Not all money lenders in the UAE see themselves as loan sharks



ABU DHABI // Some money lenders see nothing wrong with their activities and say they are simply assisting those who badly need the cash.
A 39-year-old Filipina, who asked to be called Annabelle to protect her identity, earned Dh1,600 a month as a librarian at a book shop after she arrived in Dubai in 2006.
She wanted to earn extra cash, so she began lending money to her friends who, in turn, referred her to others and so her business grew through word of mouth.
"A friend needs to act as a guarantor for someone who needs the money to pay for his or her parents' medical expenses, the tuition of their children or to buy an expensive mobile phone or the latest gadget," she said.
She lent at an interest rate of 10 per cent. For every Dh1,000 borrowed, the borrower had to pay Dh100 in interest per month. The maximum amount that could be borrowed was Dh5,000.
"I was a small-time lender," she said. "I did not keep their passports as guarantee. Once, I required a borrower to hand over her ATM card and labour card since she owed me Dh3,000."
She earned about Dh3,000 each month as a moneylender but found it too stressful and decided to quit in January 2011.
"Many people visited me at home to borrow money and I hardly had time to rest," she said.
Loan sharks take advantage of vulnerable borrowers by charging rates of interest higher than those available from conventional sources, such as banks. This means borrowers face demands for payment of hundreds or even thousands of dirhams more than the sum they borrowed.
Annabelle, who now works as a sales executive in Abu Dhabi, did not want be labelled a loan shark. She insisted her business was scrupulous and that unlike her, loan sharks charge exorbitant interest rates and harass borrowers when they are unable to repay on time.
In Ras Al Khaimah, some lenders offer smaller loans - between Dh500 and Dh2,000 - to coworkers. Borrowers do not need to part with their passports, ATM cards or labour cards.
A Filipina who has lived in Ras Al Khaimah for seven years lends money to her cash-strapped work colleagues, charging them 5 per cent interest a month. She can lend up to Dh2,000.
"I do not keep their passports but they must pay me back within two months," said the 26-year-old waitress.
rruiz@thenational.ae

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)
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