INCREASED revenue and a drop in operational costs helped the Motor Vehicle Accident Fund (MVAF) of Namibia to record a draft surplus of N$36 million for the financial year ended March 2012 – its first surplus in three financial years.
The fund recorded actual deficits of N$38 million in the previous book year, N$46 million in 2009-10 and N$318 million in 2008-09.
Announcing the draft financial results for 2011-12 at an MVAF briefing on Friday, chief financial officer James Nyandoro said revenue increased to N$341 million from N$291 million during the previous book year. Operational costs dropped from N$41 million during to 2010-11 to N$34 million.
The MVAF, however, remained technically insolvent to the tune of N$498 million, with total liabilities of N$713 million outstripping total assets of N$215 million at the end of March 2012.
Nyandoro stressed that MVAF was “technically insolvent and not technically bankrupt”. “If the MVAF was technically bankrupt, we wouldn't have been able to pay our suppliers – and we've always been able to pay our suppliers,” he said.
The MVAF's predicament stems from dragging amendments to legislation to insufficient fuel levies. Also still haunting it is the settlement the MVAF has to pay to the four Belgian survivors of the fatal accident former world champion boxer Harry Simon caused at the coast in November 2002.
The crash, in which a father and his baby daughter died, increased the MVAF's liabilities by N$150 million, Nyandoro said. Paid over time, it will eventually cost the MVAF N$250 million, he said.
Compounding the MVAF's financial woes is the fact that the fund has had to survive without sufficient fuel levies since 2009-10, Nyandoro said.
For 2011-12, the MVAF requested an increase of 16,1 cents per litre in the fuel levy, based on actuarial recommendations. This would have pushed up its total levy to 51,8 cents per litre. Government, however, granted an increase of only six cents a litre, leaving the MVAF with a shortfall over N$89 million for the financial year, Nyandoro said.
The MVAF has suffered an accumulated shortfall of N$248,4 million due to insufficient fuel levies since 2007-08, he said.
Also contributing to the MVAF's financial difficulties are road crashes “which have remained high over the period, resulting in high claims”, Nyandoro said.
During the past financial year, a total number of 2 135 accidents (2 902:2011) were registered at the MVAF, claiming 362 lives (492:2011).
In total, 3 651 people were injured, down from 5 659 in 2011. The MAVF had to pay out N$175 million in total, up from N$149 million in 2011.
Nyandoro said the MVAF has embarked on a “quantum leap” strategy to turn the MVAF around by 2017. If successful, this should see the accumulated deficit of N$498 million of 2012 change to a surplus of N$91 million by 2017.
Part of the strategy is to charge foreign vehicles entering into Namibia, introduce a surcharge on annual licenses of vehicles and to remove the injury grant, Nyandoro said.