Gulf Cooperation Council (GCC) countries1 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.
GCC governments will have to take a differentiated approach to the sharing economy to balance its rewards and risks, based on each country’s socioeconomic priorities. Defining a clear operating, legal, and tax framework for each sharing economy sector and taking into account its cross-sectoral implications will facilitate the development of local and regional platforms within broader national digitization plans.
In December 2016, Strategy& conducted its GCC sharing economy survey among 2,717 residents of the six GCC countries — including both nationals and expatriates — to understand their relationship with the sharing economy. Nearly three-quarters of respondents were from Saudi Arabia and the UAE. The survey analyzed the usage frequency by these respondents of sharing economy platforms in five sectors (accommodation, transportation, financial services, household services, business services), as well as their spending on these platforms. The survey also asked respondents about the benefits they perceive the sharing economy confers, barriers to its adoption, and their future expectations for it. Respondents were analyzed by gender, employment status, marital status, age, and income level (see Exhibit 9).
The GCC consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Based on the Strategy& GCC sharing economy survey.
"The Sharing Economy: Consumer Intelligence Series," PwC, 2015.
"Youth in GCC countries: Meeting the challenge," Strategy&, 2015.
"Technology at Work v2.0," Citi Global Perspectives and Solutions,2015.
Hilal Halaoui, Salim Ghazaly, Karim Aly, Joe Youssef Malek, and Rawia Abdel Samad, "Private-sector participation in the GCC: Building foundations for success," Strategy&.
Karima Berkani, "Being Uber in Saudi Arabia," Uber Newsroom, Apr. 24,2016.
"Urban population (% of total)," The World Bank, World Development Indicators.
"Share of mobile internet and app usage in the Gulf Cooperation Council region in 2016, by country," Statista, 2016.
Philip Boigner, "The Top Corporate Venture Capital Programs in the GCC," ArabNet, August 7, 2015.
In August 2013, dubizzle was acquired by Naspers, the South African media multinational and parent company of the global classifieds site OLX.
Aby Sam Thomas, "MENA Startups Getting Funded: Carpool Arabia Shares Its Story," Entrepreneur Middle East, December 6, 2015.
"Careem Closes First Tranche in $500 Million Funding Round Led by Rakuten and Saudi Telecom Company," Careem, December 19, 2016.
"Shared benefits: How the sharing economy is reshaping business across Europe," PwC, 2016.
"Understanding the Arab Digital Generation," Strategy&, 2017(originally published 2012.
"European Sharing Economy Coalition," Euro Freelancers.
"A review of the regulatory regime for crowdfunding and the promotion of non-readily realisable securities by other media," Financial Conduct Authority, February 2015.
Allan Woods, "Airbnb operator in limbo after Quebec announces regulation," The Toronto Star, May 4, 2015.
"Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A European agenda for the collaborative economy," European Commission, June 2, 2016.
Sophie Curtis, "Government urges people to be more 'cyber streetwise'," The Daily Telegraph, January 13, 2014.
Fadi Adra, Karim Aly, Chucrallah Haddad, and Serge Eid, "Safeguarding GCC consumers: How GCC countries can modernize their consumer protection frameworks," Strategy&, 2017.
"An introduction to Value Added Tax in the GCC," PwC, January 2017.
Embracing sharing: Managing the disruption of the sharing economy in the GCC