What Saudi women driving means for the country’s economy

Reem Hosam El-din
6 Min Read

Women across Saudi Arabia have officially started driving on the streets of their country after the longstanding ban against women drivers was lifted on Sunday, as Saudi Arabia was deemed the last country on Earth to have a ban on women driving cars. Hundreds of women who already had their licenses went on their very first rides to celebrate their new freedom. “One woman showered every intersection she passed with rose petals. Another took her father for a ride to make up for all the times he had taken her somewhere. Another logged into her Uber Driver application, and waited for a fare,” Time reported.

“The lifting of the driving ban quashes one of the most enduring symbols of sexism and inequality in Saudi Arabia, and has widely been hailed as a major step forward for women’s rights in the country. It also provides immense opportunities for employment—allowing Saudi Arabia to move toward a goal set by 32-year-old Crown Prince Mohammad bin Salman to raise women’s participation in the workforce to 30% by 2030. Women will no longer have to depend on husbands or fathers to get to work, or spend a significant chunk of their salaries on a full-time driver. And some are themselves becoming professional drivers,” Time said.

The Saudi market welcomes women on a larger scale

Of course, allowing the women of Saudi Arabia to drive is likely to give a push to the Saudi economy as women purchase new automobiles and actively become part of bringing income to their country.

According to Bloomberg, lifting the ban on women drivers in Saudi Arabia “could help the kingdom reap as much income as selling shares in Saudi Aramco”. The move is expected to add as much as $90bn to Saudi economic output by 2030. “Selling as much as a 5% stake in the Saudi Arabian oil company could generate about $100bn,” Bloomberg said.

Lifting the ban on women driving cars is expected to increase the number of women looking for jobs, which will eventually end up boosting the size of the workforce and lifting overall incomes and output, according to Bloomberg Economics’ chief Middle East economist. However, it will take some time before these gains are reached, as the economy absorbs the large and growing number of women seeking jobs.

Every year, about 70,000 or more women are expected to join the labour market. The larger participation of women will increase potential economic growth by as much as 0.9% a year, depending on the percentage of women who choose to work either full- or part-time.

Ending the ban is one of the reforms that will have the most significant social effect among the reforms carried out by Saudi Arabia’s crown prince, Mohammed bin Salman. This will also reduce the country’s dependence on oil to transform and improve its economy. Additionally, it will result in higher demand on petrol, according to Bloomberg.

Saudi automotive market expected to see changes

The total number of female drivers in Saudi Arabia is expected to reach 3 million in 2020. On the other hand, male drivers are projected to increase to 9.5 million in 2020, from 9 million in 2017, according to PricewaterhouseCoopers Middle East economic bulletin.

About 3 million new women drivers will be added to Saudi Arabia’s automotive market by 2020, which will open a group of gradual opportunities for investors and industry participants, from car sales to motor insurance, vehicle leasing, and driving schools. “The volume of new driving licenses issued is expected to increase significantly by 2020 as women begin to apply for driving licenses from Q2 2018. This will be the primary, direct enabler for all the resulting demand for car related services,” PwC reported.

Car sales are expected to grow by 9% per annum until 2025, boosted by the new women customer segment, compared to 3% annual growth in the past four years. Market growth in new car sales is expected to be largely captured by existing new car dealers that are well established in Saudi Arabia. However, there will be significant opportunities for market entry in the used cars segment in the short to medium term, PwC added.

As for the motor insurance sector in Saudi Arabia, currently, there are 27 companies providing motor insurance. The motor insurance market is projected to grow by 9% annually during the 2017-2020 period to reach SAR 30bn, according to PwC.

As women get to enjoy their freedom in the conservative kingdom, growth is expected to come along in various sectors. The impacts of the decision to lift the driving ban will be seen clearly over the next few years as the market expands in new, unprecedented ways.

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