The Pioneer International Private School is located in a villa in Abu Dhabi.
The Pioneer International Private School is located in a villa in Abu Dhabi.

Private villa schools under pressure



ABU DHABI // The tradition of using private villas as schools - some filled with more than 700 pupils - is coming under scrutiny as the Abu Dhabi Education Council (Adec) begins inspecting 66 such facilities. "In the old days it was easy for private schools to come and open," said Dr Mugheer al Khaili, director general of Adec. "What's worrying us is safety." In May, the Ministry of Education gave the education council authority over all Abu Dhabi private schools, part of a plan to decentralise education and give more responsibility to local councils such as Adec in Abu Dhabi and the Knowledge and Human Development Authority (KHDA) in Dubai.

The education council is also looking into closing government-run evening schools, which see pupils attending classes late in the day, and moving them to regular day facilities. The Government first addressed the issue of villa schools in 1999 when a Ministry of Cabinet Affairs decree ordered that they be phased out. Nearly a decade later, dozens of villa schools still remain in Abu Dhabi, while there are only two left in Dubai.

One of the first actions taken by the KHDA when it was given authority over Dubai's private schools in April last year was to begin shutting down its 17 villa schools. In one case the agency helped to locate new school places, but the other schools moved to new premises and their pupils moved with them. They were not given any assistance by the KHDA to do so. Dr Khaili said the first inspections in Abu Dhabi showed that the villa schools, which were originally licensed by the Ministry of Education and cater for the children of low- and middle-income workers, many from the Indian subcontinent, had qualified principals and teaching staff who were operating out of substandard facilities.

"Safety of children is more important than anything else," said Dr Khaili. Most schools, where children crowd into villas intended to house four or five people, have poor airconditioning systems. None has playgrounds or sporting facilities. "The schools are in the middle of a community," said Dr Khaili. "It's very dangerous for the children to go out - maybe they will be hit by cars." In the past, private schools were allowed to operate as long as they had a licence from the ministry, and some have since swollen in size without expanding facilities. Sharaf al Hashemi, the deputy director of the Pioneers International Private School, one of several Filipino villa schools in Abu Dhabi, said relocating the school would be difficult because tuition fees were kept so low.

"We need the Government assistance because it will cost us a huge amount, over Dh8 million (US$2.18m), because of high building costs," said Mr Hashemi. "It's the Government who is asking us to move from the villas into another building." Pioneers, with fees ranging from Dh6,285 to Dh10,000 a year, has been educating Filipino children since 1990. Little Flower Private School, which has served the Indian community since 1986, charges as little as Dh2,000 per year.

UAE currency: the story behind the money in your pockets
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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.”

UAE currency: the story behind the money in your pockets
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