A panel discussion on the Arab Youth Survey at Ritz Carlton hotel at DIFC in Dubai. Ravindranath K / The National
A panel discussion on the Arab Youth Survey at Ritz Carlton hotel at DIFC in Dubai. Ravindranath K / The National

An insight into young minds



The success story of this country is a powerful narrative that many in the region believe is a model for other Arab countries to emulate. As The National reports today, a third of young Arabs who participated in the ninth annual Arab Youth Survey – the opinions of 3,500 young Arabs from 16 countries were solicited in the course of the research – would like to live and work in the UAE.

Young people also showed great awareness about the challenges that the region faces. Barely half of those polled (52 per cent) said they felt their countries were moving in the right direction, down 12 per centage points from the previous year. Eighty per cent of respondents wanted their governments to do more to address their needs and focus on finding jobs and improving security. Unemployment, ISIL and the threat of terrorism were seen as the biggest obstacles. Governments around the region must heed the warnings of this data and face up to the threat of extremism with the strongest possible response.

The survey also highlighted dissatisfaction with the education systems. The majority of young non-GCC Arabs viewed schools and universities as incapable of preparing them for jobs of the future. This sends a clear message to policymakers across the region. They must reform. They must seek to provide school leavers and graduates with relevant skills or risk another “lost” generation.

There are, however, some points that need addressing in the GCC. In particular, young people’s declining use of Arabic, with 68 per cent of those in the GCC saying they use English more than their mother tongue. This result is undoubtedly partly attributable to the multilingual nature of countries such as ours. But this is why it is so important that Islamic atudies, moral education and Arabic instruction are given preference in the curriculum to make sure that traditions are not overtaken by multiculturalism.

The survey’s most headline-grabbing result – about where young people would like to live – is also a wake-up call to others. The UAE is safe, prosperous, tolerant and happy. There is no magic formula for success, but those four words are solid building blocks.

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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