UK Visa Bond: The Economic Implications

The United Kingdom plans to run a pilot scheme to secure financial bonds of £3,000 each, from selected first-time visitors from a list of six commonwealth countries, including Nigeria. The UK plans to run the project for 12 months, from November 2013.

All the countries, at the receiving end, are crying foul especially India and Nigeria. The UK would be imposing a bond on immigrants, compelling them to make this down payment in lieu of their non-violation of the immigration laws. The £3,000 bond is a prerequisite for the issuance of the six month visa.

Countries that Made the List
Below are the countries that have been handpicked for the pilot of the UK visa bond:

  • Bangladesh
  • Ghana
  • India
  • Nigeria
  • Pakistan
  • Sri Lanka

The claim is that these countries were chosen because when the volume of visa applications was weighed, against the volume of visa term violations, these countries were top on the list. Of course, the High Commissions found a milder way of relating this information so as not to further offend the sensibilities of the affected nations.
The claim, from some quarters, is that the policy is still under review, but Nigeria cannot afford to believe that, if the new era is to commence in few weeks time.

As for India, a country which is loudly condemning the policy, the bond approach is said to be a familiar measure as Indian companies do the same to their employees. The country is said to be famous for its ‘Bonded Labour.’ The claim is that Indian companies, especially, IT companies would keep six months to one year salary equivalent as ‘bond.’

British Government’s Claims
The British government claims that the move is aimed at curbing illegal immigration into the country. Visa violations and the issue of illegal immigrants are major concerns. Nonetheless, the plan seems to be more directed by the UK Government’s domestic agenda to curb immigration all together. The increasing demand for stricter immigration laws and closer watch over the influx and exit of legal and illegal aliens into the UK has influenced elections a great deal, and the immigration policies of parties is a significant determinant of what would happen at the polls.

A closer look at the timetable for the commencement of the UK visa bond, vis-a-vis the oncoming elections, would be quite revealing. The visa bond is not only going to deliver political benefits, it would be delivering financial benefits as well. We expect that the idea is also to deliver security benefits; by restraining the entry to potential fundamentalists and terrorist materials. If you look at the list of the six selected countries, you would notice that, apart from Ghana, the five other countries on the list have large fraction of non-Christian populations.

What the UK Stands to Benefit
The UK visa bond would be sponging off huge (no-interest) loans from immigrants into its coffers. Look at the figures; the British High Commission confirmed that over 180,000 Nigerians apply to visit the UK every year. These individuals are subjected to visa fees of about ₦20,000.00 which translates to over ₦3.6 billion, yearly. That is quite an income from visa fees alone.

But we all know that is not all. Nigerians seeking to travel to the UK, engaging travel agents, pay those agents other levies, usually totalling over ₦50,000.00. So, assuming 50% of the Nigerian UK visa applicants are first-time applicants, and they make the £3,000 new visa bond payment, that would be an additional £270 million (about ₦70 billion). Calculate the equivalent from the other five countries and sum it up. That is a huge interest-free, six months loan. Bear in mind that these listed countries are not developed countries. These individuals are grappling with inflation and harsh economies.

It is quite curious that the former British colonies are subjected to this, after all, that was ‘extracted’ from them in the very lucrative colonial era. Yet, francophone countries, from which the British extracted quite less, and even other politically more volatile Arab states, have been exempted from the visa bond.

Ironically, several foreign missions in the country are very clear about the quality of naira denominations they would accept for their receipted fee. Perhaps, the visa bond collectors would also be stating such a requirement.

The Looming Economic Implications
If this UK visa bond goes through, chances are that others would follow suit and demand similar bond payments from Nigerians. If Nigeria retaliates with a visa bond of its own, as Ambassador Gbenga Ashiru warned, what price tag would it carry that would match what Nigerians are forced to pay; especially, when you look at the number of Nigerians going in and out of the UK? The £5,000 Ambassador Ashiru threatened may not be sufficient.

The truth is that, all that bravado does not mean very much in the wake of the Minister of Aviation, Stella Oduah, sudden quietness after she had threatened to ‘shake the heavens’ over the oppressive airfares British Airways was slamming on Nigerians, especially, in comparison to the lower fares it charged neighbouring countries, like Ghana. Today, she is silent and Nigerians are still paying British Airways through their noses.

Statistics has it that Nigerians spend over ₦80 billion ($500 million), annually, on school fees and travel fees for the UK educational institutions. And as the standard of education in Nigeria continues to fall, even as the Academic Staff Union of Universities (ASUU) battles the Federal Government, the amount of money Nigerians spend to study in the UK would, certainly, rise.

Also, the beneficiaries of this sacrifice are, usually, reluctant to come back to Nigeria. Unemployment, poor infrastructure and the foreign exchange valuation of the nation’s wage structure will likely keep them as UK visa bond loan providers, as they would rather work abroad.

Effect on Businesses
India would feel the pinch. One major reason is that its software exporters have offices in the UK. Not all these companies are large. Some are medium and all of them would have to shell out the £3,000 bond for each of their staff visiting the UK for the first time.

Ganesh Natarajan, Vice-Chairman and CEO, Zensar Technologies, stated that, at any point in time, his company had 10 people on temporary visa.

As for Nigeria, which is predominantly a trading country, the £3,000 would be factored into the price of commodities coming into the country, from the UK. It would be factored in as travel cost, because it would not be refunded until the trader returns to the country. So, it cannot be used for business by the trader. The merchant has been deprived of the profit that £3,000 would have earned and someone has to pay for that; the consumers. A price hike of goods imported from the UK is imminent.

This hike could spark a chain reaction with goods imported from other countries, as traders turn to them to get away from visa bond demands. It should be noted that, a large percentage of consumer goods in the country are imported; even toothpicks, chips and, shamefully, petroleum products.

Reduction in Overseas Training
The UK visa bond would also make it more expensive for businesses to send their employees to the UK for training. It would make it more expensive for them to bring in heavy machinery. It would make it more expensive for them to open and sustain branches in the UK. This would get worse if the naira takes another plunge as against the pound sterling.

For exports to the UK, this is a sad story because exportation in Nigeria is still just a seedling and should not be subjected to such ‘harsh weather.’ You would have to acknowledge that exportation often requires company workers to commute with the products, or to stay abroad to track, receive and deliver them. The UK visa bond would make this more expensive. The £3,000 bond is a lot of money for start-ups to cough out and the 6-month delay, before it is refunded, is enough to cripple many start-ups. The UK visa bond is a stab in the back of ‘free trade.’

The Backlash for the UK
The UK visa bond will rake in, all the above mentioned, benefits, except one. That exception happens to be the ‘official reason’ for the visa bond.

The visa bond would rake in the money, and would likely enable the ruling party score some points with its electorate. It would even reduce the volume of immigrants from the countries singled out. But there is a good chance that it will fall short with regards to curbing illegal immigration.

The policy will cut down the volume of visitors to the UK for holidays, business, education and other genuine reasons, as these visitors would begin to look at other alternatives. Dubai is very popular for trade because of its policies. Other countries will reap from the tourism harvest thrown out by the UK.

However, with the £3,000 visa bond, the UK is not only telling genuine travellers, “We want to give you a visa but you cannot afford it;” It is also telling illegal immigrants, “You can stay illegally if you can afford to lose £3,000.”

Like Nigeria, India has acquired a reputation as a significant supplier of visa violators. It is alleged that a significant number of Indian emigrants including students never return home; so much so that the NRI (Non Resident Indians) visa is teased in some quarters as ‘Non Returning Indian.’

Critics also point out that the bill has a lot of loopholes. This would boost the illegal market. The illegal market would charge more and only those who are going to the UK with ulterior motives would have it easy. The listed countries are not the only ones with high influx/visa violator volumes. It is curious that countries like Romania and Poland are not on the list. Perhaps, it might be because they are European countries. Nonetheless, the UK insists that the visa bond pudding was not spiced with racism.

The visa bond will affect the UK’s bilateral relations with these countries, but that is, obviously, the least of its concerns. This is pretty being short-sighted. These countries, like India, are beginning to build stronger ties with other European nations. What’s more, these countries belong to the emerging economies of the near and short-distant future.