02 August 2016
The ride sharing app is expanding in the region, after attracting several big government backers.

How often do you Uber? The ride-hailing app has become a household brand and has joined the ranks of Google as a commonly used verb in everyday life. This is particularly true of the Middle East, which has become one of the U.S. firm's most successful foreign markets.

First developed in San Francisco in 2009, Uber has attracted big name investors like Goldman Sachs, Google and the Qatar Investment Authority. Last month, Saudi Arabia's sovereign investment arm Public Investment Fund (PIF) purchased a $3.5 billion stake in the firm, and Uber said the financing round valued it at $62.5 billion.

Uber has seen "incredible growth" in the Middle East over the last six months, especially in Egypt, according to Jambu Palaniappan (pictured below), the company's regional general manager for Eastern Europe, Middle East and Africa.

"The number of drivers on the platform has increased forty times in the last year. The number of riders has increased five times, that's across MENA [Middle East and North Africa]," he told Zawya in an interview conducted in May, before the announcement of the Saudi investment. He did not provide detailed figures.

"Egypt specifically has been Uber's fastest growing in MENA (and) that we've ever seen including the U.K., France, etc. The business has grown basically 200 times over the last year and that wasn't off a small base a year ago. We're continuing to double down and invest in more cities and more products and also bringing a team on to support that as well," he said.

Uber currently serves nine countries and 15 cities across the MENA region and in November last year announced plans to invest $250 million to expand its operation over several years, but without giving a timeframe. A company spokesperson told Zawya in an email that "the money is dedicated to the region and will be spent where/when needed".

Currently, the firm does not have operations in Oman or Kuwait, but it has entered the Pakistani market and is eyeing expansion in Africa.

"We [will] make a big push on Africa expansion this year as well," Palaniappan said. "I think we'll always look at new countries in the market, we don't necessarily have an exact timeline... But it's the idea of increasing access to Uber to more people. That's fundamental to our business."

Big hit with Saudi women

One reason Uber has taken off in the region is because it helps to address a fundamental issue for regional governments... job creation.

"Over 19,000 work opportunities have been created in the Middle East over the last two years with Uber," Palaniappan said. "When you think about moves to increase access to employment and create entrepreneurship, starting your own business along the lines of Uber is an incredibly powerful tool.

"I think we've seen such progress and innovation from governments on how Uber can be part of the solution," he added. "That's the reason our business has grown at the astronomical rate is has over the last year."

Saudi Arabia's investment in Uber was its first foray into the technology start-up market as part of efforts to diversify the Gulf Arab state's economy and create jobs for citizens. PIF's managing director will take a seat on Uber's board, giving the Riyadh government direct involvement in the company's decisions, according to a Reuters report.

In the ultraconservative kingdom, where women are not permitted to drive, Uber has proven particularly popular, not just as a mode of transport, but as a means for social change.

"We get comments from women all the time in Saudi Arabia saying that Uber has given them much more in terms of accessibility to transport options, a lot of them go back to school or back to work," Palaniappan said. "For us, 80 percent of our customers in Saudi right now are women."

Asked whether Uber provided the option of dedicated female drivers for women clients as other taxi services do in some conservative parts of the Middle East, Palaniappan said: "We don't." (If the app launches a service for female users - maybe called Uber Pink - you know where the idea came from.)

Uber Pool

Uber has already introduced Uber Chopper in the United Arab Emirates (UAE) for those looking for a stylish way to fly down for the Formula 1 in Abu Dhabi emirate, and Uber Yacht for nautical partygoers, but Palaniappan believes a new product called Uber Pool will help it capture a bigger share of the Dubai market.

Launched in Dubai in September 2013, Uber has roughly 5,000 drivers in the emirate, according to a report by Gulf News in April. It faces stiff competition from local rivals such as ride-hailing firm Careem, which recently secured $60 million in funding and last week announced plans to develop self-driving pods, and the government-operated taxi service, which is currently developing its own smartphone payment system.

"Uber Pool is effectively matching demand for multiple customers and putting them into one car, a shared car, versus each individual taking their own car. When you think about that at scale, the impact it can have on cities where you're taking personal car ownership and shifting that into shared Uber pooled cars, I think it's significant. That's certainly our vision and where we want to go," Palaniappan said.

There are two factors which already work in Uber's advantage - the hot climate makes it difficult to walk to public transport facilities during summer months, and Dubai is a popular global tourist destination.

"Uber is complimentary (to public transport), some of our most frequent pick up and drop off locations here in Dubai are metro stations, which shows people are using Uber as part one of their journey and other options as part two," the regional head said.

"The other thing that impacts demand is the tourist cycle. Over 40 percent of the customers that use Uber in the UAE are not from the UAE, people visiting. It's one of the great pieces of value of a global brand, people can land here, open the Uber app, same app, same credit card, same experience."

The market potential can only grow as governments in several countries in the region invest heavily to further expand their tourism sector, develop infrastructure and nurture the SME ecosystem.


© Zawya 2016