Saudi decision on women driving is a good sign for investors

Allowing women to drive shows Saudi Arabia is serious about reform. Faisal Al Nasser/Reuters

Allowing Saudi women to drive is a landmark decision for the kingdom - and it is great timing, too.

Saudi Arabia is in the market to sell dollar bonds today, its second this year. The decision to lift a ban that activists have fought for decades is a sign the kingdom is serious about transforming its society as part of a larger drive to diversify the Arab world’s biggest economy away from oil.

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“In terms of achieving one of the goals of the economic reform plan [increasing female participation in the workforce], lifting the ban on driving is a big step in the right direction,” said Khatija Haque, the head of research for the Middle East and North Africa at Emirates NBD. “It’s also a signal to investors, ahead of the upcoming bond issue, that the authorities remain committed to implementing their ambitious economic reform agenda, even though visible progress has been a little slow in recent months.”

For Michael Cirami, the Boston-based money manager at Eaton Vance Management who oversees about US$13bn of assets, the change improves his outlook on Saudi Arabia, but says he will be looking out for a backlash.

“It will be an important indicator to watch,” he said.