Transport Minister Fikile Mbalula is optimistic they are on the right path to turn the troubled Road Accident Fund (RAF) into a sustainable and equitable road accident scheme.
For years, the RAF has struggled with financial woes, but during a media briefing on Monday, Mbalula said that the turnaround strategy has been yielding results.
Mbalula said the RAF had reduced administrative costs of more than R7-billion during the 2020/21 financial year for the first time in decades.
The state-owned company has been reporting consecutive annual deficits since 1981, the same year it was declared technically insolvent.
Mbalula said the entity operated on a financially unsustainable model for decades, becoming the government's contingent liability.
When the Road Accident Fund Act of 1996 came into effect on 9 May 1997, the annual deficit had grown to R886-million.
In 2005, the annual deficit had risen to R1.2-billion.
"This astronomical increase in the annual deficit continued until the historic R3.2-billion surplus reported for the period ended on 31 March 2021. The RAF has, for the first time in many years, posted a surplus of R3.2-billion."
Mbalula said this was a dramatic shift from an R5.2-billion deficit the previous year.
"Investment income has increased from R62-million to R157-million. Finance costs have decreased by 62%, year-on-year, from R263-million to R90-million. Writs of execution have reduced by more than 50%, through a legal strategy and stratification of the debt book.
"The short-term liability has reduced by R2.2-billion, from R17-billion to R14.8-billion. Current assets have increased, including cash position, by more than R4-billion," Mbalula added.
The RAF collects R43-billion a year through the fuel levy, with only R26-billion of its annual revenue spent on actual compensation.
"About R17-billion is spent on administrative costs annually. Of this, R10.6-billion goes to legal fees. More than R2-billion is spent on medical costs.
"The situation is further exacerbated by a number of fraudulent claims the RAF has to contend with. The RAF model was centred on litigation, with 99% of the claims settled just before trial. The legal costs had been growing exponentially over the years from R800-million in 2008 to R10.6-billion in 2019," Mbalula said.