Uber and Careem in Saudi Arabia — what now?

Saudi Arabia’s announcement that women will soon be allowed to drive cars has been widely welcomed, but it could have a massive impact on the ride-hailing services.

Uber and the Dubai-founded Careem could all be facing a challenge to the revenues that they generate in the kingdom –much of which comes as a result of women not being allowed to drive.

“King Salman bin Abdulaziz al Saud has issued a decree authorising the issuance of driver's licences for women in the kingdom,” Saudi state television announced. “The decree will take effect in June 2018.”

Prince Khaled bin Salman, Saudi Arabia’s ambassador to the US, said women would not need permission from their guardians to get a license or have a guardian in the car and would be allowed to drive anywhere in the kingdom, including the Islamic holy cities of Mecca and Medina.

Women with a licence from any of the Gulf Cooperation Council countries would be allowed to drive in Saudi Arabia, he added. He said the Interior Ministry would have to decide whether they could be professional drivers.

There was no immediate official comment from any of the companies, although on the social media platform Twitter, Careem congratulated "all women" in Saudi Arabia and that it was looking forward to them joining the "Careem family."

Currently women are legally subject to a male guardian, who must give approval to basic decisions they make in fields including education, employment, marriage, travel plans and even medical treatment.

Women in the kingdom are also bound by law to wear long robes and a headscarf and require the consent of a male guardian for most legal actions.

As women have become a greater part of the workforce, many are spending much of their income on ride-hailing services.

Both companies had seen the Saudi market as one of the most lucrative, especially with government plans to bring a further 1.3 million women into the workforce by 2030.

Not only did the two companies see this as an opportunity, so did the Saudi state.

The country's sovereign wealth fund put $3.5 billion into Uber in June 2016 while state-controlled Saudi Telecom Co announced on December 2016 that it had bought 10 percent of Careem for $100 million.

“The percentage of Careem captains who are Saudi has jumped from effectively zero to 60 percent in the last 12 months, and we aim to employ 70,000 Saudis by end 2017,” said Abdulla Elyas, co-founder of Careem, in January.

Zeid Hreish, Uber’s general manager in Saudi at the time said, “In a country where they [women] cannot get behind the wheel we are offering both the women and the government a win-win solution.” 

Exactly, what impact the current announcement or whether it will continue win-win for the two companies is unclear, especially since 80 percent of their customers are women.

The royal decree ordered the formation of a ministerial body to give advice within 30 days and then implement the order by June 24, 2018, according to state news agency SPA.

It gave no details but said a majority of the Council of Senior Religious Scholars, Saudi Arabia's top clerical body, had approved its permissibility.

The decree stipulated that the move must "apply and adhere to the necessary Sharia standards," and it is only likely that once this has been done, the impact on the ride-hailing operators will become clear.

Comment could not immediately be obtained from Uber and Careem.