Saudi Arabia set for wide-ranging benefits with the advent of women drivers

19 March 2018 Authored by Consultancy-me.com

As the implementation deadline for the Saudi royal decree on women drivers speeds into view, Big Four professional services firm PwC has canvassed the road ahead to predict the likely advantages to the Kingdom, projecting a range of direct and indirect benefits to the economy as a whole.

With last year’s Saudi royal decree allowing women in the country to drive scheduled to take effect by June this year, the local arm of professional services firm PwC, which has over 1000 employees based in Saudi Arabia and programmes in place to boost its gender diversity profile, has taken a look in advance at the potential economic impact to various sectors in the Kingdom. 

Car sales/Car leasing

Naturally, the automotive industry is expected to be the first to receive a boost, with car sales projected to grow at 9% per annum over the next seven years, in conjunction with a motor insurance market tipped to grow at a parallel rate between 2017-2020 (reaching a sum of SAR 30 billion) – the increased revenues due in part to a recalculation of insurance premiums in line with shifting risk profiles. Next in line is the vehicle leasing segment, with growth of 4% predicted over the period to 2025.

With an estimated 3 million female drivers to take to the roads by 2020, such figures might be expected, but there are also a range of peripheral services such as driving schools which will be set for a sizeable bump, as well as mid-to-longer-term impacts in areas such as car maintenance and auto-repair, petrol stations, traffic management and parking, and, not insignificantly, the necessary capital spending on roads and infrastructure.

What will change?

With respect to driving schools alone, PwC notes that there are currently 1.1 schools per million residents in Riyadh compared to a figure of 1.8 in Dubai, suggesting the potential to increase the number of driving schools in the Saudi capital almost overnight – and with the new schools expected to be women-only, there will be a corresponding job creation opportunity for a large number of female driving instructors. 

More broadly, however, the consulting firm believes that there will be a significant boon to the economy as a whole, with opportunities for the government and local and foreign investors. Hala Kudwah, Partner and financial services leader at PwC Saudi Arabia, said at the time of announced decree; “Overnight, this has created a huge segment of mobile women which will certainly accelerate economic reform in Saudi Arabia and attract more business investment.” 

PwC’s Partner/Deals Strategy and Operations leader for the Middle East, Laurent Depolla, said in conjunction with the latest report; “This is an exciting time as Saudi Arabia has taken concrete steps to advance the gender equality agenda, which in turn will boost the Kingdom’s automotive market and present an array of opportunities for market players and investors.”

Mapping the impact of females driving on the KSA ecosystem

Kudwah also suggested that the country would also see a shift in consumption patterns, with previous spending on drivers and taxis likely channeled toward retail and leisure, and noted the potential benefit to general economic productivity; “There’s this productivity black hole where male members of the family take time off work to collect kids from schools, respond to emergencies, pick up the groceries etc. When women are able to drive it will increase the efficiency of the system.”

Overall she says, “The decision to lift the ban on women driving is an economic necessity triggered by the Kingdom’s transformation that is sweeping the nation economically and socially.” The Vision 2030 national transformation agenda of Saudi Arabia is just one of a number of such projects currently underway in the GCC, which are set to have an enduring impact on the entire Middle East.

The regional developments have recently prompted management firm A.T. Kearney to establish a National Transformations Institute in Dubai, while PwC’s strategy subsidiary Strategy& has suggested that the governments of the GCC should consider setting up behavioural science units to support the efficacy of transformational policymaking. Locally, the reforms will be felt at even the most minor level, such as with the Saudi government having engaged The Boston Consulting Group to help it identify opportunities in its reintroduction of cinemas to the country

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