PHOTO
11 April 2016
Walk into any popular upmarket restaurant in Dubai and it will be full of residents enjoying a night out with friends or colleagues. As they swipe their credit cards to settle their bills, try asking them if they currently have a savings plan in place for a rainy day.
The answer will most likely be no, according to Mohammed Qasim Al Ali, chief executive officer of National Bonds, who believes the lack of a savings mentality is an "epidemic problem" in the Gulf region.
"It is the mindset. People don't think long-term...People here enjoy the lifestyle, enjoy driving a good car, the apartment and staying out with friends all the time," the CEO of the government-owned firm, which offers sharia-compliant savings and investment plans, told Zawya during an interview at the company's headquarters in Dubai.
"The lifestyle is very good and it offers a lot of incentives to spend... People are living from one pay cheque to another," he said. "Dubai is no different from any city around the world."
A National Bonds survey released on Sunday found that 84 percent of respondents in the United Arab Emirates (UAE) think their current savings are not sufficient to secure their long-term future.
The '2015 Savings Index', which was compiled by Sondos Market Research and included 2,000 respondents from across the Gulf region, also found differences between nationalities when it comes to regular savings.
Just under half (48 percent) of Western expatriates living in the UAE said they saved regularly, followed by 44 percent of Asians, while 28 percent of Emiratis and 27 percent of Arab nationals surveyed said they were regularly putting money aside.
Money management skills
Al Ali said the lack of a savings culture in the region is a major concern and something which should be addressed at an early stage by the education sector.
"In this part of the world, we are not trained in school on how to treat money," he said. "In the West, you have access to financial advice and tools."
However, Al Ali reported that this is changing as money management is now becoming part of the education system. Emirates Foundation, the independent philanthropic body set up by the Abu Dhabi government began financial education workshops in schools in 2013 and this September it was made a part of the UAE's national school curriculum.
The foundation is now working with the UAE Ministry of Education in a programme to educate teachers in how to deliver the programme to students. "It is what we have been saying for a decade... It will be an excellent new step in changing the culture," Al Ali said.
The National Bonds index found that 69 percent of those surveyed said they had not saved as much as they would have liked last year. The survey showed that 84 percent of UAE respondents said they were financially stable, but only 63 percent said they plan to increase their savings in 2016.
Al Ali believes in order for this to change in 2016, people need to adapt their perception of saving and set clear goals for how much they want to achieve each month.
"You should pay yourself first," he recommends. "Our mind has been programmed to be very organised to give people money. When it comes to saving, we don't set anything. You need to set yourself 10 to 20 percent aside, and then you pay yourself."
"Ultimately, your earnings, minus your savings, equal what you spend. Here, your earnings minus spending, whatever is left, maybe nothing is left, becomes your savings. We want to change this."
However, things do look promising. Last year National Bonds saw a 3 percent rise in savers, but Al Ali believes that public and private bodies should also play a role by encouraging employees to transfer some of their salary directly into a savings scheme.
National Bonds has been fully owned by Dubai's sovereign wealth fund, the Investment Corporation of Dubai (ICD), since March 2011 when ICD bought out previous shareholders, which included Burj Khalifa developer Emaar Properties, Dubai Holding and Dubai Bank.
Licensed by the UAE Central Bank, National Bonds Corporation PJSC was established in March 2006 with a paid-up capital of 150 million dirhams ($40.8 million) and currently has around 816,000 members.
The company announced last month that its savings and investment products provided up to 4 percent annualised returns to customers in 2015, with long-term three-year products producing the best results.
© Zawya 2016
Walk into any popular upmarket restaurant in Dubai and it will be full of residents enjoying a night out with friends or colleagues. As they swipe their credit cards to settle their bills, try asking them if they currently have a savings plan in place for a rainy day.
The answer will most likely be no, according to Mohammed Qasim Al Ali, chief executive officer of National Bonds, who believes the lack of a savings mentality is an "epidemic problem" in the Gulf region.
"It is the mindset. People don't think long-term...People here enjoy the lifestyle, enjoy driving a good car, the apartment and staying out with friends all the time," the CEO of the government-owned firm, which offers sharia-compliant savings and investment plans, told Zawya during an interview at the company's headquarters in Dubai.
"The lifestyle is very good and it offers a lot of incentives to spend... People are living from one pay cheque to another," he said. "Dubai is no different from any city around the world."
A National Bonds survey released on Sunday found that 84 percent of respondents in the United Arab Emirates (UAE) think their current savings are not sufficient to secure their long-term future.
The '2015 Savings Index', which was compiled by Sondos Market Research and included 2,000 respondents from across the Gulf region, also found differences between nationalities when it comes to regular savings.
Just under half (48 percent) of Western expatriates living in the UAE said they saved regularly, followed by 44 percent of Asians, while 28 percent of Emiratis and 27 percent of Arab nationals surveyed said they were regularly putting money aside.
Money management skills
Al Ali said the lack of a savings culture in the region is a major concern and something which should be addressed at an early stage by the education sector.
"In this part of the world, we are not trained in school on how to treat money," he said. "In the West, you have access to financial advice and tools."
However, Al Ali reported that this is changing as money management is now becoming part of the education system. Emirates Foundation, the independent philanthropic body set up by the Abu Dhabi government began financial education workshops in schools in 2013 and this September it was made a part of the UAE's national school curriculum.
The foundation is now working with the UAE Ministry of Education in a programme to educate teachers in how to deliver the programme to students. "It is what we have been saying for a decade... It will be an excellent new step in changing the culture," Al Ali said.
The National Bonds index found that 69 percent of those surveyed said they had not saved as much as they would have liked last year. The survey showed that 84 percent of UAE respondents said they were financially stable, but only 63 percent said they plan to increase their savings in 2016.
Al Ali believes in order for this to change in 2016, people need to adapt their perception of saving and set clear goals for how much they want to achieve each month.
"You should pay yourself first," he recommends. "Our mind has been programmed to be very organised to give people money. When it comes to saving, we don't set anything. You need to set yourself 10 to 20 percent aside, and then you pay yourself."
"Ultimately, your earnings, minus your savings, equal what you spend. Here, your earnings minus spending, whatever is left, maybe nothing is left, becomes your savings. We want to change this."
However, things do look promising. Last year National Bonds saw a 3 percent rise in savers, but Al Ali believes that public and private bodies should also play a role by encouraging employees to transfer some of their salary directly into a savings scheme.
National Bonds has been fully owned by Dubai's sovereign wealth fund, the Investment Corporation of Dubai (ICD), since March 2011 when ICD bought out previous shareholders, which included Burj Khalifa developer Emaar Properties, Dubai Holding and Dubai Bank.
Licensed by the UAE Central Bank, National Bonds Corporation PJSC was established in March 2006 with a paid-up capital of 150 million dirhams ($40.8 million) and currently has around 816,000 members.
The company announced last month that its savings and investment products provided up to 4 percent annualised returns to customers in 2015, with long-term three-year products producing the best results.
© Zawya 2016
