To be rich is glorious [Archives:2005/839/Opinion]

May 5 2005

By Raidan Abdulaziz Al-Saqqaf
[email protected]

This is just a thought on the importance of financial literacy in the everyday life of my Yemeni countrymen. To get rich you have to understand basic economics. Because every time you go to work, buy a car or even do your grocery shopping; you are actually taking part in the global economy. The primary reason why it is important to understand basic economics is to protect yourself and your own finances from the ups and down of the economy.

Economics is a cycle, it hits its' highest point and then it comes down to bust, these two points are relative to the specific items and commodities you have in mind, for example in the local economy, you can see how the prices of certain vegetables fluctuate time and again, Or airline fares' fluctuation; which also have peak seasons and discount periods, this applies in every industry, local or globally.

The reasons behind such a behavior may vary; depending if it was a rainy season in the local vegetable market allowing a larger harvest of vegetables to be sold in the same market or an increase in the Jet fuel prices for the airline industry.

Regardless of the reason for the price fluctuation, managing your own personal money allows you better fit in the context of the local economy and in turn the global economy. For that, you have to understand the behavior of your own money and the impact of the global economy on your currency – the Yemeni Riyal for example.

What is the actual value for the Yemeni Riyal? In the old days, currency was backed by hard assets such as gold or property, but now the value of money is based on the government's monetary policy and global confidence in our government; because it is the government that backs up the value of its currency and promise to deliver the value mentioned on the currency note, the more this promised value is, the richer you become as a holder of a Yemeni currency and vice-versa.

Our government has been trying hard to stimulate the economy and enhance global confidence in the Riyal, as it undertakes serious reforms, combats corruption, adopts democracy and encourages foreign investment. However, other governments in the world have succeeded to secure more confidence than we did; which means that we are falling behind as an economy, this is represented in the exchange rate mechanism and the value of the Riyal against other dominant currencies. A good example is in the fluctuation of the Japanese yen during the last two decades.

So how can Yemen become rich? Unless massive natural resources are discovered, a lot of reform has to be done, because reforming and changing now is less painful than a foreseeable economic disaster for our local economy and in turn, on us as individuals.

We are all shareholders in this country and are seriously affected by its economy, so lets work together to help our country help us; There is no secret recipe on how to get rich; it's a matter of simple economics, for the individual to have a better understanding of the local economy, and for the nation to understand the global economy and undertake what it takes for economic revival as a whole.