January 28, 2023

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33% of the World is Financially Literate; the UAE Scores 30.7%

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  • A reported 45% of UAE residents have not yet started saving for retirement
  • About 3.5 billion adults worldwide lack an understanding of basic financial concepts
  • Global data shows that only 35% of men and 30% are women are financially literate

Bas Kooijman, CEO and Asset Manager of DHF Capital S.A., cites that the UAE’s financial literacy rate of 30.7% will require further proactivity to catch up to leading nations; Denmark, Norway, Sweden, Canada, the United Kingdom, Germany, Australia, and Finland, boast financial literacy rates ranging between 63% and 71% .

Global data shows that 35% of men, and 30% of women, are financially literate ; this world average of 33% indicates deep disparity and calls for global concern. With inflation rates rising, a recession looming, and the possibility that cryptocurrencies may replace fiat money, the importance of improving financial education has never been more evident.

The UAE has accordingly taken actionable steps toward educating its population. In 2020, the country rolled out the Ghaya initiative to support UAE nationals and their ability to contribute to the nation’s economic growth. This program was announced shortly after a 2019 financial literacy survey found that 43% of UAE respondents 16 and 24 years old felt unready to manage their own money, and 53% said schools didn’t prepare them enough to manage their finances .

With 90% of the UAE’s population made up of expatriates, additional efforts which not only educate the country’s younger people but also its adults will serve to benefit greatly as even affluent individuals require assistance. In fact, a 2021 survey of individuals with at least $100,000 in investable assets found that 42% worry retirement won’t even be an option.

This concern of inadequate preparation for retirement was noted across the 24 countries in Asia, Europe, Latin America, and North America . Moreover, 62% of the individuals surveyed

said they needed professional advice selecting investments in their retirement plan, despite them being part of a group where more than half rated their investment knowledge as strong .

As it relates to the UAE, a survey by ‘Friends Provident International’ found that 45% of the country’s residents have not yet started saving for retirement, even though 44% of people expect to retire by 55, and 63% hope to do so before they turn 60. Furthermore, 40% of UAE residents will only start saving for retirement 10 years or less before they reach it .

Bas Kooijman, CEO and Asset Manager of DHF Capital S.A., commented: “With even the wealthiest investors seeking financial advice, this reflects the importance of enhancing one’s financial literacy. We are living in an unprecedented time where resources and information have never been more accessible, and even if you weren’t educated from a young age you can still start now. Understanding how to diversify your portfolio will allow you to mitigate your financial risk, pay off impending debts, and save up for a stress-free retirement. The UAE has made great strides in its 50-plus years of existence but even greater progress in the coming years will provide mutual benefit to both the country and its residents.”

Global debt is dangerously high; borrowing by governments, businesses and people was $226 trillion in 2020 but it reached a record $303 billion in 2021 to reflect the biggest one-year debt surge since World War II. COVID-19 and global turmoil have contributed to this spike while the current debt wave is the world’s fourth since 1970 . Bas Kooijman is working amidst this to make wealth creation more affordable for all via his securitisation firm, DHF Capital.

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