Consumption expert and founder of the website "the Arab consumer network" Hassan Al Kathiri has said that around two-third of local borrowers in the UAE take out bank loans to spend on non-essential items, and has called for the government to undertake an awareness campaign to make emiratis stop splurging on borrowed money.
Al Kathiri agrees with the result of a recent survey conducted by the Dubai-based Arabic newspaper 'Emarat Al Youm', which found out that most people borrow from banks to buy luxuries, not essential goods.
The poll in which 6,000 readers participated concluded that 53 per cent of borrowers spent their loans on luxury products.
Al Kathiri said "the proportion of those who take loans to spend them on non-essential products is higher, ranging between 60 and 70 per cent.”
He explained that some people have taken loans to buy luxury cars costing more than Dh300,000, though they do not need such expensive vehicles.
Al Kathiri attributed this to lack of consumer awareness and planning. He called for Dh1 billion out of the Dh10 billion gift of President His Highness Sheikh Khalifa bin Zayed Al Nahyan, to be spent on a consumer awareness campaign among Emiratis, including women and children. "The media should participate in this campaign to make people rationalise consumption and spend money on the right things," he said.
He also called for the appointment of a Central Bank consultant in all banks in the UAE to raise the awareness of loan seekers and help them read between the lines of the loan contract.
He said some people buy four-wheel drive vehicles although they do never drive in the desert. Some spend as much as half a million dirhams on wedding parties, which makes many couples begin their married life with huge bank debts. Such people need to be educated in a professional manner to help them differentiate between essential and non-essential products, he said.
He also said 80 per cent of Emirati households eat out regularly, a practise that, accoeding to him, needs to be curtailed.
Al Kathiri called for curbs on TV and press advertising that drives people to buy non-essential products. He called for participation of family members in budgeting and said at least 10 per cent of a family’s income must be saved for emergencies.