Ride-hailing company Careem plans to expand across as many as 30 new cities in Pakistan as it taps into the country’s growing middle-class.
The app, which competes against Uber Technologies Inc. offering car, motorcycle and rickshaw rides in South Asia’s second-largest economy, will seek to grow from its current presence in 10 Pakistani cities over the next three years, Junaid Iqbal, Careem’s managing director in the country, said in an interview.
Pakistan’s economy is on a upward trajectory, backed by growing consumer spending, along with a significant dip in militant violence in the past two years. The nation’s growth rate has risen close to 5 percent last year after completing a $6.6 billion International Monetary Fund loan program that staved off a balance-of-payment crisis in 2013. However, Pakistan’s current account deficit is widening and foreign-exchange reserves dwindling as exports lag regional peers, prompting speculation that the government may need IMF support again.
Nonetheless, cellular phone penetration stands at around 71 percent in the country of more than 200 million people, according to Pakistan’s telecommunication authority. “The number of smartphones are growing, Internet users are growing,” Iqbal said. “In couple of years, you will have a huge population of people who will become very savvy.”
Dubai-based Careem, which has lured investment from recently arrested Saudi billionaire Prince Alwaleed bin Talal and Daimler AG, operates in more than 100 cities in the Middle East, North Africa and South Asia. It began its Pakistan operations in 2015 and there is a plan to diversify the business in the nation by 2020 with $100 million of investment, Iqbal said.
It’s “currently settling in transportation,” though Careem may move into other e-commerce businesses in Pakistan, Iqbal said, without specifying. A former fund manager and news anchor at local broadcasters Geo and CNBC Pakistan, Iqbal aims to make Careem turn a profit in Pakistan by 2020.
“Each new product and each new territory comes with certain cost,” he said. “The focus is growth.”
E-commerce is growing fast in Pakistan with the arrival of various online outlets like Daraz, Kaymu and Yayvo. Pakistan’s e-commerce market may grow to a size of $1 billion by 2020, from less than $100 million two years ago, according to the nation’s telecom agency. Chinese Internet giant Alibaba Group Holding Ltd. has voiced interest in setting up in Pakistan.
The central bank reported 9.4 billion rupees ($86.5 million) of e-commerce card transactions in the last fiscal year. Adam Dawood, head of Pakistan’s Yayvo online retailer, said transactions are much higher considering many customers pay in cash.
“The Internet’s population size is growing rapidly, so the stage is set for growth,” Dawood said by phone.
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