Lifting the driving ban on Saudi women carries economic dividends

Ride-hailing services such as Uber and its main regional competitor Careem have plans to capitalise on the opportunity.
Sunday 01/07/2018
About turn. A Saudi woman drives her car through the streets of Riyadh for the first time, on June 24. (AFP)
About turn. A Saudi woman drives her car through the streets of Riyadh for the first time, on June 24. (AFP)

LONDON - There is no denying the positive sociological importance of Saudi Arabia lifting the female driving ban. However, the chief motivator in changing Saudi law is the kingdom’s necessity to diversify its economy beyond the energy sector.

The kingdom’s female population makes up 22% of the workforce. The Saudi government made it one of the main targets of Saudi Vision 2030 to increase that percentage.

The first obstacle removing driving ban resolves is the issue of getting around and analysts have said increased mobility would improve women’s access to the Saudi job market. The Gulf Research Centre think-tank said eliminating the “major handicap” of transportation and allowing women to drive could enable more than 400,000 women to “contribute to the labour force and the economy.”

The Saudi Gazette said the driving decision would create 500,000 job opportunities in ten years, helping achieve the goal of increasing women’s work force participation, particularly among those from middle-class families, to 30% by 2030.

Ride-hailing services such as Uber and its main regional competitor Careem have plans to capitalise on the opportunity. Uber said it planned on hiring women this autumn and Careem has already begun.

“We are delighted to welcome these pioneering women to Careem and in line with Careem’s commitment to create job opportunities across the wider Middle East region,” Careem CEO Mudassir Sheikha told Forbes Middle East. He said the company’s target was to have 20,000 females signed up region-wide by 2020.

There have already been positive economic benefits resulting from the lifting of the female driving ban — the Saudi insurance industry reported a considerable boost on June 24, the day the law went into effect.

Al Rajhi Company for Cooperative Insurance reported a 10% increase while SABB Takaful Company and Saudi Indian Company for Cooperative Insurance saw increases of 7.9% and 4.8%, respectively, Thomson Reuters reported.

The Saudi automobile industry suffered a 20% drop in sales in 2017 due to regional economic factors but is predicted to see 10% growth as more Saudi women drive. Market analysis firm BMI said there were indications of increased demand, with more than 165,000 female applicants to the first Saudi driving school for women when it opened online registration in January and the first women-only car showroom, which opened the same month in Jeddah.

A recent report by Bloomberg Economics asserted that the reversal of the driving ban could help Saudi Arabia acquire “as much income as selling shares in Saudi Aramco,” considered the cornerstone of the Saudi economy and the most valuable company in the world.

Saudi Arabia could add as much as $90 billion to its economy by 2030, with economic benefits extending beyond that date, the Bloomberg report said, adding that, at its most optimistic estimate, the selling of 5% of Saudi Aramco would generate approximately $100 billion.

“Lifting the ban on driving is likely to increase the number of women seeking jobs, boosting the size of the workforce and lifting overall incomes and output,” said Ziad Daoud, Dubai-based chief Middle East economist for Bloomberg Economics, “but it’ll take time before these gains are realised as the economy adapts to absorbing a growing number of women seeking work.”

With bells on. A newly-licensed Saudi motorist opens the door of a car before leaving her driveway in the Saudi coastal city of Jeddah, on June 24. (AFP)
With bells on. A newly-licensed Saudi motorist opens the door of a car before leaving her driveway in the Saudi coastal city of Jeddah, on June 24. (AFP)
21