Social and economic changes brought by UBER in Saudi Arabia and Egypt
On June 2nd it was reported that Saudi Arabia has signed a deal to purchase shares of Uber worth 3.5 billion USD through the Public Investment Fund (PIF) and thus becomes a partial partner in the kingdom, and has representation on the board, something that will give Saudi Arabia impact on decisions.
This transaction will contribute to spreading the sources of income of the Kingdom’s economy and reduce its reliance on the oil sector so much. In this context it should be noted that Saudi Crown Prince has set up the fund as an important contributor to this process expanding it from 600 billion reals (160 billion USD) to more than 7 trillion, helping Riyadh to become “investment powerhouse”.
In addition, the use of the service of this application can help create jobs. This service, active in the kingdom since 2014, is common among Saudi women who are forbidden to drive, according to the company, 80% above the 130 thousand of its users in the kingdom are women. When the lack of cheap and convenient transportation is a significant obstacle their employment. In addition, greater use of the service will improve the Saudi balance of payments whereas there are millions of foreign drivers driving the women. This cut could save hundreds of millions who are being sent annually by the drivers to their homes abroad.
The company has not announced plans to expand its operations in the kingdom due to this transaction, but the transaction will assist in removing the legal difficulties of service in the kingdom after earlier this year, in Mecca, transportation authority spokesman said foreign taxis that use mobile apps, are illegal since they do not have the license of the Ministry of Transportation.
Indeed, on March 4th, it was announced that a special committee from among several different government agencies was created to regulate the market of mobile taxi applications.
In Egypt, this service began in November 2014 in the cities of Cairo and Giza, and a year later in Alexandria, when the number of drivers who joined the service in accordance year increased by 73 and it put Cairo as the city with the highest growth rate in Europe, Middle East and Africa.
On March 8th it was reported that this issue is of concern to taxi drivers in Egypt who are protesting and demonstrating against ten thousand users of the application which are defined by them illegal “who steal their income” and therefore are asking the government to turn off the service in the country. Taxi drivers fighting it, among others, by posing as customers and calling the service through the app and deliver drivers to the police upon arrival.
On February 26th Transportation Authority in Cairo imposed fines on nine drivers who have worked with these applications because of “circumventing the law”, however the legal status of these companies remains unclear, especially as the service provider (Uber, Careem) claim to be IT companies alone and actually do not own a single vehicle.
