Education

Dh22m fund to aid thousands of expatriate students

The allotments include Dh12m from the Zakat Fund to help 2,000 pupils from low-income families pay their school fees.

Kareem Shaheen
Kareem Shaheen

June 25, 2010

ABU DHABI // Thousands of needy expatriate pupils and students in the UAE will benefit from some Dh22 million in financial assistance this year. The allotments for pupils in secondary schools and college students were announced by officials from the Zakat Fund, the government body that distributes the zakat alms tax.

Mugheer al Khaili, the council's director general, said: "This aid helps accomplish one of the four pillars of Adec's strategic plan. There should be a chance of an education for every student regardless of nationality, colour or race. We hope that other individuals and organisations join in to aid this needy group so they can continue their studies." The Zakat Fund enlists the help of Adec to disperse its financial aid through the secondary school system, but deals directly with college students seeking aid.

Overall, this year the Zakat Fund will provide about Dh12m to 2,000 pupils in all grades. More than Dh2m of this has been earmarked for 384 pupils in Al Ain who get assistance to pay school fees as part of the Iqra (Read) programme. The Iqra programme was launched in 2004, a year after the establishment of the Zakat Fund by Sheikh Zayed, the late President of the UAE. Adec helps the fund identify scores of pupils in need of assistance based on their academic performance as well as their family's size and income level.

Abdullah al Muheiry, the fund's secretary general, said: "These students are identified by Adec, and the funding is based on the social and economic circumstances of the students." Over the past six years, it has distributed Dh31m to help more than 10,000 pupils. "We do not differentiate between students in Grade 1 and Grade 12 - what determines it is need," Mr al Muheiry said. The fund will help the pupils pay their school fees: low-income pupils are charged about Dh6,000 a year.

"The cost of living is very expensive in the UAE in general, and a lot of students cannot pay the Dh6,000," Dr al Khaili said. The aid will only go towards paying fees for expatriate students, since Emirati pupils have the option of getting a free education in public schools. The announcement also comes ahead of a new Dh10m campaign to finance college for 50 needy students over four years, an expansion of Iqra run by the Zakat Fund. This effort has recruited 30 students so far and aims to find 20 more by the next academic year. "This is the forgotten group," said Jamal al Mazrouei, the manager of zakat sources and media at the fund, adding that Zakat Fund studies have shown that the demographic group gets little financial assistance. Students hoping to take advantage of the programme will not need to renew their zakat applications, which are valid for the four years needed to complete a degree. The fund estimates academic fees to be about Dh50,000 per student per year. Students that meet the low-income requirements must also have earned excellent high school marks and maintain high scores in college to keep the grant. Other complex calculations take into account everything from a family size to a student's nationality. Adec is also planning to set up nonprofit schools with low fees that cater to pupils from low-income families in the capital. The Zakat Fund gets its money from the annual contributions of zakat, the Islamic alms, which is then distributed to needy members of society. The basic annual zakat rate is 2.5 per cent of financial assets, with varying rates for other assets, such as gold or livestock. Despite the recent economic crisis, the Zakat Fund has amassed contributions that exceed previous years. Revenues from individuals rose by 93 per cent in the first quarter of 2010 compared with the same period last year, and the number of contributors rose by almost 40 per cent. Its total revenues in 2009 reached Dh67m. kshaheen@thenational.ae

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.”