The country's vision for the future is outstanding
The country's vision for the future is outstanding

How the UAE's caring leadership helps citizens overcome their debt problems



“A true leader thinks of his people as members of his own family. He cares for them and looks after them at all times.” This quote by the UAE's Founding Father, the late Sheikh Zayed, reflects a unique philosophy that adds a further dimension to the concept of leadership as commonly defined in the social sciences. The quote also reflects a special relationship between this country's rulers and its Emirati citizens. Examples of this humanitarian approach can be seen in the initiatives taken in recent years by the UAE’s wise leadership that have aimed to serve Emirati citizens, particularly the initiatives that relieve them of financial and social burdens.

My columns have often focused on the initiatives taken by the UAE's wise leadership and the ways they have made history in the region. However, this article cannot cover the entirety of initiatives that have reflected the humanitarian attitude of our leaders in addressing the concerns and ambitions of Emirati citizens. Therefore, I will content myself with mentioning certain significant initiatives—primarily the one taken by Sheikh Khalifa, the President, to establish the Dh10 billion Debts Settlement Fund to assess and resolve UAE citizens' unsettled loans.

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The fund aims to settle personal loans in co-ordination with the UAE Central Bank and other creditor banks in the country, once again reflecting the compassion that the wise leadership shows its citizens. They sensed the difficulties that their people were facing and moved to urgently address these issues. They took into consideration the persistence of these problems, while revealing a keen desire to solve them to lessen the hardships of citizens, especially the psychological suffering that unsettled loans and debts can cause.

The Debts Settlement Fund is divided into two levels. On the first level, it addresses citizens with limited income who face difficulties in settling loans of up to Dh1 million. On the second level, it addresses debts of up to Dh5 million, for citizens who are either in custody, with pending investigations, or who have already been convicted. The fact that the focus is on those who are convicted of loan defaults as well as those who are in custody underscores the profound humanitarian dimensions of this initiative. This is a noble gesture that truly confirms the constant willingness of our wise leadership to ensure family and social stability for citizens, inspiring them with hope and encouraging them to effectively engage in the national development agenda. The President’s initiative to settle the debts of citizens with limited income is a manifestation of a deep understanding of the negative effects of this problem at the social, economic, and demographic levels, affecting both the family and social life of Emiratis.

The prompt action to deal with this issue and limit any ensuing negative effects certainly has produced  significant results. First, on a social level, the fund helps ensure stability for families by bringing their members together, paving the way for them towards new horizons and liberating them from the burden of debt. This humanitarian initiative also takes into account the reasons behind the citizens’ failure to pay their debts, which are mainly related to ignorance about bank loan regulations and/or failure to successfully manage investments for reasons beyond their control. Thus, the fund provides them with a new chance to reintegrate into society, resume their careers and reconnect with their families.

Second, the initiative helps instil a culture of saving and ensures that all citizens, not just the ones in debt, are made aware of the risks of excessive borrowing as well as the importance of maintaining a balance between spending and income levels. This has helped disengage citizens from the culture of consumerism, which in most cases is the reason they fail to settle their debts in due time, thereby reducing the demand for unnecessary loans. Third, on an economic level, the fund helps the banking sector in the country by providing them money to settle dubious and bad debts, thus consolidating the banks’ available liquidity. This creates a healthy banking environment, which subsequently serves the interests of the national economy by providing greater funding for development projects and advancing the UAE’s economic agenda in the forthcoming period.

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The Debts Settlement Fund is just one example of how the wise leadership actively helps citizens overcome their problems and concerns. Another initiative is the Khalifa Fund for Emiratisation Empowerment, which was launched in 2011 to provide financial resources to enhance programs and policies that encourage Emirati citizens to join the labour market, especially in the private sector. In addition, there is the Absher Initiative, launched in 2012 with a five-year timeline of implementation, which integrated 20,000 Emirati citizens into both the Government and private sectors. This initiative was described by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, as “a distinguished and great initiative that aims to serve national cadres”.

At the social level, the President issued a decree in 2011 granting citizenship to children of Emirati mothers married to foreigners, as well as an initiative to integrate children born overseas to Emirati fathers and foreign mothers into the Emirati society. Indeed, the wise leadership, under the guidance of the President, has numerous activities that address the needs of UAE nationals overseas, such as sending private planes to retrieve Emiratis with health conditions. Moreover, the wise leadership has adopted numerous policies to encourage various sectors including education, health care, employment and others to entrench social security among citizens. This is a vital component of the empowerment phase launched by the President, which aims in its essence to serve, develop, and support UAE nationals, while providing them with a decent standard of living at all levels, ensuring social and economic stability.

The wise leadership's initiatives help UAE nationals to actively contribute to the development and progress of the country at all levels. The initiatives distinguish the UAE as a model of good governance and wise leadership, which upholds the interests of the citizens, the country's most important asset. Referring to the wise leadership as compassionate and humanitarian did not come out of the blue; it is based on a long record of initiatives and activities that revolve around honoring the people and ensuring their happiness, whether they are inside or outside the country. This approach traces back to the late Sheikh Zayed, who instilled humanitarianism in UAE domestic and foreign policies. This has made the country a model of compassion and generosity, extending beyond geographical, cultural, racial and religious boundaries to reach out to the needy and contribute to the development, stability and peace of the world.

Dr Jamal Al Suwaidi is the director general of the Emirates Center for Strategic Studies and Research

Water waste

In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.

Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.

A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.

The Emirates is the world’s third largest per capita water consumer after the US and Canada.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

The rules on fostering in the UAE

A foster couple or family must:

  • be Muslim, Emirati and be residing in the UAE
  • not be younger than 25 years old
  • not have been convicted of offences or crimes involving moral turpitude
  • be free of infectious diseases or psychological and mental disorders
  • have the ability to support its members and the foster child financially
  • undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
  • A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

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Opening Rugby Championship fixtures: Games can be watched on OSN Sports
Saturday: Australia v New Zealand, Sydney, 1pm (UAE)
Sunday: South Africa v Argentina, Port Elizabeth, 11pm (UAE)

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