ABU DHABI // The alarming rise in Emirati debt has prompted the Government and private sectors to act.
“We have this huge culture of debt,” said Dr Sabha Al Shamsi.
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Dr Al Shamsi blames this on a lack of financial awareness in the culture.
Most people “don’t value money or understand the risks of taking a loan because they are not taught these things at home”, she said.
Another factor is that young people constantly compare themselves to their friends.
“They don’t want to feel ‘less’ than their friends. So if a friend has an expensive car then they must get an even more expensive one that they probably can’t afford but their friend can.
“We are materialistic. We must change mindsets and start early in schools. Parents need to educate their kids as well.”
A 2013 study conducted by the Emirates Foundation for Youth Development showed that 54 per cent of youth say their financial behaviour is largely influenced by their friends.
In 2012, the foundation launched the Esref Sah programme to spread awareness among young people about how to manage their personal finances. They have reached out to almost 16,000 Emiratis and have held workshops in 40 schools, and all the universities across the UAE.
A bus customised as a mobile classroom has travelled the country promoting financial literacy.
“We try to explain the risks of living on credit, and a lot of people live on credit, which is very bad.
“If you value money then you will not go into debt,” she said. “Young people are the future and we need to educate them on how to value money, how to invest, to save, to learn to do personal budgeting and ultimately, how to benefit themselves and benefit society.”
salnuwais@thenational.ae
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About this special report:
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Car loans are the most popular with Emiratis and unregulated banks do nothing to improve the situation by encouraging locals to take out unsecured loans up to four times their annual salaries. Non-payment of loans has led to countless arrest warrants and jail time. Last year, 3,638 Emiratis had cases filed against them in Abu Dhabi judicial courts for bounced cheques. As a result, the Emirates Foundation and the Ministry of Education have teamed up to educate young people, and tackle the problem of financial illiteracy that plagues the country.
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