Do you ever get the feeling that everyone around you is having a better life? They drive a nicer car, live in a bigger apartment, always dress in designer clothes, and never look at the right-hand side of a menu. And to really rub salt in the wound of jealousy, they probably earn less than half of what you do.
So how can they afford such a lavish lifestyle? Were they just born rich? Do they have substantial savings? Or are they just much better when it comes to money?
Our UAE debt survey this week suggests the answer is none of the above. The truth, which I have long suspected, is that a huge number of people are living way beyond their means, raking up staggering amounts of debt which they have no intention or ability to ever pay back. And they are still at it. If you don’t believe me, check out the survey results, some of which are mind- blowing. More than one in five people don’t even have a clue how much money they owe. And a staggering 26.5 percent owe more than $68,000. When it comes to car loans, 24 percent — nearly one in four — still have more than $27,000 to pay off, and twelve percent of us own more than six, yes six, credit cards. This ties in with the findings of the Lafferty Group which last year said total consumer debt across the GCC was $139bn, with the UAE having one of the highest ratios of credit cards on the planet, with 199.4 cards per 100 people.
So who is to blame? Yes, I know, it’s all the fault of those horrible banks who forced you to take a $68,000 personal loan. Then the next day, they helped you move into a fabulous penthouse overlooking the sea, stopping off along the way at Dubai Mall to help you carry that fantastic 68 inch wide-screen TV into your house. And just to make sure you didn’t forget to pop into the bank and pay them back every month, they helped you buy a new sports car. But you still did it, didn’t you?
I am no defender of banks in the region, and I have no qualms in saying that many of them are guilty of over aggressive lending tactics. Sometimes, during the boom years, these were nothing short of disgraceful. And for many people who have tried to resolve their problems through dialogue with the banks, the process has been futile. Banks can and should do more. But ultimately, everyone now in huge debt once had a choice to make. Take the money and spend it, or try and live within their means. I don’t buy the argument that rents were rising so fast, you had to borrow to survive. In most cases, salaries also rocketed. Blame the banks, blame the system, blame the economy. Blame everyone you want to, but the numbers don’t lie: most people in debt have only themselves to blame.
Why is everyone resigning?
Summer. Here we come, time for long holidays, putting your feet up, recharging your batteries and looking forward to Q4. Just skip over Q3.
Not quite, at least not in the UAE. Is it just me or has anyone else noticed the wave of high-level changes taking place across some of the biggest companies in the emirates? Yousef Omair Bin Yousef, CEO of Abu Dhabi National Oil Company (ADNOC) — resigned. Abdulla Saif Al Nuaimi, CEO of Abu Dhabi Energy Company (TAQA) — resigned. Marc Dardenne, CEO of Emaar Hospitality — resigned. Chris O’Donnell, CEO of Nakheel — resigned. Let’s not forget also Sheikh Ahmed, chairman of Emirates Airline, now also taking on the role of chairman of Emirates NBD. I don’t think any one of these is in any way related, and apart from Chris O’Donnell, none of the departures appear to be acrimonious. But what it does signal is major changes at the top. Yes, the UAE economy, according to independent forecasts, will grow by over three percent this year. Yet the continued failure of the property market to pick up means that fears of a double-dip recession cannot be totally discounted.
We could, in the coming months, still face massive economic challenges. Putting in place new teams to face up to them may not be such a bad idea.
Anil Bhoyrul is the Editorial Director of Arabian Business.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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