Embracing sharing: Managing the disruption of the sharing economy in the GCC

27 September, 2017

Gulf Cooperation Council (GCC) countries can unlock significant benefits from the sharing economy and address specific socioeconomic needs if they can harness its powerful effects. The sharing economy is based on the exchange of goods and services directly between individuals through online platforms. It can alleviate the problem of underexploited human resources and assets, thereby enhancing related industries. However, this digital age transactional system is barely beyond its infancy and poses challenges related to regulations, trust, resistance from incumbents, labor policies, and culture.

The sharing economy is growing as it efficiently helps supply meet demand. Consumers enjoy more control and flexibility when purchasing products or services directly from verified providers and conducting transactions through secure online gateways. According to the Strategy& GCC 2016 sharing economy survey, GCC consumers spent US$10.7 billion on sharing economy platforms in five key sectors: accommodation, transportation, household services, business services, and financial services. Spending is expected to increase as nationals in particular develop more demand for sharing economy services.

To make the most of the sharing economy, each GCC country needs a differentiated framework tailored to its market specificities. This can balance key trade-offs to promote economic benefits like job creation and innovation, while mitigating risks to consumers. The framework has five pillars. First, the relevant ministries or authorities need a governance model to oversee sharing economy activities in their respective sectors and address the implications of a system that crosses sectoral lines. Second, fit-for-purpose regulations should address market access requirements, legal liability, and consumer protection. Third, updated labor policies should include part-time employment for nationals and expatriates to participate in the sharing economy. Fourth, GCC countries should ensure that any new taxes cover the sharing economy. Fifth, GCC governments should promote localization of sharing economy platforms to identify truly local solutions to local problems.

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Melissa Rizk

Melissa Rizk

Senior Fellow, Ideation Center, Strategy& Middle East

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