The Motor Vehicle Accident Fund (MVA) has attributed its positive performance in 2014 to good investment returns and prudent management of expenses. The fund recorded a net surplus of P92.8 million in 2014 compared to P142.9 million in 2013.
Led by Chief Executive Officer (CEO) Cross Kgosidiile, MVA stated in its latest annual report for 2014 that it continues to leverage on its strong financial position to fulfil its commitment whilst ensuring sustainability. The Fund’s total assets increased from P3.1 billion in 2013 to P3.5 billion in 2014 and the increase was a result of the notable performance of both local equities and offshore investments. Its local equities increased from P1 223.1 million in 2013 to P1 358.3 million in 2014.
Offshore investments increased by P111.6 million from P994.5 million in 2013 to P1 106.0 million in 2014. Reserves increased from P2.5 billion in 2013 to P2.7 billion in 2014 while non-current liabilities increased from P448.7 million in 2013 to P529 million in 2014.
“The Fund is will improve the handling of clinical and welfare data of claimants and ensure effective management of cases. This project is expected to be completed in 2016,” said Kgosidiile.
MVA’s total comprehensive income of P164.8 million was recorded during the year compared to P423.2 million recorded in 2013. The decrease, which impacted the net surplus, was largely driven by a decrease in net fair value on available for sale investments, less foreign exchange gains to offshore investments and increase in claims expenses.
“The Fund focused on reducing fatalities and injuries on roads in line with the pillars of UN for road safety 2011-2020,” stated Kgosidiile in the report.
On costs, total expenses increased by P55.5 million from P189.6 million recorded in 2013 to P245.1 million in 2014. This was driven by an increase in claims expenses attributable mainly to rising medical costs. The net increase in the claims provision rose from P76.0 million in 2013 to P122.4 million in 2014.MVA stated that the increase in medical costs was mainly driven by an increase in high value claims and the shift in the claims profile.
“The Fund relies on investments income to meet its long term obligations because the rising claims costs are not fully paid from the fuel levy income,” said MVA.
Kgosidiile stated that there is also greater need to increase participation in road safety operations, adding that it will participate in road maintenance at accident prone spots to improve accident free usage on major roads in an effort to mitigate crashes. He further stated that it is significant that fewer road crashes were recorded in Botswana in 2014 than in the year before, the total costs being 16, 641 and 17, 062 respectively, a drop of 25 percent.