Arab Youth Survey 2020: More than one third of young saddled with personal debts

Experts warn that student and car loans can lead to even deeper debt issues

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  An anti-government protester carries a national flag as she shouts slogans in front of the Lebanese army soldiers during a protest on the road leading to the Presidential palace in Baabda, east Beirut, Lebanon. EPA

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  An anti-government protester holds up a Lebanese flag as army soldiers stand guard during a demonstration against deteriorating economic conditions as politicians are deadlocked over forming a new government, in the town of Jal el-Dib, north of Beirut, Lebanon. AP

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  A demonstrator waves a Lebanese flag during anti-government protests on August 8, which were ignited by a massive explosion in Beirut's port. Lebanon's economy was already tanking due to a currency crisis, economic mismanagement and politicial turmoil when the blast hit. Reuters

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  Demonstrators carry an injured man during anti-government protests that were ignited by a massive explosion in Beirut, Lebanon. Reuters

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  nti-government protesters write on a road sign as they hang mock gallows symbol to execute Lebanese politicians during a protest on the road leading to the Presidential palace in Baabda, east Beirut, Lebanon. EPA

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  Demonstrators gather as they hold Lebanese flags during a protest against the government performance and worsening economic conditions, in Beirut, Lebanon. Reuters

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  Demonstrators throw stones during anti-government protests in Beirut. A perfect storm of economic woes and political turmoil has given the country's well-educated, often multilingual, young people little hope of a viable future there. Reuters

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  A demonstrator sits on the ground in front of Lebanese police officers during a protest against growing economic hardship in Beirut, Lebanon. Reuters

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  Protesters sit outside tents at Martyr's square in downtown Beirut in August. The Arab Youth Survey found 77 per cent of Lebanese 18 to 24-year-old's had considered or were actively trying to emigrate in hope of a better life. Reuters

Related: Arab Youth Survey 2020: Young people plan exodus amid dismay at region's corruption and economic failure

More than one third of young Arabs are saddled with debt, the Arab Youth Survey 2020 has found.

At least 35 per cent have significant debt compared with just 15 per cent who took part in the survey in 2015.

The main reason for this was student loans, according to 26 per cent of those polled, followed by car loans (20 per cent), medical bills (12 per cent), home mortgage (10 per cent) and marriage loans (9 per cent).

Excessive shopping, credit cards, business loans and holidays are also a problem.

Car loans were the main reason for personal debt in the GCC, while student loans topped the polls in North Africa and the Levant.

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Personal debt is most common among young people in Syria (73 per cent), Jordan (70 per cent), Palestine (65 per cent) and Iraq (59 per cent).

The level of personal borrowings is significantly lower in the UAE and Saudi Arabia, where it stands at 14 per cent. It was even lower in Kuwait where it stood at four per cent.

Ambareen Musa, founder and chief executive of financial comparison website Souqalmal.com, said it was crucial that young people educate themselves about the pitfalls of getting into debt.

“While education loans and car loans may seem like the obvious start to a young borrower's debt journey, mishandling finances can often lead them to falling deeper into debt, especially credit card debt which many view as quick and easy cash,” she said.

Ambareen Musa of Souqalmal.com says aspiring homeowners may need to make some cutbacks to save for a down payment. Photo: Courtesy Souqalmal.com

“Financial education is crucial in building awareness about debt, savings and money management among young borrowers.

“Be it through government led financial literacy initiatives, or financial education programmes run by schools, banks, local communities and other private organisations, equipping young people with the basics about managing their finances will help them make sound financial decisions in the future.”

When asked how they viewed their personal finances, more than one in three (34 per cent) said the situation was pretty bad or poor.

The levels of personal debt also varied throughout the regions with only eight in 100 young Arabs in the GCC saying their finances were poor or pretty bad, but that figure rose to 57 per cent among youths in the Levant.

Covid-19, unsurprisingly, has also had a detrimental effect on the finances of young Arabs across the 17 states that took part in the survey.

Almost one in three (30 per cent) said their level of household debt had increased because of the impact of coronavirus.

That figure was even higher in the Levant where it stood at 40 per cent, while it was lower in the GCC, with just 17 per cent saying their household debt had increased because of the virus.

Ms Musa said young people in the region were among those most badly hit financially by the pandemic.

“Many people have lost their primary source of income or have had it greatly reduced and this has naturally affected their ability to repay debts,” she said.

“Probably some of the worst affected are young jobseekers fresh out of university, especially those who have spent thousands on their education and now have limited to no access to job opportunities to start repaying their education loans.”