DUBAI // Consumers are losing tens of millions of dirhams each year when they are not given the correct change at the checkout, according to economic and finance experts.
The practice of rounding off totals is essential to maintaining efficiency in the system, they say - but what we lose on one day is balanced off with gains when stores round down on others.
Anecdotal evidence suggests about Dh30 million may slip through consumers' fingers every year, though experts stress a scientific study has yet to be carried out.
Although high, the figure is far below that quoted in recent media reports, which suggested up to Dh100m could be lost every year.
"To say it is between Dh50m and Dh100m is to assume that figures are always being rounded up, which isn't the case," said Dr Steven Buigut, the head of accounting, finance and economics at the American University in Dubai's school of business administration.
"What you will find is that shops will round down just as much but, as a consumer, you will tend to remember the times when things are rounded up."
Dr Buigut said the answer was not to mint more coins through the Central Bank - because the cost of doing so is often more than the coin's face value.
"It is expensive to mint extra coins and bring them into circulation. To mint a penny, for example, would cost you about 1.3 pence because the base metal is more expensive," he said of the smallest element of UK currency. Any savings, therefore, would be swallowed up by the minting process, Dr Buigut said.
"In my own experience, I've had some days where the figures seemed to be rounded up and others when they were rounded down," he said.
"Even if you say 60 per cent of shops will round up, that still leaves a hefty total that will more likely round down. The trouble is, it's impossible to say for sure if people are losing out because, in most cases, it's anecdotal."
Professor Tarek Coury, an economist at the Dubai School of Government agreed, saying reader surveys were notoriously inaccurate, with only those motivated enough to respond giving their views, while the vast majority of the public stay silent.
"I think it's a bit of a red herring, to be honest," he said. "There is a selection bias in these kinds of surveys and, unfortunately, no scientific study has been done. Much of the figures being bandied about are through anecdotal experience.
"Even if you are being overcharged 50 fils once a week, that adds up to Dh2 a month."
The only way to be sure of always paying the correct amount is to pay by credit or debit card, Prof Coury said. "In most cases this is how people do pay for items anyway, as it's not practical to carry around so much cash. I would also advise consumers to do bulk buying whenever possible.
"The thing to keep in mind is that not everywhere accepts payment by card - and the places that do not [take cards] tend to have cheaper products, because they do not have the overheads associated with a card-payment system.
"So although you might not be getting the exact change back, the products you buy will be cheaper."
For shoppers it is an annoyance, but something they grudgingly accept. "I guess sometimes I have been undercharged and sometimes overcharged," said Vicky Andrews, a British expatriate housewife who lives in the Springs area of Dubai.
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What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
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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The biog
Name: Fareed Lafta
Age: 40
From: Baghdad, Iraq
Mission: Promote world peace
Favourite poet: Al Mutanabbi
Role models: His parents
Zayed Sustainability Prize
Coffee: black death or elixir of life?
It is among the greatest health debates of our time; splashed across newspapers with contradicting headlines - is coffee good for you or not?
Depending on what you read, it is either a cancer-causing, sleep-depriving, stomach ulcer-inducing black death or the secret to long life, cutting the chance of stroke, diabetes and cancer.
The latest research - a study of 8,412 people across the UK who each underwent an MRI heart scan - is intended to put to bed (caffeine allowing) conflicting reports of the pros and cons of consumption.
The study, funded by the British Heart Foundation, contradicted previous findings that it stiffens arteries, putting pressure on the heart and increasing the likelihood of a heart attack or stroke, leading to warnings to cut down.
Numerous studies have recognised the benefits of coffee in cutting oral and esophageal cancer, the risk of a stroke and cirrhosis of the liver.
The benefits are often linked to biologically active compounds including caffeine, flavonoids, lignans, and other polyphenols, which benefit the body. These and othetr coffee compounds regulate genes involved in DNA repair, have anti-inflammatory properties and are associated with lower risk of insulin resistance, which is linked to type-2 diabetes.
But as doctors warn, too much of anything is inadvisable. The British Heart Foundation found the heaviest coffee drinkers in the study were most likely to be men who smoked and drank alcohol regularly.
Excessive amounts of coffee also unsettle the stomach causing or contributing to stomach ulcers. It also stains the teeth over time, hampers absorption of minerals and vitamins like zinc and iron.
It also raises blood pressure, which is largely problematic for people with existing conditions.
So the heaviest drinkers of the black stuff - some in the study had up to 25 cups per day - may want to rein it in.
Rory Reynolds
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Profile Idealz
Company: Idealz
Founded: January 2018
Based: Dubai
Sector: E-commerce
Size: (employees): 22
Investors: Co-founders and Venture Partners (9 per cent)
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