Saudi Arabia will reap an economic windfall following the lifting of restrictions on women drivers next year, according to economists, with the resultant increase in female participation in the country’s workforce set to significantly boost consumer spending.
“Independent mobility of women would definitely make it easier for them to enter and participate in the workforce,” Dima Jardaneh, head of MENA economic research at Standard Chartered, told The National.
Female participation in the Saudi workforce stood at just 19 per cent in 2016, compared with 65 per cent for men, according to EFG Hermes.
“Increasing women’s active participation in the economy, along the line of Saudiisation policies, would considerably boost disposable incomes of nationals; thereby, providing considerable purchasing power in the economy,” the bank said in a research note yesterday.
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Simon Williams, HSBC’s chief economist for CEEMEA, described the move as “symbolic of the push to modernise the Saudi economy, even if it’s also a reminder of how far there still is to go.”
“Practically, the potential upside is real - Saudi women are already well educated, but participation rates are low and this is an important step toward making it easier for them to work,” Mr Willliams told The National.
However Ms Jardaneh said that it was unclear as to the exact impact the lifting of the driving ban would have, with other factors keeping women from entering the workforce also at play.
“It is difficult to pin down the quantum, as in comparison women already constitute circa 50 per cent of university students in Saudi Arabia,” she said.
“This would suggest that there are other factors aside from transport deterring women from the work place including the current social norms.”
Increased participation of women in the workforce is a key part of Saudi Arabia’s National Transformation Programme, which aims to raise the percentage of the country’s women in work to 28 per cent by 2020.
Miss Jardaneh said that all sectors of the Saudi economy would receive a lift, with retail and hospitality firms especially likely to benefit.
The country’s banking and insurance sectors are set to receive a considerable boost as a result of the move, thanks to the increase in auto loans and insurance policies taken out.
Mr Williams said that the move would result in an increase of money circulated through the Saudi economy, due to a reduced reliance on non-Saudi drivers.
“As money currently spent on expatriate male drivers stays in the country rather than leaving the kingdom in remittances, domestic demand will get a lift, too.”
Prince Alwaleed bin Talal, the billionaire owner of Saudi conglomerate Kingdom Holding, last year estimated that the average Saudi family spends 3,800 Saudi riyal per month on drivers, limiting family incomes.
"Retaining foreign drivers not only has the effect of reducing a family's disposable income ... but also contributes to the syphoning of billions of riyals every year from the Saudi economy to foreign destinations in the form of remittances," he told the BBC.
The prince on Tuesday hailed “the brave decision of the leadership” allowing women to drive.