Saudi Arabia

Saudi Arabia’s Uber Problem Is of the Government’s Own Making

Ride-hailing apps in the kingdom are widely regarded as the region’s worst — in part because of state regulations Rami recalls finally losing it in a hotel lobby in Riyadh one day as he tried to hail an Uber to get to an urgent meeting. Driver after driver accepted his ride request and then cancelled it. He has now resorted to walking in the sweltering city or, for faraway appointments, spending vast sums to hire a chauffeur.

“I’ve used Uber in New York, Dubai and Europe. This is the worst,” says Rami (not his real name). Traffic congestion in the hot, sprawling Saudi capital makes travel difficult. In a city that has been waiting years for its delayed metro system to be finished, has no other public transport and a dearth of taxis, unreliable ride-hailing services compound the problem. Many drivers often call or message the customer to inquire about their destination and whether they intend to pay in cash or by credit card. Cash and convenient destinations are preferred: the wrong answer results in a cancelled ride request.

“It’s getting increasingly difficult to get around in Saudi Arabia and it’s difficult to plan ahead,” says one western consultant who travels regularly to the kingdom for meetings. “It’s terrible. I just don’t do it anymore”. This standard of service is hardly what the Saudi government would hope for as it tries to draw foreign companies to the nation — but the problem is largely one of its own making. As so often happens in the kingdom, conflicting targets between different ministries have created a mess.

The government wants to attract more tourists and has demanded that foreign companies move their regional headquarters to the kingdom by the end of the year if they want to win state contracts. But the government, which remains the country’s largest employer, also wants to lower unemployment by increasing jobs for Saudi nationals in the private sector. So it decided in 2020 that only Saudis could work for ride-hailing apps, narrowing the pool of recruits available to Uber and its Middle Eastern subsidiary Careem given that more than 40 per cent of Saudi Arabia’s population are foreigners.

Among Saudis, ride-hailing jobs attract mostly men. Women won the right to drive in 2018, but it is still rare to see them working for these companies. These circumstances, combined with previous regulations stipulating that cars must be less than five years old and owned by their drivers, caused a dearth of eligible drivers. Those signed up to Uber or Careem often have full-time jobs and work with the companies for only a few hours a day, and usually not during rush hours, according to people in the industry.

Mohammed, who works for a company by day and moonlights for Uber by night, admits he often declines rides that are bound to lead him into the busiest areas. “No one wants to be stuck in traffic,” he tells me, as he drives me home from central Riyadh. “I already spend an hour and a half going to work and back. It is disgusting”. Uber and Careem both declined to comment on their business in Saudi Arabia. But speaking in the background so as not to anger the authorities, industry sources do not mince their words. “It’s fucking appalling,” says one, bemoaning the onerous regulations.

The number of ride requests accepted and completed by the companies’ drivers dropped to almost 50 per cent after the regulations on nationality and car age limits kicked in, industry insiders say. But that figure has risen lately, they add. After some lobbying, the government now allows cars that are up to seven years old to be used by Uber and Careem drivers.

Careem has rolled out new features on its app, allowing drivers to see the destination and fare before picking up the customer, which was not previously possible and often led to cancellations. Uber has taken similar measures. Both companies are working out car financing plans for drivers with the government and banks. “We’re doing everything we can to fix it,” says one insider. “But we’ve been dealt a bad hand.”


Financial Times
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