Economic benefits of allowing women to drive are very welcome
As of June, Saudi women will finally be allowed to drive on the Kingdom’s roads. To many, this is going to be a historic event.
As a child growing up in Riyadh in the 1970s, it was not the norm for women to sit in the front seat, let alone drive. Now, I will get the chance to teach my eldest daughter Sara how to drive. What a contrast witnessed in my lifetime.
In addition to the civil rights aspect, the lifting of the ban will definitely also have an impact on the economy and contribute to the Kingdom’s Vision 2030 in various ways. The change will contribute by increasing women’s participation in the workplace and making Saudi society less reliant on expats, as many working Saudi women either spend much of their salaries on drivers or must be driven to work by male relatives.
Existing motor insurance companies will open a special section, staffed by women employees, to serve female customers. In addition, the establishment of new women-only driving schools will create new job opportunities for Saudi females.
Allowing women to drive will not only enhance the daily lifestyle of the Saudi society, but will also have a noticeable positive impact on the Saudi economy
Basil M.K. Al-Ghalayini
Part of Saudi Vision 2030 is to encourage more foreign direct investment in the country. An immediate effect of allowing women to drive is the new market for women drivers. Saudi Arabia’s female population is expected to reach 15 million in 2020, with 20 percent of them expected to drive. This means that various automotive companies will potentially have a massive new market for selling their vehicles, as well as those in the auto supply chain. This demand can be an added value for the Saudi government. Rather than importing more vehicles, which Saudi Arabia and much of the region is reliant on, the government can help encourage FDI. Moreover, further investments will be needed to upgrade and expand the road infrastructure, along with the development and maintenance of car parking areas.
With women expected to begin driving in June of this year, the number of cars and drivers on Saudi roads are expected to increase significantly, which will have a profound impact on a number of areas, ranging from car sales to motor insurance, car leasing and driving schools.
It is quite rare to have a market open up suddenly in this way, and the automotive companies now have a golden opportunity to exploit. Car sales are expected to witness a 9 percent growth per year until 2025, fueled by the new female customer segment, compared to 3 percent annual growth in the past four years.
Car leasing is also expected to substantially pick up, from growing only 2 percent per annum historically to an expected annual growth rate of 4 percent from 2017 to 2025. And since the car leasing market in Saudi Arabia is quite fragmented, this growth will open the door for the consolidation of existing players and emergence of new entrants to capture a share of the rapidly growing market.
Allowing women to drive will not only enhance the daily lifestyle of the Saudi society, but will also have a noticeable positive impact on the Saudi economy.
• Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.