Careem Halts Pakistan Operations Amid Economic Challenges: A Reflection on the Struggles of Tech Firms in the Region

In a move that signals the challenges faced by tech firms in the region, Careem, the ride-hailing arm of Uber in the Middle East, has announced that it will suspend its operations in Pakistan on July 18. The decision comes amid economic challenges, rising competition, and capital constraints, and marks the end of its core business in a country where it helped pioneer app-based transport nearly a decade ago.

The company, which launched in 2015 and quickly became a dominant player in app-based mobility, will end its nearly decade-long run in Pakistan. The decision by Careem underscores the strain on Pakistan’s digital economy, as tech firms scale back amid high inflation, weak consumer demand, and tighter global capital flows.

In a LinkedIn post on Wednesday, Mudassir Sheikha, co-founder and CEO of Careem, said, "This was an incredibly difficult decision. The challenging macroeconomic reality, intensifying competition, and global capital allocation made it hard to justify the investment levels required to deliver a safe and dependable service in the country."

Careem helped normalize digital payments, app-based bookings, and female ridership in Pakistan. However, newer entrants such as Russia-backed Yango and Latin America’s inDrive have expanded in major cities, offering low-cost models. The decision follows Uber’s exit from Pakistan in 2022.

The Pakistani startup ecosystem has come under pressure since 2022 as venture funding dried up, inflation surged to a record 38% before falling to 3.5%, and consumption weakened. Startups including Airlift, Swvl, VavaCars, and Truck It In have shut down or scaled back their operations.

Globally, firms like Uber, Lyft, and Grab have exited unprofitable markets, narrowed their focus, or expanded into adjacent services such as deliveries and payments. Rising costs, regulation, and thin margins in emerging markets have added to the strain on these companies. Uber still operates in parts of the Middle East and North Africa but has pulled back where profitability remains elusive.

In conclusion, the decision by Careem to suspend its operations in Pakistan is a reflection of the challenges faced by tech firms in the region amid economic uncertainties and tighter capital flows. The move underscores the need for governments and investors to support the digital economy and provide stable conditions for startups to thrive.