Saudi embrace of ride-hailing apps drives economic, social change

Saudi embrace of ride-hailing apps drives economic, social change
Updated 08 January 2017

Saudi embrace of ride-hailing apps drives economic, social change

DUBAI: Saudi Arabia hopes its plan to bring a further 1.3 million women into the workforce by 2030 will be given a lift from ride-hailing apps Uber and Dubai-based rival Careem.
The cars, which the government says should only be driven by Saudi men, offer women, who are banned from driving in the conservative Muslim country, an alternative to being driven to work by chauffeurs, male relatives or the shabby taxi system.
Ride-hailing apps have come under intense scrutiny from governments and regulators across the globe as they disrupt traditional taxi businesses.
But Saudi Arabia courted Uber and Careem, offering state investments, to support its Vision 2030 economic reform plan.
With a budget squeezed by lower oil prices, the plan aims to draw workers away from government jobs by creating 450,000 private sector positions by 2020. Uber and Careem say they will create up to 200,000 jobs for Saudi men in the next two years.
By offering women a way to get to work, it should also help meet the plan’s goal of increasing the female workforce by five percentage points in the next five years to 28 percent.
“This is the next best thing to women being able to drive, because you are in control of your time, no more wasteful waiting around,” said Marwa Afandi, a 36-year-old marketing executive.
With the workforces of Uber and Careem easily expected to overtake the 65,000 nationals employed by state oil giant Saudi Aramco, the kingdom has invested in both companies.
Saudi’s sovereign wealth fund put $3.5 billion into Uber in June 2016 while state-controlled Saudi Telecom Co. announced on Dec. 18 it 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.
SOCIALLY ACCEPTABLE
Women already account for around 80 percent of Uber and Careem’s passengers, the companies say.
“In a country where they (women) cannot get behind the wheel we are offering both the women and the government a win-win solution,” said Zeid Hreish, Uber’s general manager in Saudi.
A personal driver offers the most cache for middle- and upper-class women. But as these cost as much as 3,000 riyals ($800) a month, around 20 percent of the average monthly household income, women are always looking for cheaper options.
Some wealthier Saudi women have never used the country’s existing taxi system because it is not seen as acceptable for them to travel in the older vehicles that are often provided.
Uber and Careem offer an alternative because they require their drivers to use cars that are less than three years old. Uber works with car financing companies in Saudi Arabia to get deals to help its drivers buy newer cars.
The use of the app for booking a car also allows a passenger to select a particular driver and some believe that the use of smart phone technology brings a better class of driver.
There is little difference in price between a journey with Uber or Careem and a local taxi company but the industry does not feel threatened because it caters to a different market — road-side taxi hailers are usually lower income men and do not own smartphones.
“We have very little overlapping demand with Careem and Uber,” said an assistant manager at a Jeddah-based limousine company, who wished not to be named.
Careem is however, developing a subsidised rides program for low-income working Saudi women with the Ministry of Labour.
EVOLVING ATTITUDES
The high female engagement with such apps also reflects how social attitudes are evolving in the conservative kingdom.
Traditional social norms dictate local women cannot interact with men to which they are not related. However, the ride-hailing scenario has jumped ahead of such restrictions, aided by a zero tolerance policy for driver complaints operated by Uber and Careem.
“I am comfortable in the car with the driver because we are getting a professional service from a company where the driver will be held accountable for any complaints made against him,” said Alia Shayef, a 42-year-old banker living in Jeddah.
But some riders and drivers remain uneasy about the mixing of genders. An 18 year old university student in Riyadh said that since more Saudis became Uber and Careem drivers her father has forbidden her to use those apps.
A Careem driver also admitted he does not take any female riders to avoid cultural clashes and any risk of complaint.
The proliferation of ride-sharing services has also done little to take away the yearning for women to drive. Some are concerned that it has made it even less likely that the government will ever allow women to get behind a steering wheel.
In June when Uber announced the Saudi wealth fund had invested in its business some Saudi women took to Twitter to unveil their disapproval with the hashtag “Saudi women announce Uber boycott,” trending within hours of the news.
JOBS FOR MEN
The state investment is partly aimed at bolstering the employment of local men at a time of rising unemployment.
The Ministry of Transportation in November said Uber and Careem must “limit the jobs to Saudi nationals” although legal non-Saudi drivers may continue to work for the companies.
Working for a globally-recognized company such as Uber is a draw for tech-savvy Saudis, helping some overcome the stigma of being a driver.
“Uber is a trend and people want to follow it, and be a part of the digital revolution,” said Abdulelah Bassyoni, founder and managing director of Saudi-based digital consultancy Brain Technology.
Despite this, both Careem and Uber say most drivers work part-time, alongside government jobs that they are reluctant to leave cause of the perceived security and benefits.
Nasser, a 30-year-old Riyadh said he was working as an Uber driver to top up his government salary with extra cash.
“It is crazy to think anyone would leave their government position, it is a blessing to have it,” he said.


Powell: No clear hint on rates but says Fed will aid economy

Updated 55 min 14 sec ago

Powell: No clear hint on rates but says Fed will aid economy

  • The outlook for the US economy, Powell said, remains favorable but continues to face risks
  • Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter

WASHINGTON: Federal Reserve Chairman Jerome Powell sent no clear signal Friday that the Fed will further cut interest rates this year but said it would “act as appropriate” to sustain the expansion — phrasing that analysts see as suggesting rate cuts.
Powell said President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rates and have contributed to a global economic slowdown.
Speaking to a gathering of central bankers in Jackson Hole, Wyoming, Powell didn’t give financial markets explicit guidance on whether or how many rate cuts might be coming the rest of the year. The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of more rate cuts this year.
The outlook for the US economy, Powell said, remains favorable but continues to face risks. He pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
Reacting to the speech Friday, Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the US will do great.”
Trump added:
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?“
Powell’s speech comes against the backdrop of a vulnerable economy, with the financial world seeking clarity on whether last month’s rate decision likely marked the start of a period of easier credit.
The confusion only heightened in the days leading to the Jackson Hole conference, at which Powell gave the keynote address. Minutes of the Fed’s July meeting released Wednesday showed that although officials voted 8-2 to cut their benchmark rate by a quarter-point, there was a wider divergence of opinion on the committee than the two dissenting votes against the rate cut had indicated.
The minutes showed that two Fed officials favored a more aggressive half-point rate cut, while some others adopted the polar opposite view: They felt the Fed shouldn’t cut rates at all.
The minutes depicted the rate cut as a “mid-cycle adjustment,” the phrase Powell had used at his news conference after the rate cut. That wording upset traders who interpreted the remark as suggesting that the Fed might not be preparing for a series of rate cuts to support an economy that’s struggling with a global slowdown and escalating uncertainty from President Donald Trump’s trade war with China.
There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others worried more about the threats to economic growth.
Comments Thursday from Fed officials gathering in Jackson Hole reflected the committee’s sharp divisions, including some reluctance to cut rates at least until the economic picture changes.
“I think we should stay here for a while and see how things play out,” said Patrick Harker, the president of the Fed’s Philadelphia regional bank.
Esther George, president of the Fed’s Kansas City regional bank and one of the dissenting votes in July, said, “While I see downside risk, I wasn’t ready to act on that relative to the performance of the economy.”
George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed’s target level. She said her decision on a possible future rate cut would depend on forthcoming data releases.
Robert Kaplan, president of the Fed’s Dallas branch indicated that he might be prepared to support further rate cuts.
If “we are seeing some weakness in manufacturing and global growth, then it may be good to take some action,” Kaplan said.
George was interviewed on Fox Business Network; Harker and Kaplan spoke on CNBC.
The CME Group, which tracks investor bets on central bank policy, is projecting the likelihood that the Fed will cut rates at least twice more before year’s end.
Adding to the pressures on the Fed, Trump has kept up his attacks on the central bank and on Powell personally, arguing that Fed officials have kept rates too high and should be cutting them aggressively.
Trump has argued that a full percentage-point rate reduction in coming months would be appropriate — a suggestion that most economists consider extravagantly excessive as well as an improper intrusion on the Fed’s political independence.
The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt US export sales.
“Our Federal Reserve does not allow us to do what we must do,” Trump tweeted Thursday. “They put us at a disadvantage against our competition.”
Earlier in the week, he had told reporters, “If the Fed would do its job, you would see a burst of growth like you have never seen before.”
Powell has insisted that the White House criticism has had no effect on the Fed’s deliberations over interest rate policy.