The responsibility of the Road Fund Administration (RFA) is to collect Road User Charges (RUCs) and to manage the Road Fund. These funds are distributed to institutions, as identified in the RFA Act, Act 18 of 1999 to maintain the Namibian road network, carry out Traffic Law Enforcement (TLE) and to ensure road safety. These institutions are Roads Authority, 57 Local Authorities, 14 Regional Councils, Nampol Traffic, City Police Traffic, Swakopmund Traffic, Walvis Bay Traffic, Otjiwarongo Traffic, Keetmanshoop Traffic and the National Road Safety Council (NRSC).
The Namibian Road User Charging System (RUCS) was developed with the aim to economically recover the full cost of road expenditure from road users in an equitable manner. It is based on the ‘user-pay principle’. This means that road users pay for the road used to cover the full cost of road infrastructure maintenance from the RUCs revenue. The Road User Charges collected are as follows:
Cross-Border Charges (CBC)
Mass Distance Charges (MDC)
Abnormal Load Fees
Annual Registration and Licence
Annually, RFA collects revenue in excess of N$2.4billion per annum from RUCs. With an expanded road network and aging network, this revenue is not and will not be sufficient in the future to fund the road network at optimum levels. The gap between what is optimally required and what is collected is in the order of N$2 billion. This excludes the backlog funding requirements of about N$500 million for urban roads and streets.
The RFA’s Strategic Plans are mapped out in the Integrated Strategic Business Plan (ISBP) 2019-2024 document. As part of the planning process, we implement a five-year rolling budget which is reviewed annually in a participatory process that involves stakeholders from all Approved Authorities and other key institutions, of which the engagement was held on 01 November 2022. Since its inception, RFA has not received government funding.
The RFA Act was passed in 1999 and has not been amended for 23 years. Since the Act was passed, the road sector has developed substantially, and certain issues have become necessary to be addressed.
The need was identified to exempt foreign registered vehicles from the entry fee in certain defined circumstances. The CEO may subject to the policies of the Board grant exemptions in the case of cross-border military exercises, cross-border transport of medical staff or patients, temporary access to Namibia by any member of the police of any neighbouring country, and in any other appropriate circumstances approved by the Board of the RFA.
The amendment Bill deals with the fact that NaTIS, which is the vehicle license traffic management system that is used, is owed a debt that is not recoverable. An amnesty has previously been granted, which we found was not done correctly in terms of legislation hence the request that this is inserted into the Act for this accumulated debt to be written off. The Bill before parliament does contain provisions that are absent in our Act which will assist the public who are faced with challenges in terms of the accumulation of interest or penalties on their license fees applicable to estates, liquidated companies, or people in financial distress which we have seen has happened after COVID 19 and the economic downturn.
We wish to make it clear that this is a standalone matter, and it has no bearing on the tolling matter. RFA intends to address the number of requests we receive from Namibians in distress with this Bill and extend a helping hand to our neighbouring countries that require entry for the reasons set out above.
The RFA has adopted the Corporate Governance Code for Namibia, or NamCode, which is a list of best practice principles to assist and guide RFA leadership to make the right choices. Strong governance driven by sound leadership and ethical principles remains crucial to the success of the RFA. “Building and maintaining RFA’s reputation and trust are vital. We can safely claim that the RFA ranks among the top enterprises in Namibia in all aspects of corporate governance and compliance.” The RFA has obtained unqualified audit opinions successively for the past eight years, consistent with prudent financial management and internal control standards. Kindly visit our website www.rfanam.com.na to download our up-to-date integrated annual reports and annual financial statements. RFA has continued to add value to the road users, and each and every cent is fully accounted for.
Conditions of the road network: RFA is required to fully fund the maintenance of the approximately 49,000 km, valued at N$ 120 billion of which 8,260 km are bitumen surfaced (paved), 39,249 km are gravel (unpaved), and 189 km are unpaved salt roads. Due to recurrent underfunding over the past 15 years, the condition and quality of the road network continue to deteriorate. About 32% of bitumen surfaced roads are older than 10 years and are no longer able to protect the surface from water penetration and provide the required skid resistance for safer roads, less than 10% is in poor to very poor conditions, and most of these roads have already reached its lifespan. Therefore, there is a need for extensive rehabilitation at a cost of N$ 5.5 million per km. Similarly, the condition of the gravel road network rapidly deteriorated over the past decade, whereby 49% of the gravel roads are in poor to very poor conditions. To restore the gravel road network, including those leading to tourist destinations, an investment of at least N$ 675 million per year is required for the next five years to reduce the backlog.
Since inception, the RFA has invested more than N$ 30 billion in road infrastructure that contributed to Namibia’s economic and social development. This massive investment has led to Namibia being ranked number one for five consecutive years in Africa and 23 in the world in terms of quality and access to road infrastructure.
Road transport carries 90% of economic goods in Namibia, therefore allowing our road network to fail, will fail the whole economy. The major economic benefits for road users would firstly be savings in vehicle operating costs due to good pavement surfaces and secondly safety benefits due to providing a safer road and roadway environment. These costs are estimated at N$0.21/km and N$1.65/km for light and heavy vehicles, respectively. Which amounts to N$1.1bn annually.
RFA’s adherence to sustainable revenue collection, is evidently supported by the lowest fuel levy rate of N$ 1,48 per liter within Southern Africa Development Community (SADC). The fuel levy per liter of petrol and diesel grew over the years with only N$ 0.68 in 2000 to N$ 1,48 in 2022. Thus, the RFA fuel levy only grew by N$ 0,80 over the last 22 years which is very low comparative to regional road fund’s levies that are double the RFA fuel levy. In comparative terms, RSA fuel levy accruing for road infrastructure is about R3.90 per liter whilst Lesotho is about R3.50 per liter. This is in addition to the toll fees charged by both countries.
Worldwide Road authorities and road fund agencies are under financial strain to maintain aging road networks with rapidly shrinking resources, resulting in regular maintenance funding gaps and a systematic deterioration of the road infrastructure. As vehicle fuel efficiency improves, coupled with the proliferation of new electric vehicles, social trends such as carpooling, Uber and Taxify; fuel demand has declined and will eventually phase out completely.
Consequently, modern vehicles are travelling longer distances, using less fuel and causing more wear and tear on the national road network, resulting in reduced fuel levy revenue and increasing funding deficits. Eventually, fuel demand will phase out and thus make the current funding model unsustainable. Most vehicle manufacturers have already adopted stringent decarbonization agenda and committed to phasing out combustion engines from the year 2035 (13 years from now).
Assessing, planning, and management of risks and threats enable better planning. RFA is no exception; in fact, it has been part of the RFA culture for the good part of a decade now. Therefore, we must plan ahead to ensure organizational sustainability and relentless execution of our institutional mandate. It is now common knowledge that the RUCs revenue is threatened by the much-needed technological advancements from car manufacturers aimed at curbing carbon emissions and reversing global warming, equally so to remain relevant, RFA is challenged to find solutions to the oncoming threat of the diminishing revenue. As part of assessing how to augment diminishing revenue from the fuel levy, management had to interrogate alternative ideas, including tolling.
Tolling: as part of forward-looking better planning, RFA commissioned a feasibility study three years ago with a similar study done in 2008 by the Roads Authority. The study informed that tolling can be sustainably introduced on our road network.
South Africa introduced tolling concepts more than 50 to 60 years ago, with modern tolling introduced in 1983, and those tollings are not being scrapped as some of the media articles seem to suggest. E-tolls limited to Gauteng Province, in our humble understanding are the only programme being scrapped. The rest of non-e-tolls Tolling Programme continues across all provinces of RSA, and there are over 59 Toll Plaza’s across the RSA road network. In recent years, the following countries in SADC: Zambia, Malawi, Zimbabwe, Mozambique, Angola has introduced tolling to fund the maintenance of their roads.
It should be understood that, at this point in terms of tolling, a study was conducted, and Cabinet has given approval for public consultations, which are planned within the next 6 months. It is, therefore, not a foregone conclusion that implementation will take place, but what is certain is that the value add to road users will far outweigh the cost of driving on badly maintained roads.
RFA continues to add value to our road users by funding roads that enable logistical connections of industries, free movement of people, and connecting Namibia to the rest of Africa. Indirectly well-maintained roads contribute to economic growth and job creation.
Mr Ali Ipinge
Chief Executive Officer
Road Fund Administration (RFA)
Tel: 061- 433 3000