Careem, the Middle East-based ride-hailing service owned by Uber, announced it will suspend operations in Pakistan on July 18. The company cited economic difficulties, rising competition, and funding constraints as reasons for ending its core business in the country, where it helped pioneer app-based transportation nearly ten years ago.
Economic Pressures Impact Pakistan’s Digital Economy
This decision reflects growing challenges in Pakistan’s digital economy. High inflation, weak consumer demand, and tighter global capital flows have forced many tech companies to scale back their presence. Founded in 2015, Careem became a leading player in Pakistan’s mobile app market before this move.
CEO Cites Harsh Macroeconomic Realities
Careem’s co-founder and CEO, Mudassir Sheikha, described the decision as “extremely difficult.” In a LinkedIn post, he explained, “Harsh macroeconomic realities, increasing competition and global capital allocations make it difficult to justify the level of investment required to provide a safe and reliable service in the country.”
Careem’s Impact on Pakistan’s Digital Landscape
Careem played a key role in popularizing digital payments, app-based ride bookings, and encouraging female riders in Pakistan. However, the company has faced increasing competition from new players such as Russia-backed Yango and Latin America’s inDrive, which offer low-cost services in major cities.
Uber’s Exit and Broader Startup Challenges
Careem’s exit follows Uber’s withdrawal from Pakistan in 2022. Since then, the country’s startup ecosystem has struggled. Venture capital funding has dried up, inflation soared to a record 38% before easing to 3.5%, and consumer spending has weakened. Several startups including Airlift, Swvl, VavaCars, and Truck It In have either shut down or scaled back operations.
Global Trends in Ride-Hailing Markets
Around the world, ride-hailing companies like Uber, Lyft, and Grab have exited markets where profitability is limited. These firms are focusing on more lucrative areas or expanding into related services such as food delivery and digital payments. Rising operational costs, regulatory hurdles, and slim profit margins in emerging markets have heightened these pressures.
Uber continues to operate in parts of the Middle East and North Africa but has withdrawn from other regions where profitability remains elusive.
