Improving financial literacy in the UAE still needs attention

While initiatives are improving young people's understanding of money matters, the youth are still struggling with the temptations of modern life

Dubai, United Arab Emirates, September 19, 2017:    Sara Abdulrahim, left, and Arwa Ali, volunteers with the Emirates Foundation's Esref Sah Programme attend a panel discussion about boosting financial literacy confidence among youth, hosted by the Emirates Foundation at The Address Hotel in the Dubai Marina area of Dubai on September 19, 2017. Christopher Pike / The National

Reporter: Alice Haine
Section: News
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According to Sara Abdulrahim and Arwa Ali, the biggest challenge for young Emiratis looking to manage their money is the lure of social media.

“Social media makes you want to spend more,” says Ms Abdulrahim, 29, a credit analyst at Emirates Global Aluminium.

“Follow any social media figure and every day they talk about a product, the latest shoes, bags, outfits – it makes you want to buy more. I’ve stopped using Instagram because it was really affecting my spending habits.”

This was one of the reasons the two women volunteered to become personal finance mentors for the Emirates Foundation’s (EF) Esref Sah Programme, a financial literacy initiative that educates the nation’s youth on how to manage their money.

Poor financial literacy rates have been a topic of conversation in the Emirates for some years due to worrying levels of debt among some residents, particularly in the wake of the global financial crisis.

“I saw this as a chance to better myself first and then to benefit the country,” says Ms Ali, 30, a financial business partner at Abu Dhabi Tourism and Culture Authority, of her decision to join Esref Sah’s volunteer programme, Shabaab Club.

“I have a finance degree and I work in finance but my mind wasn’t financially aware. With the lifestyle here, you spend and don’t think of the future or how to invest. It’s an issue that affects everyone, not just Emiratis."

Dubai, United Arab Emirates, September 19, 2017:    Nariman Abdulla Kamber Alawadhi, chief manager at the Central Bank of the UAE, right, speaks as Clare Woodcraft-Scott, CEO of the Emirates Foundation, left to right, Andrew Woolnough VP, Corporate Communications, CEMEA Visa Middle East and Tariq Mana Saeed Al Otaiba, Sr. associate office of Strategic Affairs Crown Prince Court, Abu Dhabi listen on during a panel discussion about boosting financial literacy confidence among youth hosted by the Emirates Foundation at The Address Hotel in the Dubai Marina area of Dubai on September 19, 2017. Christopher Pike / The National

Reporter: Alice Haine
Section: News
Nariman Alawadhi, chief manager at the Central Bank of the UAE, right, speaks as Clare Woodcraft-Scott, chief executive of the Emirates Foundation, left, listens on along with Andrew Woolnough, vice president corporate communications at Visa Middle East and Tariq Mana Saeed Al Otaiba, senior associate office of Strategic Affairs Crown Prince Court. Christopher Pike / The National

The mentors attended a business platform hosted last week by the EF, which focused on boosting financial literacy confidence among the nation’s youth through education with a panel debate also highlighting the fall out from financial illiteracy.

Clare Woodcraft-Scott, the chief executive of EF and the debate’s host, said that despite launching Esref Sah five years ago, which has helped to raise the nation's financial literacy awareness levels, work still needs to be done.

“Financial literacy is literally life changing," she says. "Somebody that can manage their finances and engage with the banking sector effectively, and have the financial and business acumen for the workplace, can succeed in life better than someone that does not have those skills and that has been proven systematically across the globe.

“Yet after several years, we are still not getting as much traction as we would like. Despite the overwhelming importance of this subject we still find institutions and individuals not recognising that importance.”

Nariman Alawadhi, the chief manager at Central Bank of the UAE and one of the panellists at the event, says the common theme among the complaints the Central Bank receives about financial products is ignorance.

“We have doctors that come to us, engineers who know what they are doing but when it came to financial literacy they did not know how to handle a cheque book or what they were paying on credit cards," she says.

A straw poll of the event’s approximate 100 guests, for example, found only one person had actually approached the Al Etihad Credit Bureau to get a copy of their credit score.

Dubai, United Arab Emirates, September 19, 2017:    Hussain Al Balooshi program manager for the Emirates Foundation for youth development during an event with the aim to boost financial literacy confidence among youth at The Address Hotel in the Dubai Marina area of Dubai on September 19, 2017. Christopher Pike / The National

Reporter: Alice Haine
Section: News
Hussain Al Balooshi, heads up the Emirates Foundation's Esref Sah programme, which has helped to provide financial education to more than 40,000 people across the UAE Christopher Pike / The National

This poor understanding of how the UAE's financial system operates, is one of the reasons Esref Sah decided to expand the work it carries out. The programme initially focused on raising awareness via their dedicated bus, which has taken its financial literacy workshop to 40,000 young people across the Emirates aged between 15 to 35 to date.

Now it also measures the impact of its work via the Shabaab Club, which has trained 100 volunteers including Ms Ali and Ms Abdulrahim over eight months in more than 70 subjects relating to effective money management.

“You wouldn’t believe the outcome,” says Hussain Al Balooshi, who heads up the Esref Sah Programme. “Sixty-four per cent of them started saving, 26 per cent started looking for investment opportunities and 80 per cent became more aware of financial literacy.

“There was a huge impact and today the youth we trained support us in delivering workshops at schools, universities and government entities."

Ms Abdulrahim says she has also hosted a session at her own workplace.

“We are trying to target graduate trainees – those that have just started working, they get caught by the banks when they first start getting salaries,” she says.

Mr Al Balooshi agrees that the temptation of bank offers is always there for young people.


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“You don’t need to get a car for Dh500,000 when you are 20 years old or take out a loan to go travelling because your friends are,” he says.  “Our advice to youth is to limit yourself and try to take a positive loan, such as a loan to buy a property or when you have an emergency.  We give them a simple example: start saving Dh1,000 a month and you then have Dh12,000 a year - that could be your budget to support your travel once a year.”

To further help young people avoid the temptation of high-interest loans and credit cards, Esref Sah introduced a bank-training curriculum to educate bank employees on the right ways to market their products to young Emiratis.

“We designed the content in a way that it matches the banks’ products and services," says Mr Al Balooshi. "So when it comes to loans we tell the employees to explain interest and the calculations of that interest instead of just focusing on reaching their targets and KPIs [key performance indicators]. They’ve been chasing the bonuses more than anything else.”

Mr Al Balooshi stresses they are not telling the banks to banish sales targets altogether, but they do want to encourage more “responsibility”.

“We would like them to take their job description very carefully, for example explaining to consumers the differences between a personal, investment or car loan," he says. " I know some young people that have taken out personal loans instead of car loans; they then paid cash for the car without being aware of the high interest rates applied to personal loans compared to car loans."

Despite the positive change brought about by Esref Sah, Ms Woodcraft-Scott says that only two banks have collaborated with the initiative since its inception in 2012, something she is keen to change.

“We play our role as a social purpose foundation but we believe the solution also lies partly with the banking sector,” she says. “A better educated client produces a better asset portfolio for the bank.”

Tariq Al Otaiba, senior associate office of Strategic Affairs Crown Prince Court, Abu Dhabi. Christopher Pike / The National

One initiative the independent philanthropic organisation has influenced was the recent introduction of personal finance education at every school in the Emirates, making the UAE the first country in the world to have financial literacy a mandated part of the school curriculum, says Ms Woodcraft-Scott.

The moral education course was rolled out to all schools at the start of this academic year with two sessions dedicated entirely to financial literacy, covering budgeting, saving and investing.

“That course was built from the material we got from the team at the Emirates Foundation,” says Tariq Al Otaiba, an associate for strategic affairs at the Crown Prince Court.

"The material is there, the teachers have been trained and the kids have started but part of the mandate of the course is to engage with the community so that it is not just limited with the classroom activities.

“So the more the Emirates Foundation engages with schools and the more private sector firms engage with the programme, the more these lessons hit home.”

Ms Alawadhi takes it one step further by calling for a national strategy on financial awareness to be introduced.

“We can collaborate – no one should say I am the only one," she says, referring to the need to get all relevant agencies from the public and private sectors on board. "Nothing changes unless people start talking about it."

But while education is important, Andrew Woolnough, the vice president of corporate communications at Visa Middle East, says consumers must also educate themselves about what they are getting into.

“It is easy to blame the institutions, and institutions should take some of the responsibility but, equally, individual responsibility plays a massive role in financial services. It's in the interests of banks to sell responsibly and for you to use those products responsibly,” he says, adding that the environment the young are brought up in also has a big effect on their relationship with money.

"My father grew up in the 1950s when there was still rationing in the UK after the Second World War and as a result the culture was very frugal and people did not like to spend a lot of money," he says.

"Things have moved on and, as we have seen from the financial crisis, there is a tendency for people to spend – there is more access to credit products and you can buy things on your phone."

Mohammad Jasmi, another volunteer with Esref Sah's Shabaab Club, certainly wishes he had learnt about effective money management at a younger age.

"We are fortunate to grow up in a prosperous environment but that was also a challenge as having that prosperity leads some people to access money and make purchases with debts," he says. "I did not know about savings until I had finished university and then I faced some challenging situations. If I had grown up with awareness I would have made better financial decisions."