CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year
Careem chief executive Mudassir Sheikha said his company has recovered "quite strongly" from the initial wave of the pandemic. (Screengrab)
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Updated 08 February 2021

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year
  • Appearing on Frankly Speaking, Mudassir Sheikha highlighted the Saudi market’s importance and strategic value to Careem
  • He expressed pride in the fact that Saudi citizens now comprise 100 percent of the company’s workforce in the Kingdom

DUBAI: Careem, the ride-hailing company that has revolutionized mobility and delivery in the Middle East, is looking forward to a full recovery to pre-pandemic business levels by the end of this year, its founder and chief executive Mudassir Sheikha, told Arab News.

Its taxi, delivery and other mobility services took a big hit at the low point of the pandemic recession last summer, when it was forced to lay off one-third of its workforce.

But Sheika said: “From the depths of that crisis we’ve actually recovered quite strongly. If you look at the mobility of people business, which moves people from point A to point B, it’s grown 10 times from that point.

 

 

“The ‘mobility of things’ business — the delivery business — didn’t get impacted as much to begin with, and that that has grown four times.

“Even our nascent Careem Pay business — the ‘mobility of money’ as we call it — has doubled in size. So, the businesses have recovered strongly from that low point.”




Sheikha said his workforce in the Kingdom is now 100 percent comprised of Saudi nationals. (Handout)

Sheikha was appearing on the latest episode of Frankly Speaking, a recorded show where prominent Middle East policymakers and business leaders are questioned on their views about the most important issues of the day.

He also revealed that the Careem workforce in the Kingdom is now 100 percent comprised of Saudi nationals, talked about the new commission structure he hopes will help rescue the restaurant industry, and described in detail the reasons for the 2019 sale of Careem to Uber, which made him one of the wealthiest people in the region.

He also explained how, from start-up origins as a ride-hailing service in 2012, Careem now aims to become a “Super App” that can handle the full panoply of consumers’ everyday needs, from calling a cab to transferring cash.

On the 2019 deal which saw Careem taken over by the global giant Uber, he said: “We’re much stronger as a result of being part of the Uber family, and we can actually do more with that support. Just keep in mind that we have an investor, a parent company. Now that is actually quite resourceful — not just from a funding standpoint, but more importantly from an understanding and knowledge of many of the things that we're trying to do in this region.”

 

 

The $3.1 billion sale to Uber made big profits for a range of Saudi investors who had backed Sheikha in earlier finding rounds, but some analysts said that Careem would have been more valuable if it had floated shares on the Tadawul stock exchange in Riyadh as the region’s first “unicorn” — a startup company that achieves a valuation of over $1 billion.

“The decision on whether to continue and do an initial public offering (IPO) versus become a part of the Uber family was considered carefully by the Careem board at that time, and it was determined that the Uber acquisition was the right way to go,” Sheikha said.

“The way the deal was constructed, we have the right to remain independent. We get to keep the Careem brand, we get to keep the Careem culture and can run this business in a way that makes sense for the opportunities in this region.”

The essential difference between Careem and Uber — now under CEO Dara Khosrowshahi — lies in Sheikha’s ambitions to widen his horizons beyond “people mobility” to provide a range of consumer services via the Careem “Super App.”

“Careem is a Super App whereas Uber's focus is more on mobility and trying to become the house of all mobility options,” he said.

“When you open the app in Dubai, for example, not only can you order a car or a taxi, but you can also get micro mobility — you can get a bike — you can order food, you can order groceries, you can order pharmacy products, you can even pay bills and and pay your friends and family through the app.”

He believes that Saudi Arabia, despite the economic downturn of the pandemic, is a perfect place for the “Super App” strategy. “I think our opportunities are plenty, and frankly, COVID-19, while it has been a tragedy on many dimensions, for digital adoption it's actually been a big booster to what has happened in Saudi Arabia,” Sheikha said.

“From our perspective to become a Super App in Saudi Arabia means that we can actually start helping people, not just with mobility but pretty much almost everything they need on a daily and weekly basis.”

Careem is undecided whether to join the rush of companies chasing Riyadh as the base their main regional headquarters, but Sheikha said: “It is a very important and strategic market for us and we have a large part of our workforce based in Saudi (Arabia), so whether we are headquartered here (in UAE) or there it is fair to say that we all spend a fair amount of our time in Saudi and make sure that it gets the attention it deserves as one of our largest and most strategic markets.”

When Careem first entered the Saudi market in 2013, it faced a problem attracting citizens to become “captains” — drivers of Carem taxis — but Sheikha said the pressure of economics, as well as essential training, has now meant the driver force in 100 per cent comprised of Saudi citizens.

“We did a lot of work to make sure that this was seen as a respectable profession, calling them captains, making sure their earnings were given in a way that was acceptable. We started educating customers on how to behave with these captains,” he said.

 

 

Careem also made a big move to attract female “capitanas” when Saudi laws were changed to allow women to drive, but this has been a more challenging goal. “It has something that we would love to do a lot more on. We have a small percentage of our fleet who are female captains in Saudi (Arabia), and once in a while you will get a ride with them. But it’s been hard to scale that program,” Sheikha said.

“What we’re seeing a little bit is that there are women who want to drive and be capitanas, but there’s still a need for acceptance, and perception and the way that this is seen. That needs to evolve before it starts becoming more widespread.”

Sheikha’s big recent focus has been on the delivery market in the UAE, where the surge in home deliveries during the pandemic restrictions has put some restaurants at financial risk. “The food-delivery business in this region is not in a healthy place,” he said.

Careem weighed into the controversial subject last week with a plan to charge zero commission on deliveries by its drivers, charging instead a flat-rate subscription for access to the Careem app. The move drew an instant response from the competition, notably Noon, the e-commerce company run by UAE entrepreneur Mohamed Alabbar and backed by Saudi Arabia’s giant Public Investment Fund.

But, far from being a price war in the food-delivery business, Sheikha sees the move as one that will encourage long-term stability for the restaurants and delivery companies. “Let's not think short term, let's think mid to long term about this huge opportunity ahead of us. If we try to maximize the economics today, we will sacrifice the long-term opportunity,” he said.

Careem has no plans to move outside its birthplace, the Middle East, because Sheikha believes there are huge opportunities to expand and deepen its “Super App” operations to more of the 15 countries and 100 cities it serves in the region.

Likewise, plans to make its car fleet “greener” — by introducing more electric vehicles, for example — will be a secondary priority to the challenge of making transport and other services more affordable, at least while the economic effects of the pandemic are still with us.

Will Sheikha, having taken Careem so far in the relatively short time since it began, ever decide to hand the wheel over to Khosrowshahi of Uber?

“We are very early in the Careem journey. Inshallah, when we look at this business eight or 16 years from now, we see the region being radically better as a result of Careem being around. So, there's a lot to be done and we are just getting started,” he said.

Watch full episode below:

 

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Twitter: @frankkanedubai


The Saudi dividend: Oil price up 20 percent in a month

The Saudi dividend: Oil price up 20 percent in a month
Updated 23 min 4 sec ago

The Saudi dividend: Oil price up 20 percent in a month

The Saudi dividend: Oil price up 20 percent in a month
  • Kingdom’s surprise output cut buoys market, along with rising demand and good news on vaccines

DUBAI: Oil prices rose nearly 20 percent in February as Saudi Arabia’s “surprise” voluntary cut of 1 million barrels took effect in an increasingly optimistic market for crude.
Although Brent crude, the global benchmark, closed on the day slightly off its best level of $67, oil experts said the surge last month was the result of Saudi moves to keep excess oil off the market as part of the OPEC+ alliance of producers.
One analyst said: “OPEC+ will be giving themselves a big pat on the back because the strategy is working, not least because of the big cut.”
The rise last month came as good news on the global rollout of COVID-19 vaccines coincided with signs that oil demand was picking up, and oil in storage was being drained at an increasing rate as economic activity resumes.
The strength of global financial markets, buoyed by the Biden administration’s $1.9 trillion stimulus package in the US, was further evidence of the recovery, with the key S&P index turning in its best performance in four months.
Oil output from OPEC countries fell in February for the first time since last summer, an indication that Saudi-led policy was working.
“So far, the members of the alliance have been cooperating and implementing the cuts in exemplary fashion,” analyst Eugen Weinberg of Commerzbank said.
Oil markets will face a test this week when ministers from OPEC+ meet to decide whether to put oil supply back on the market.
The Saudi output cut expires at the end of March, and other countries, notably Russia, are keen to increase production to gain the benefit of rising prices.
Oil officials in the Kingdom are awaiting data from the OPEC technical committee before committing themselves to reinstating the output. One option could be a phased re-introduction of output in coming months.


Global markets rebound as rate hike worries fade

Global markets rebound as rate hike worries fade
Updated 02 March 2021

Global markets rebound as rate hike worries fade

Global markets rebound as rate hike worries fade
  • Wall Street stocks snapped higher at the open and kept pushing up further

LONDON: World stock markets shot higher on Monday, bouncing back from last week’s heavy selloff as worries about early interest rate hikes faded and US Treasury yields dropped, dealers said.

Wall Street stocks snapped higher at the open and kept pushing up further, recovering much of the ground they lost at the end of last week.

The blue-chip Dow was up 2.1 percent in late morning trading, with the broader S&P 500 and tech-heavy Nasdaq Composite also gaining more than 2 percent.

In Europe, London, Frankfurt and Paris all closed the day 1.6 percent higher.

Asian stocks rose strongly on bargain-buying as the passage of President Joe Biden’s $1.9-trillion Covid relief stimulus through the US House of Representatives provided additional cheer.

While many Democrats are disappointed a $15 minimum wage can’t be included in the package in the US Senate, “it does have the short term benefit of making the path to passing the American Rescue Plan that bit easier,” noted Spreadex analyst Connor Campbell.

Oil prices climbed before this week’s output meeting of the OPEC group of oil producers and their allies, while the dollar advanced versus the euro and yen.

“Equity markets have shaken off the negative sentiment that was doing the rounds last week as the pullback in government bond yields has seen buyers step into the fold,” said analyst David Madden at online trading firm CMC Markets UK.

Stocks took a beating last week as government bond yields spiked higher, with investors worried that too much stimulus will spark inflation and push central banks into raising interest rates earlier than expected.

In a bid to calm markets, several central banks — including in Japan, South Korea and the European Union — sought over the weekend to reiterate their pledges to maintain their ultra-loose monetary policies for as long as needed.

Australia’s led the way by ramping up its asset purchases to keep rates low.

“Traders feel more confident about snapping up relatively cheap stocks as they are less fearful that central banks will look to tighten their policy anytime soon,” said Madden.

News that Johnson & Johnson’s one-shot vaccine had been given the green light by US regulators — paving the way for a quicker rollout of vaccinations — added to the positive sentiment on Monday.

“Now that the US has three highly effective Covid vaccines, expectations for herd immunity at some point in the summer should release a lot of pent up buying power from the US consumer,” said Oanda analyst Edward Moya.

He said this is renewing interest in stocks in smaller companies with investors betting that an early drop in restrictions will boost their fortunes.

Oil prices also rebounded with focus on the key meeting of the OPEC+ group of major producers on Thursday, when they will discuss the huge output cuts that have provided much-needed support to prices.

Russia is said to be keen to turn on the taps again but Saudi Arabia prefers to keep the status quo.


ENGIE ramps up KSA expansion as energy embraces private sector

ENGIE ramps up KSA expansion as energy embraces private sector
Updated 02 March 2021

ENGIE ramps up KSA expansion as energy embraces private sector

ENGIE ramps up KSA expansion as energy embraces private sector
  • French conglomerate aims to more than double its workforce in the Kingdom to 5,000 by 2025

JEDDAH: ENGIE, the France-headquartered energy and services conglomerate, revealed earlier this year its plans to invest a further $6.34 billion in Saudi Arabia by 2025, adding to its existing assets and projects in the Kingdom valued at over $8 billion.

The new investments will cover a wide range of services, but the bulk of the $6.34 billion will be in new public-private partnerships (PPPs) focused on utility and social infrastructure projects, Turki Al-Shehri, ENGIE’s CEO in Saudi Arabia, explained to Arab News.

The firm aims to get involved in PPPs to establish new hospitals, universities, schools and railroads, while its focus on energy services will include renewable energy, energy efficiency, research and development (R&D), as well as advisory services.

The Saudi Ministry of Health recently released Al-Ansar Hospital in Madinah for private investment, as part of its Private Sector Participation Program (PSP). Al-Shehri noted that it is a project worth $300 million, with around 240 beds, and ENGIE is already bidding to build, operate, maintain, and provide medical equipment to the hospital for a period of 20 to 30 years.

Moreover, ENGIE was awarded the Yanbu-4 independent water producer desalination plant by the Saudi Water Partnership Company last year, projected to supply 450,000 cubic meters of desalinated seawater per day using clean energy. According to Al-Shehri, this project alone is valued at around $850 million.

“This is ENGIE’s second water project. The first was Marafiq power and water project,” said Al-Shehri. “We work with water desalination projects around the world, with Saudi being a major target for us.

“The Saudi Water Partnership company recently released a seven-year plan which will require three to four seawater desalination projects per year; bidding on such projects is part of our strategy,”
he added.

After operating in Saudi Arabia for 20 years, the conglomerate expanded its presence in the Kingdom in 2019 by establishing its holding company to bring all the group’s Saudi assets under one umbrella holding company.

Al-Shehri noted that the decision to establish the holding company was encouraged by the Kingdom’s Vision 2030. Announced in 2016, the 2030 plan focuses on increasing the private sector’s long-term contribution to the economy by opening up new opportunities and removing obstacles that are preventing the sector from playing a larger role in development.

“ENGIE’s bread and butter are PPP projects,” he said. “In the past, they were very selective, mainly within Saudi Aramco, Saudi Electricity Company, and Saudi water company … it was segregated and not a countrywide strategy. However, Vision 2030 has completely changed ENGIE’s objectives toward Saudi Arabia.”

There has been a continuous increase in awarding of PPP projects in utility infrastructure projects between 2017 and 2020, while social infrastructure projects have just recently been introduced,
he explained.

Al-Shehri said the holding company was a requirement to consolidate the exerted efforts and utilize existing resources with global know-how. The French company currently has 16 Saudi subsidiaries “and the number is growing” he said.

Restrictions as a result of the coronavirus disease (COVID-19) pandemic did not have too much impact, he added, and plans for ENGIE’s PPP projects have been moving smoothly.

“Since ENGIE operates in 70 countries globally, we were able to learn from countries that were infected prior to Saudi Arabia, and we were able to take measures ahead of time,” he said.

Instead, ENGIE has directly hired 62 additional employees and acquired Allied Maintenance Company (AMC) in 2020, which added another 1,300 employees to its workforce, bringing the total number of staff in the Kingdom to around 2,000.

The firm plans to expand its workforce in Saudi Arabia to reach over 5,000 employees by 2025 and Al-Shehri said ENGIE has a strong local focus.

“When it comes to local content, we are focusing on two aspects: Manpower as well as local supplies,” he said. “ENGIE wants to be, and will be, a leader when it comes to international companies ensuring that there is local content being used and proper knowledge transferred, and local partners.”

He noted that the company spends $130 million a year on local supplies for all its assets, which equates to 85 to 90 percent of supplies being sourced locally.

Renewable energy is a core sector for ENGIE and Saudi Arabia provides big opportunities. During the Future Investment Initiative forum in January, Prince Abdul Aziz bin Salman said that the Kingdom aims to produce 50 percent of its electricity from renewables by 2030. “When the government took on this initiative, the private sector immediately started to follow suit,” Al-Shehri said.

According to a news report by research firm Frost and Sullivan, the region is expected to expand its renewables capacity from solar and wind by 18 times by 2025. “This is a very fresh market and the opportunity for growth is tremendous,” he said.

“It is the largest market in the region … It will continue to grow, and I think we will continue to see changes in policy as a result of prices continuing to decrease and opportunities being open to the private sector and regulations being relaxed,” he added.


Bitcoin is at a ‘tipping point,’ Citi says

Bitcoin is at a ‘tipping point,’ Citi says
Updated 02 March 2021

Bitcoin is at a ‘tipping point,’ Citi says

Bitcoin is at a ‘tipping point,’ Citi says
  • With the recent embrace of the likes of Tesla Inc. and Mastercard Inc., Bitcoin could be at the start of a ‘massive transformation’ into the mainstream, Citi says

LONDON: Bitcoin rose nearly 6 percent on Monday as risk assets rallied after last week’s bond rout cooled, and Citi said the most popular cryptocurrency was at a “tipping point” and could become the preferred currency for international trade.

With the recent embrace of the likes of Tesla Inc. and Mastercard Inc., Bitcoin could be at the start of a “massive transformation” into the mainstream, Citi added.

Bitcoin, which has risen to $47,000 from $4,700 last March, could in the future become the preferred currency for international trade or face a “speculative implosion,” the investment bank said. It was up 5.7 percent at $47,834 on the Bitstamp exchange. Smaller rival ether rallied 7.5 percent to $1,525.

Bitcoin’s recent performance has come with the growing involvement of institutional investors in recent years, contrasting with its heavy retail investor focus for most of the past decade, Citi added.

If businesses and individuals gain access via digital wallets to planned central bank digital cash and so-called stablecoins, bitcoin’s global reach, traceability and potential for quick payments would see it “optimally positioned” to become the preferred currency for international trade, Citi said.

Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions. 

Still, it has over the past year gained traction in some emerging markets such as Nigeria.

Such a dramatic transformation for bitcoin to the de facto currency of world trade — a status currently held by the dollar — would depend on changes to its market to allow wider institutional participation and closer oversight by financial regulators, Citi said.

Still, shifts in the macro-economic environment may also make the demand for bitcoin less pressing, it added.


DIFC Courts sees 41% rise in cases during 2020

DIFC Courts sees 41% rise in cases during 2020
Updated 01 March 2021

DIFC Courts sees 41% rise in cases during 2020

DIFC Courts sees 41% rise in cases during 2020
  • The DIFC Courts’ Small Claims Tribunal (SCT) saw cases increase 47 percent to 466 cases in 2020

DUBAI: The Dubai International Financial Center (DIFC) Courts saw a 41 percent rise in the number of cases it handled last year, with its technology and construction sector recording a 233 percent surge in disputes, it was announced on Monday.

Established in 2004 and based on the English-language common law system, the courts’ jurisdiction was expanded in 2011 to include all businesses from all GCC countries and beyond.

The number of cases at the main Court of First Instance rose last year by 41 percent, while the total value of claims increased 72 percent to AED9.95 billion ($2.71 billion), with the average claim across cases amounting to AED86.3 million. The cases covered a wide range of sectors, including banking and finance, construction, and real estate.

The courts also reported a 50 percent increase in the number of opt-in cases last year, meaning claims where the contracts do not specify the DIFC Courts as the location for disputes but both parties have elected to use it in order to find a resolution.

Zaki Azmi, chief justice of the DIFC Courts, said: “Undoubtedly, 2020 was a year that tested the resilience of every government service, private-sector business, and individual. It was a year that forced everyone to re-shift focus; to reprioritize, and, to adapt to rapid changes.

“Given the extraordinary circumstances that have emerged, all core services of the DIFC Courts have been fully maintained, whilst remaining true to our core values and dedication of public service.”

The DIFC Courts’ Small Claims Tribunal (SCT) saw cases increase 47 percent to 466 cases in 2020. The majority (51 percent) of cases were related to breach of contract, followed by employment (25 percent), property and tenancy (16 percent), and banking and finance (8 percent). The total value of claims related to SCT cases amounted to AED55 million.

Earlier this year, the DIFC Courts launched a new court which will rule on commercial space-related disputes, it was revealed on Monday.

The Courts of Space initiative, in partnership with the Dubai Future Foundation, will see an international working group of public and private-sector experts tasked with exploring space-related legal issues linked to such disputes, and brainstorming possible outcomes.