Visa middleman fights backlash

2014-07-06 15:00

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The new visa application contractor appointed by the department of home affairs is facing a tough crowd, not least because it is being allowed to charge a R1?350 fee that is up to 10 times what this service costs elsewhere.

Last month, VFS Global opened 11 visa application centres across South Africa after winning a five-year contract to handle the paperwork on the department’s behalf when foreign nationals apply for visas inside the country.

This follows a 2010 contract from the department that makes VFS its face in India, China, Nigeria, Angola, Democratic Republic of Congo, Ghana and Kenya.

The new contract is actually much smaller than the existing department’s tender, which involves VFS processing about 250?000 foreign visa applications a year for fees between R230 for Indians to R820 for Angolans.

But VFS’ new local operation is in damage control after an outcry by local immigration practitioners, who face redundancy, and visa applicants who have suddenly found a massive new fee at least doubling the cost of their applications.

VFS’ chief operations officer for Africa, Jiten Vyas, told City Press the backlash “really hit us”.

He is particularly wary of the word “monopoly” and seems almost glad to be able to point to massive contracts VFS recently lost to competitors.

VFS set up its first office in South Africa in 2004, acting as the face of the Australian government’s visa department. It has since lost that contract.

The backlash from existing immigration practitioners is familiar, according to Vyas.

The same thing happened in 2008 when VFS landed the UK contract to process Indian visa applicants, he says.

Ultimately, the number of old agents “may have reduced” but at the same time, that service industry continues to exist by advising and accompanying applicants who have to go through VFS, he says.

The “pretty standard” R1?350 fee is “not understood well”, according to him.

The fee, which was agreed on with the department, covers the cost of 11 new VFS centres across the country, the 100 or so staff needed as well as the provision of biometric services.

Globally, VFS services tend to be a lot cheaper.

The company generated about R2.4?billion in revenue from its contracts last year, according to its parent company’s annual report.

That revenue came off the back of 18?million visa applications, meaning average revenue was a relatively paltry R135 per application.

That figure and the R1?350 charged locally are “not comparable at all”, says Vyas.

According to him, the price follows the complexity of the solution with regards to infrastructure, staff and the technologies requested.

“There are some contracts where there are very low requirements for these factors. In fact, for one major contract we do not even have an application centre.”

Due to accounting rules, the average revenue per application is also not the same as the average fee, he told City Press.

The new contract with the department lasts five years and promises about 100?000 applicants a year. That amounts to about R650?million in revenue or R135?million a year before income from additional services.

Additional services like passport deliveries and SMS notifications are part and parcel of the business model.?In many countries, VFS offers gold and platinum lounges that allow the rich to either skip queues or at least endure them in luxury. In four of the local offices, R500 gets you into the premium lounge. In effect, the fee quadruples the cost of the cheapest tourist visas and doubles the cost of a permanent residency application.

Home Affairs Minister Malusi Gigaba has dismissed questions around the new fee by insisting that foreign citizens applying for visas are in any case supposed to prove a certain income and that R1?350 is “actually nothing” in many foreign currencies.


.?One major international challenger is the European TLSContact, which was created in 2007 and bought out by French outsourcing giant Teleperformance in two transactions in 2010 and last year.

Contracts from France, Germany, the Netherlands, Italy and Switzerland followed.

Teleperformance recently won a coveted piece of diplomatic business away from VFS – the UK’s contract to process applications from the entire African continent, as well as the Australian contract.

South Africans need to go through Teleperformance if they want a UK, Australian or Swiss visa.

.?BLS International, another visa facilitator founded in India a few years after VFS, is currently the channel through which South Africans apply for visas to visit India.

BLS has scored a number of Indian government contracts to run visa centres worldwide and recently branched out with a handful of Danish contracts.

Since South Africans do not pay visa fees to go to India, the only cost is the small BLS fee of R48 plus whatever extras you add, which includes courier delivery of passports, SMS confirmations and the like.

.?Since 2001, the US has used CSC, a US company, to process visa applications from abroad, including applications from South Africa.

In South Africa, two small niche players have arisen as well:

.?Carpago was created by a group of French businessmen led by former Air France manager Paul Cabane in 2010 and now deals with South Africans looking for Shengen visas to travel to Italy or France.

.?A South African company called Intergate Visalink was created by four partners, also in 2010, and has the German embassy in South Africa as its flagship client.

It is an offshoot of a traditional immigration service company such as those that have protested against the department of home affairs outsourcing to VFS.

It is owned by one German and three South African partners. They charge South Africans applying for German Shengen visas a fee R285 on top of the €60 (R877) fee that the Germans charge.

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