How has the response of the government to the COVID-19 pandemic changed the needs of the companies you are serving?
Credit Oman is the national export credit agency of Oman and provides trade credit insurance for accounts receivable, B2B. We work with manufacturers and providers selling in Oman and outside of Oman by covering them against insolvency, bankruptcy, and default from the non-payment risk of the counterparty. We collect a premium from that. It helps companies reach a wider segment of companies and markets. They can also diversify into new products or enter Africa, East Asia, and Latin America. Businesses are reluctant to export, as they are worried they will not get paid. This is why Oman set up this agency 30 years ago to promote and facilitate trade. The pandemic caused a drastic global slowdown of the supply chain. There were lockdowns that restricted traveling and the effective number of people who can actually work. Many companies had the capacity in place but were unable to sell, and it also led to a buildup of receivables because they did not earn revenues and are unable to fulfil their liabilities, such as paying salaries and vendors. The Omani government sought to reduce the liabilities by introducing stimulus packages, financial incentives, tax incentives, and the cancellation or reduction of many fees. One of the latest packages introduced by the Minister of Finance was for investment promotion and export enhancement. Diversification from oil is key, so exports will play an important role in Vision 2040. Exports have benefits such as attracting foreign currency, creating jobs within the country, enhancing SMEs, and so on. COVID-19 has put a hold on some initiatives but has accelerated others. We were expecting many cases of bankruptcy, but thanks to efforts from companies and the government to get banks to waive the liabilities against them, the domino effect has been reduced. Hopefully with the vaccinations, we will see things reopening.
Which sectors are your main clients from right now?
We cut across all sectors. We have building materials, large pharmaceuticals, food, sanitation products, telephone, and IT companies. We are seeing huge growth in those segments. During the pandemic we reviewed our policies, processes, and people and sought to streamline our IT systems. We had strong support from our shareholders and worked to adapt to the new market in an agile way. We also created something specific for SMEs, and the benefit is that they will have protection for their accounts receivable. They can also use this to avail trading facilities from financial institutions, which helps with collateral for banks. SMEs can often be excluded from financial assistance, so this support can allow them to flourish.
How are you working to expand the credit to companies supporting Oman's diversification efforts?
We assess the creditworthiness and risk of the buyer, look at the commodity, semi-finished or finished product, and how trends are developing. We also look at the sector and how it is performing and at the country exports. We try to identify risks. We want to work with AI and big data. Some companies gather this information that can help us assess these factors. In the future, we plan to offer our clients information on the commodities that are attractive and the possible buyers. For now, we have revisited our products, reviewed our pricing, and become more flexible and solution oriented. We have introduced new products for mid- and short-term projects for anything between three to 20 years.
In which foreign markets are you providing the greatest level of coverage?
The GCC is the biggest market for Oman, especially the UAE, KSA, Qatar, and India. This is not for oil. A large amount of credit goes to East Africa because of its proximity and the culture. We have also extended our lines to go to Colombia, Jamaica, Guatemala, Honduras, and so on. We protect companies from commercial risk, for example insolvency of the buyer. In some cases, we have a by-country risk assessment guided by international standards. We look at the risk assessment, and we cover for war, mutinies, or anything else that might prevent funds from going back to Oman. In fact, as a standard for most of our export policies we add the commercial and political risk. Different countries have different levels of risk. We try to encourage our exporters to not go where everybody is going, be smart, and identify other opportunities. We have some fisheries sending fish to Vietnam, for example. We have a mix and match in Oman's output.
What would your advice be for Omani exporters to reach untapped markets?
There are useful websites like ITC, which has filters by sector, country, and commodity. Companies can research demand for their products around the world and the main countries that import such products. There are some tools available to Omani sellers to explore. There is also a procurement map, where one can look into how they can get suppliers for raw materials or products. It is a handy tool, and we advise our clients to use it. They can always come to us, and we can validate the information for them and instill more confidence.
What are your medium-term expectations for export growth, and what would be the main challenges?
The global expectation is that we will see a surge in supply for main commodities such as semiconductors. Many raw commodities will see a surge, and we will see ICT coming up strongly—technology platforms, smarter consumption, e-commerce platforms, and so on. We have seen a huge flourishment in start-ups. We expect a solid recovery of the international market; we will have some little bumps, but because of the state's support to provide a lifeline to businesses, we expect companies to grow. The awareness element in the insurance still needs to improve, but interest in our services has increased after the pandemic, because companies see the value in being protected against unforeseen adverse events.