VFS a Profiteering Project, Ripping Migrants

Creating monopolies, charging exorbitant fees and making money out of desperate people is never shrewd scrupulous business practice. I sometimes run against the tide or do I resuscitate it? We have all we want here and do not travel a lot but that should never be a reason to pinch from our visitors. It is unuBuntu like. Traditions gone to the dogs! Well, I am not saying investors should not make money but how they make it should be just and reasonable. Our policies and social services fees should have a human and social face. With all due respect, we know without doubt that frugal engineering in ecommerce, particularly egovernment, does not increase costs. If anything, it reduces the cost to zero.

In South Africa, VFS occupy a space that had debilitating apache reminiscence for foreign nationals living in the country. The visa service delivery by the department of home affairs (DHA) was and is to a great extent pathetic. DHA officers were casual and lethargic in serving the public, information asymmetry and disinformation was rampant all bent on confusing the applicants in order to create lucrative breeding ground for corruption. DHA offices were characterized with unending long queues and prowling scamsters.

The introduction of an Internet based self-service visa application platform by VFS mid this year to circumvent queuing was a welcome development. The platform give applicants, at most, full control of the initial application process. It is convenient and quite a civilized service delivery channel for a country so expansive. It aids planning, time management and reduces unnecessary loss of productive time while waiting in queues.

Apart from the above positives and other downstream benefits for increased use of Internet cafés and banking fees, the VFS business model in South Africa is a total rip-off of poor migrants. For once the system did not remove the paper based application system. After applying online one needs to print the completed application form, attach all required paper based documents, make an appointment for an interview with immigration officers where upon biometric details are collected, and paper application form and attached documents are submitted. The system is still entirely paper based with no internal fallback capabilities if attached supporting documents are misplaced or lost.

Once the application document is submitted to DHA, VFS loses control of the time to application outcome. In fact, it is relegated to a non-interactive document movement tracker a function that was available on the DHA website albeit with poor back office service. Moreso some performance targets are not specific, for example, permanent residence permit applications take anything from an uncapped minimum of eight (8) months. If the first interview was thorough enough to screen ineligible applications the adjudication process would be timely. The fact that this is a money spinning project means thoroughness at the point of application (purchase) will reduce revenue. This is the reason we see a recycling of rejected applications.

There is no doubt that VFS added a pinch of value to the visa application process. However, the value they brought to the table is disproportionate to the whooping melodramatic 89% increase in the average cost of visa service fees. The rand is not a paper currency, it is a solid convertible hard currency. This is authorized inflation and day light profiteering which unnecessarily increases the cost of doing business in South Africa and making travel an unreachable luxury. Whatever the investment the company made does not justify the exorbitant additional fees they charge. To put the rip-off into perspective, imagine the 250 000 Zimbabweans renewing permits each paying R870 (R420 for DHA, R380 for VFS and R70 for biometric services). Whilst this maybe an outlier, the fact is that VFS will effortlessly receive R95million just this October and November a big feat enough to resuscitate the ailing post office and save jobs from the looming retrenchments had enough foresight been applied in the tendering process. A public private partnership (PPP) would have been the most ideal vehicle to ensure eventual transfer of technology, creation and saving of jobs. As it is, VFS has created a monopoly that has eliminated all visa facilitation companies and killed employment. It is uncommon for governments to resuscitate post offices by assigning them expanded government services like home affairs and travel functions.

It is incontestable that VFS offers a turnkey solution replicated with minor changes for all the countries it serves. It is undeniable that the countries use shared cloud based databases. The cost savings that result from such a frugal innovation does not warrant the fees that VFS charges. Pursuant to that, it would be national interest to know VFS’s cost structure to at least justify its charges and how it is investing its windfall to prove any benefit to the country.

If egovernment is going to create reckless monopolies with negative externalities of this magnitude, then we must go back to the drawing board. The real sustainable value of this service delivery channel is in reducing both the cost, processing and decision time. Surely to charge 89% more fees on a basic service which also shifted the cost of data capturing and printing to applicants while processing and decision time remained constant is an insult to civilized pricing models. On top of that VFS may profit from free biometric and personal details captured by the system.

Either DHA or VFS or both should take a significant cut of their charges to reflect electronic commerce, self-service savings and long turnaround time. Alternatively, they have to invite other players to party. In its current form, the service is in direct conflict to the sustainability revolution underway.

The point is not about who is served, it is about fair pricing, not a loot.

Source: www.lastmazambani.blogspot.com

Twitter: @LastMazambani

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