Dubai - April 26, 2009 - The women's campus at Zayed University in Dubai April 26, 2009.  (Photo by Jeff Topping/The National) *** Local Caption ***  JT016-0426-ZAYED UNIVERSITY IMG_8315.jpg
The women's campus at Zayed University.

Universities to start year with Dh428m funds shortfall



ABU DHABI // The three federal universities will start the coming academic year with a total funding shortfall of Dh428 million.

The Ministry of Finance has submitted a budget to Cabinet that will give the universities less than their entitlement under a formula drawn up by the Ministry of Higher Education and Scientific Research in 2008.

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Worst hit will be the Higher Colleges of Technology (HCT), the largest with 17 campuses, which will be short Dh333m, or 25.8 per cent .

Zayed University will be Dh32m, or 8 per cent, below its calculated figure. United Arab Emirates University, the leading federal institution in terms of research, will be short Dh63m, or 4.5 per cent. Sources at the universities say the amount has been calculated without consultation. They say places may have to be cut, campuses closed and courses decreased as the number of teachers cannot meet the growing number of students.

The funding required by HCT is based on its 19,000 students in the 2010-2011 year. The cut comes as the number of students is expected to grow in October by 3,000. "I don't know how we'll cope if we don't get more financial support," one academic said. "We are already stretched … we're running out of space and numbers will be unmanageable if something isn't done soon."

Since 2009, sources say, there have been more than 20 meetings between officials from the Ministry of Finance, Ministry of Presidential Affairs and Ministry of Higher Education and Scientific Research, to try to resolve the funding formula issues.

In 2008, the Cabinet approved a student-based funding model to help universities plan resources, with a higher education co-ordinating council (HECC) to run the system.

The Ministry of Finance, the Ministry of Presidential Affairs and the HECC agreed the model would be updated every two to three years.

In December 2009, the Cabinet approved total funding of Dh2.5 billion based on its funding formula. This, say university sources, was the last time it was fully applied. In 2009-2010, the amount submitted by the Ministry of Finance was about Dh140m less than requested by the Minister for Higher Education and approved by the Cabinet.

Records released in December last year showed the HCT began taking bank loans in 2009 but staff say debts started building up to six years ago.

The same records showed Zayed University owed Dh33m in electricity and water bills to authorities in Abu Dhabi and Dubai.

"There are so many ministries involved that it makes decision-making very complicated," a government source said. "The Ministry of Finance wants semester-based funding but the institutions do it on an annual basis and incur annual costs."

Several factors are taken into the Ministry of Higher Education's calculations. The big cost is teaching staff. Then there are transport, housing and student subsistence grants.

The number of enrolled students is made official 20 days into the academic year, so the universities are unable to plan because they do not know how many students on which their funding formula will be based.

They cannot hire extra teachers in advance and the country does not have enough qualified part-time academics to fill the gaps.

"Funding goes back to 2008 levels until the 2011-2012 numbers are submitted to Cabinet, so we are simply not prepared for this influx of students, which gets bigger and bigger each year," said one academic.

Zayed University's funding is short of the amount needed to cope with the 5,600 students it had last academic year, but it expects a rise in student numbers of between 15 and 18 per cent this coming year.

The National approached all the ministries and universities involved. None would comment.

Christina Gitsaki, Unesco chair in applied research in education at Sharjah HCT, said education budgets around the world were suffering.

"Universities are having to seek funding elsewhere. In science and business they are being pushed towards research for private industries. They can make a profit from the product, especially in areas such as medical research."

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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.”

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History's medical milestones

1799 - First small pox vaccine administered

1846 - First public demonstration of anaesthesia in surgery

1861 - Louis Pasteur published his germ theory which proved that bacteria caused diseases

1895 - Discovery of x-rays

1923 - Heart valve surgery performed successfully for first time

1928 - Alexander Fleming discovers penicillin

1953 - Structure of DNA discovered

1952 - First organ transplant - a kidney - takes place 

1954 - Clinical trials of birth control pill

1979 - MRI, or magnetic resonance imaging, scanned used to diagnose illness and injury.

1998 - The first adult live-donor liver transplant is carried out

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Cycling
Safia Al Sayegh (women's road race).

Swimming
Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics
Maryam Mohammed Al Farsi (women's 100 metres).

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