Across the Mena region, there is a worrying lack of financial planning and savings among many citizens and expatriates.

From Takaful Emarat’s perspective, a number of factors in the Mena region have contributed to a relatively weak culture of financial planning and saving among our citizens and expatriate populations.

Unlike in more developed western markets, where the concept of mitigating personal risk has existed for decades, we have comparably embryonic education programmes addressing the importance of financial planning in our region. This type of education is required to highlight the need for both citizens and expatriates to plan and save in order to generate income post-retirement, provide for family education and ensure comprehensive life and health cover is in place, for example.

To highlight this point, industry research has shown that almost one third of Mena citizens, tens of millions of people, save nothing at all. Across the GCC, the statistics are also worrying with approximately one third of all employees admitting they do not save or have any structured financial planning in place. This lack of a robust financial planning/saving ideology has major ramifications for our regional citizen and expatriate populations with regards to managing short-term financial needs through to longer-term major issues such as planning for education, health, retirement as well as death.

Future regional trends

In the west, financial planning is the responsibility of the individual rather than the state and increasingly, we are seeing this trend materialising in our region.

Our view is that citizens and expatriates should personally manage their own “life plan” which also covers their families’ current as well as future needs. From a Sharia perspective, here in the region, this has been helped by Mena governments’ support for the Islamic financial services industry and the robust growth in the takaful sector.

Traditionally, the investment policies and annuity principles of conventional pension systems meant conventional schemes were not accepted by Muslims, given the payment of riba (interest) twinned with the element of gharar (uncertainty) due to the unpredictability of life expectancy and annuity payment streams.

However, the growing takaful industry is now well-positioned to provide Sharia-compliant solutions to those eager to align their beliefs or prefer this non-conventional financial system with the need to plan all aspects of their life from education to health and savings through to retirement.

Just to provide an idea of the growth of this industry, the global takaful industry is expected to reach $20 billion (Dh73.4 billion) by 2017, according to Moody’s. This underlines consumers’ continued demand for takaful products resulting in double-digit growth for the industry experienced since the beginning of the decade. The roll-out of compulsory medical insurance across the UAE will bolster this growth.

Financial planning for life is critical

As highlighted, we encourage every citizen and expatriate alike to take control of their own finances and wider life plans and to actively research the types of investment, savings, health and life cover which are available to suit their specific needs. Savings and health care plans can be started with very small monthly payments, and everyone should seek the benefits of these of platforms.

In terms of choosing a provider, customers should ensure that the firm is well regulated, well-funded, and provides comprehensive investment choices to ensure optimal choice. In addition, investment firms and products should also provide portability so their contributions are not tied to the country where the policy is opened, especially for today’s mobile expatriate working population.

To conclude, as a region, we simply do not save enough or actively plan for major events throughout our lives. This is changing with the growing popularity of takaful as a means to plan for unexpected financial or medical emergencies through to providing the necessary funds to support not only oneself but one’s family in later years to maintain the lifestyle they have become accustomed to.

Today, there are comprehensive Sharia-compliant and portable solutions in place which cater for every need, both from a citizens and expatriate perspective. The vast product range means appropriate and suitable financial solutions are more accessible than ever before, even for those who do not consider themselves to be financially savvy. This growing availability, along with a slow but definite understanding of the benefits of planning for the future, means there has never been a better time to begin or expand a structured financial plan and prioritise de-risking your future. After all, your future is in your hands.

Wael Al-Sharif is Chief Executive Officer of Takaful Emarat