RAF’s debt, he asked if the entity had a plan of covering, fundraising or coming up with methods of improving the system because he does not foresee the Committee addressing the problem here and there. The amounts of liabilities were too high especially as people continued to cause accidents. He agreed the Committee cannot cover everything but there was a need to come up with a system to say what was needed the most, what are the criteria to be used and what determined the system most needed. The Committee is there to support entities however the Committee is shocked by budget constrains given that accidents still occurred daily.

The Chairperson reiterated an earlier point that the NCOP mainly focuses on provincial matters. He then proposed a breakdown from each province in terms of fuel levy and claims received on a daily basis. Regarding claims, he asked if there was a way of managing attachments using the legal associations.

Response

On the Road Accident Benefit Scheme (RABS) Bill, Deputy Minister Magadzi replied that she was afraid to venture into the Bill because a week or two ago she was answering court papers with respect to how Members engaged with the Bill in the National Assembly. She said she would have loved to talk to the Committee about the matters infused.  

Ms Jabavu responded to the question on high rate of accidents confirming that, as a Member earlier pointed out, SA ranks 38th in the world in terms of accidents. She said the RAF is a victim of its own success.  She pointed out there were programmes where the RAF would go out and sensitise people about its services. Almost every weekend, there was a province that was out there either in the form of the RAF on the road or just small activations. Focusing on the provinces, she was concerned by the rate of accidents in Limpopo which she found scary.

On sustainability, the RAF was one of the many entities within the transport family. Other entities had different responsibilities such as enforcement i.e. Road Traffic Management Corporation (RTMC) that looks for prevention because law enforcement and prevention were critical. The RAF had a small element that looked at prevention but the core mandate of the RAF was compensation. Once a claim and accident happened, there was no way the entity can turn people away. As long as the accident rate in South Africa increased, the deficit will continue increasing.

On the ten people arrested, the RAF normally works very closely with law enforcement agencies. The Chief Strategy Officer will comment on the status.

Ms Jabavu acknowledged the numbers of people with disabilities employed was low and emphasised the nature of the RAF business was to lead by example. The RAF was going to ensure it brings people with disabilities on board.

She responded that on the unqualified audit, the RAF would have loved to have a qualified audit because in the last two years it had unqualified audits. 

Ms Jabavu replied that each time the RAF goes to community outreach programmes, because it is partnered with municipalities, those  municipalities would asked the RAF to have a representative in each municipality, but the RAF was unable to do that because it had no resources. Even in the 97 hospitals where it had a footprint, the RAF would have loved to be in more hospitals and have more people per hospital especially in bigger hospitals but it had no resources. As a country, there was a crisis in terms of additional resources. She confirmed the presence of the RAF in hospitals is well known and the RAF also partnered with CEOs of the hospitals.

Ms Jabavu said the RAF was going to provide the Committee with the breakdown in terms of the number of women employed and how the caregivers are getting paid. Claimants would have a caregiver based on the level of injuries and support needed. The RAF would also provide the Committee with the breakdown of claims and fuel levy collected per province.

On bank attachments, the RAF had an agreement with the attorneys on how to pay per month. There were delinquent lawyers who would reach an agreement with the RAF and still go to the back. The RAF also had a relationship with the law society but it was just the attorneys that were difficult. There was no way the bank cannot pay once the court order was there.

Mr Victor Songelwa, Acting Chief Financial Officer, RAF, responded on grants and investment noting that the RAF was hardly receiving grants - the last grant it received was in 2007. Grants were ad hoc when the deficit was showing its head – RAF instead depended on the fuel levy. Each year the RAF does make motivation to National Treasury via the Department of Transport. One slide was added in the presentation on the income statement which breaks down claims and liabilities.

Ms Jabavu responded on vacant positions saying the RAF started with interviews for the CFO. The position of CPO was also created because the budget of the tenders that the RAF had were huge. Interviews of the CPO would begin in early September 2019.

Ms Mantiti Kola, Chief Strategy Officer, RAF, replied that the APP was a written final draft. In terms of the National Treasury planning cycle, on the old process, the RAF had three incidences where it submitted the APP - the first draft was in August, second draft in November and the final in January. This year, the TAF submitted the final APP in January as per the framework but one was also submitted in July post-elections however the final APP was derived from the old framework. The RAF will present this year’s upcoming APP in October.

On the ten people arrested, the RAF had a team of about 90 people who conduct investigations internally and externally. Once the report was concluded, if there was a criminal element, the RAF forwards the case to the police.

She confirmed that the RAF had a footprint in various provinces - five years ago, there were no customer service centres in Mmabatho, Bloemfontein, Polokwane and Nelspruit but customer service centres were established and then the demand was greater. The RAF started partnering with the community service centres as a new programme in some municipalities such as Vembe, Mamelodi, Beaufort West and Newcastle. Above this, the RAF mobile vans were helping in areas far from regional offices, customer service centres and community service centres.

Deputy Minister Mgadzi said the Committee needed to put its eyes on the radar because there were a number of challenges that the RAF had already indicated financially. She complimented the good work that was done by the RAF particularly the “RAF on the Road”. As the Committee dealt with provinces, perhaps the RAF should provide information on where the programmes were and when it takes place so that the Committee would able to see the work of the RAF. She expressed joy at attending the Committee for the first time.

The Chairperson also expressed his gratitude to the Deputy Minster, the RAF team and the Committee Members.

The meeting was adjourned.

Share this page: