Steering a new course in Saudi Arabia

With the first female drivers taking to the roads in Saudi Arabia, Arabian Business looks at the range of opportunities that the law change will open up
Steering a new course in Saudi Arabia
By Staff writer
Thu 12 Jul 2018 04:12 PM

“Welcome to the 21st century”.

Those were the words used by Prince Alwaleed bin Talal when he climbed into the passenger seat alongside his daughter Reem, who proceeded to drive through the streets of Riyadh, the capital of Saudi Arabia, for the first time.

The lifting of the driving ban in the kingdom, a policy that was announced in September last year, is the most visible and perhaps tangible manifestation of the Vision 2030 plan, a sweeping and ambitious programme of reforms aimed at transforming the Saudi economy away from oil. It that context, lifting the driving ban is more than a social or cultural issue. Way more.

By delivering increasing mobility and independence for the nation’s women, whole new areas of economic activity have opened up – car sales, insurance, accessories, servicing – and new opportunities for educated, ambitious women in the workforce can be exploited. This is economic liberalism in its purest sense; releasing the potential of half the Saudi population.

Not that it is a panacea, nor will the benefits be immediate, but Prince Alwaleed had it right. Taken alongside the elevation of Saudi’s economy to emerging market status, the potential public sale of key state assets, not least five percent of Aramco, and the ambitious mega-projects of Neom and King Abdullah Economic City, Saudi is entering a new era in which limitations have been replaced by latitude.

Here, Arabian Business looks at some of the ways the new law is already being a catalyst for new opportunity.


THE ECONOMY

“Worth more than Aramco IPO”

By helping to further realise the potential of half the population, Saudi Arabia’s economy will receive a major boost in the next decade

By ending its status as the last country on earth to prohibit women from taking to the wheel, Saudi will reap generational economic benefits. According to Bloomberg Economics, allowing Saudi women to drive could add as much as $90bn to economic output by 2030, with the benefits extending beyond that date. Selling a five percent stake in Saudi Arabian Oil Co could, at best, realise $100bn in revenue in what would be a one-off boost to the Saudi coffers.

“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,” says Ziad Daoud, Dubai-based chief Middle East economist for Bloomberg Economics. “But it will take time before these gains are realised as the economy adapts to absorbing growing number of women seeking work.”

Ending the ban is one of the most socially consequential reforms implemented by Saudi Arabia’s Crown Prince Mohammed bin Salman. It’s also a key part of his plan to veer the economy away from its reliance on oil.

Any economic change will likely be gradual with the weak underlying growth environment”

“The participation of women in Saudi Arabia’s labour market is poor. With only 20 percent of females in Saudi Arabia economically active, the country even lags behind its neighbours in the Gulf, where participation averaged 42 percent in 2016,” says Daoud.

“Recognising this, the Saudi administration made raising the female participation rate one of its main targets in the National Vision 2030 programme, designed to modernise Saudi society.”

Adding just one percentage point to the Saudi participation rate every year might add about 70,000 more women a year to the labour market, according to Daoud. The larger participation of women will lift potential economic growth by as much as 0.9 percentage points a year, “depending on the proportion that chooses to work full or part-time,” he adds.

Ancillary impacts

Another potential boost to the Saudi economy will come from a decrease in the use of private chauffeurs. According to Monica Malik, chief economist at Abu Dhabi Commercial Bank, there are about 1.4 million of these workers in the country currently, earning around $500 a month in addition to accommodation. As women start to drive themselves, this could represent somewhere in the region of $8.8bn being retained in the Saudi economy every year. The rise in disposable income in Saudi households, particularly in middle income brackets, could lead to a reasonable economic upswing in retail and leisure activity.

“Any economic change will likely be gradual with the weak underlying growth environment, but the social impact and positive sentiment over the transformation plan will be substantial,” Malik says.

On the flipside, energy consultancy FGE estimated a 10 percent increase in Saudi driving activity due to women will add 60,000 barrels per day to domestic gasoline demand, which could add pressure to a country that, perhaps surprisingly, is a net gasoline importer.

One instant impact of the women now taking to the wheel has been a surge in insurance stocks on the Saudi stock market. In the first two days of women being allowed to drive, all but one of the 33 insurance stocks listed on the Saudi Tadawul experienced an uptick – with Amana Insurance and AlRajhi Takaful climbing 9.9 percent in the first day alone.

This, though, is no spike. The impact will be long and sustained.


PUBLIC TRANSPORT

Mobility meets opportunity

Ride-hailing apps look forward to more female drivers – and more riders

As soon as the driving ban in Saudi Arabia was lifted, Careem’s female drivers began working in Riyadh, Jeddah and Dammam after 2,000 potential “capitanahs” signed up for training. Careem will then begin to offer female passengers the option to drive with female drivers.

“Following the announcement in Saudi Arabia in September 2017 that women would soon be allowed to drive, we opened our door to female captains – ‘captainahs’ – and invited them to come and sign up to Careem and receive the initial training,” Careem CEO Mudassir Sheikha says.

We’ve set a longer-term target of having 20,000 females signed up region-wide by 2020”

“We’ve been overwhelmed by the response. In line with Careem’s commitment to create job opportunities across the wider Middle East region, 2018 will see a new focus on attracting women to sign up to the platform. We’ve set a longer-term target of having 20,000 females signed up region-wide by 2020.”

Earlier in 2018, Careem set up a “women’s female captain committee” to examine how to include women on the platform, as well as identify how to create a conducive environment for them to operate. “Driving for a ride-hailing company provides the chance to be your own boss, earn an additional income and work your own hours, so it’s particularly geared towards the needs of working mothers,” says Careem co-founder Abdulla Elyas.

“To date, Careem has welcomed women in Egypt, Jordan, Lebanon, Morocco, Pakistan and the UAE and registered some 2,000 women in Saudi ahead of the decree coming into effect.”

Currently, about 70 percent of Careem’s passengers in Saudi Arabia are women.

Main rival Uber is also planning to launch a new feature that allows female drivers to select a preference to be connected to women riders. The feature is designed to allow women to take advantage of the economic opportunity that driving for Uber can provide, while also “being mindful of the cultural context.”

“The pilot reflects the local and significant cultural shift, preserves flexibility and will help Uber serve more people at this important time,” a recent statement from Uber notes. The pilot will be rolled out in the fall and made available to all women drivers in the kingdom.


FEMALE EMPLOYMENT

Female drivers will spur employment opportunities

A GulfTalent survey now reveals the new economic and workplace opportunities for women of the driving ban repeal

According a new survey from Gulf Talent, there is set to be a significant impact on the wider Saudi economy from the rulings allowing women in the kingdom to drive. This doesn’t simply relate to auto makers and dealerships, but the stimulus provided by allowing women greater mobility and the freedom that comes with it.

The survey points to three key findings about the new opportunities:

• Driving is expected to empower Saudi women and contribute to their progression to senior leadership roles in the workforce traditionally held by men.

• Many working women will switch to more lucrative jobs when they can better access them by driving.

• Driving will create new jobs for women in the automotive sector, while more city jobs become accessible to unemployed women from outlying towns and regions.

Based on the survey findings, an overwhelming 82 percent of Saudi women plan to take up driving before the end of 2018. This is expected to contribute to more women growing into senior roles traditionally dominated by men, many women upgrading to higher paying jobs further away from their homes, and many currently unemployed women getting the opportunity to work.

Women’s empowerment and growth

Career advancement is a major factor in empowering women and is one of the pillars of Saudi Vision 2030. The GulfTalent survey found that women’s driving significantly enhances their chances of career progression by giving them the mobility required for managerial positions and removing logistical barriers that have traditionally inhibited promotion to senior roles.

“Senior positions often involve working with employees in multiple offices across the region either within or outside the country, which was more difficult in the past without being able to drive,” comments a regional HR manager at a construction company in Dammam. “Now that women will be able to drive, more female candidates will likely be considered for senior roles that entail traveling to other offices.”

Improved job-skill matching

The survey predicts that driving will lead to a wave of employed women moving to better matching and more lucrative jobs in other companies. Many of the survey respondents admitted that they previously had to settle for jobs with lower pay than their qualifications merited or unrelated to their interests and studies because of transport constraints. Many women surveyed affirmed they will be looking for better opportunities as soon as they are able to drive.

Senior positions often involve working with employees in multiple offices across the region”

One HR manager in Jeddah told GulfTalent “We will now be able to hire more female staff for sales positions and other jobs requiring work outside the office.”

New jobs for women

The Saudi government’s Vision 2030 aims to raise women’s participation in the workforce from 22 percent to 30 percent. The new opportunities created by women driving are set to contribute to achieving this goal.

One key segment that will benefit from driving is women from villages and small towns, many of them teachers, who need to commute to jobs in larger cities. With long-distance public transport limited and costly, many of these women have historically been unable to work at all. “The ability to drive will allow women to commute to work in the cities from more remote locations in the same way that their male counterparts have been doing for years.” said Turki Almadhi, founder and president of Tavi, an investment firm with offices in Riyadh.

By 2020, an estimated three million women are forecast to be driving in Saudi Arabia, according to research by audit firm PwC. As a result, the kingdom’s automotive sector is expected to see a significant boost in demand, leading to creation of many new jobs in the sector, including a large number of female employees to cater for the new breed of female car owners. Transport services such as Careem and Uber have already announced plans to hire thousands of female drivers.


“This is the future”

Saudi’s Princess Reema heralds the economic benefits of this new era of female independence

Princess Reema bint Bandar, the deputy of planning and development for the Saudi Arabian General Sports Authority (GSA), has outlined why the move is much more an economic decision as a social and cultural one.

“The strategy is pure economics,” she told CNN. “The economics say you can’t have 50 percent of the community not participating. The economics say when 50 percent of your community, and specifically women, are involved in business and in trade you actually have a better economy.

“This is about job creation, this allows a woman to behave as a professional. She can get to work on time, by herself and operate independently.”

She points out that the measure is part of a wider process of social and economic inclusion. “This is the future, this isn’t something you go back from,” she says. “The symbolism of this is that we are taking control, but taking control collectively. This isn’t a singular activity. The onus is on us to take the next step forward in the growth of the inclusion of women in our country.”


Princess Reema bint Bandar

THE AUTODEALERS

Driving the choice

Crystal Worthem, marketing director, Ford Middle East and Africa, on the changes in the kingdom’s auto showrooms

Will Ford now expand its model range offering in Saudi to cater to this new, wider customer base?

At Ford, we already offer and sell a full range of products in the kingdom. But we see that the mix of products that we sell will begin to change as we begin to deliver cars to women across our showrooms. We’ve spent an incredible amount of time listening to Saudi women about not only their model range preferences but also what is important to them across the entire customer experience.  We certainly want to continue this dialogue and learn more from them in terms of the potential product mix and their preferences.

How does the female customer differ?

One of the key areas of feedback so far is that safety and having driver assist technologies are on top of the list for this new customer group. There is also a penchant to drive small to mid-size sport utility vehicles (SUVs) given the size of the models instils a sense of confidence and safety on the road. Our safety offering is validated by our five-star safety ratings across a range of our vehicles, especially the SUV range.

Safety and having driver assist technologies are on top of the list for this new customer group”

Ford was also the first mainstream manufacturer to roll out driver assist technologies and convenience features nearly a decade ago. Our extensive range of driver assist technologies help provide the confidence our female customers need as they take on the road.

What plans are there to amend or upgrade the showroom experience?

Purchasing a vehicle is an exciting event and an important investment, and to ensure our customers entail a family experience, our distributor AJVA has already invested in upgrading facilities to reflect this. This includes creating a warm welcoming family environment with special areas for children to be entertained while the parents are looking at the vehicles. AJVA has a team of both male and female sales consultants to help our new customers based on who they prefer to interact with. AJVA has a long-standing team of female employees who have a deep understanding and experience with the Ford brand and its products.


EXPERIENCE

Driving in Riyadh

Samar Almogren writes about driving in Saudi Arabia for the first time

My name is Samar Almogren. I’m a talkshow host and writer. I took off my niqab a long time ago.

When I first decided to show my face on television, it did not go down well. But my father supported me, and has always supported me in all of my life decisions. He’s the one who encouraged me to study abroad. So, I’ve driven in different countries before, and I have an international driver’s licence, but it’s going to be totally different at home.

I actually hate driving. But that’s not the point. The point is that it is my right. I can drive, and whether I choose to or not is another issue.

It’s going to be great to be able to take my mother around, rather than have her sit in the backseat with a stranger”

To get in my car, to hold this steering wheel, after having lived my entire life, since the moment I entered this world, in the back seat... This is now my responsibility, and I’m more than ready to bear it. I’ve long depended on myself.

I always knew this day would come. But it came fast. Sudden. I think this was the biggest stumbling block. I don’t see any more obstacles from here on. Driving was the big one, and that’s done now.

Everyone’s already asking me to drive them to work or to come for coffee. It’s going to be great to be able to take my mother around, rather than have her sit in the backseat with a driver who’s a stranger. No, my mom isn’t going to drive at her age, but we are going to drive her around, me and my sisters. We want to spoil her.

What’s most important to me is that I can drive my baby around. It’s the worst thing to me to have to entrust him to a driver, even though I’m always with him in the car.

I wore white tonight because it’s the colour of peace. I feel like a butterfly... No, a bird. I feel free like a bird.


Talkshow host and writer, Samar Almorgren

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Last Updated: Thu 12 Jul 2018 04:19 PM GST

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.