SMALL BUT EFFECTIVE

Oman 2015 | ECONOMY | FOCUS: SMES

SMEs have been globally recognized as the silent drivers of the economy, and the Sultanate is no exception. Omani SMEs account for 90% of the corporate sector, making up around 16% of the country's GDP and serving as a major source of employment.

The Sultanate of Oman is no stranger to foreign investment, actively working to create a business-friendly environment. Regardless of the global economic meltdown in 2008, the Sultanate's economy has enjoyed steady growth over recent years. Moving forward, a large part of those plans hinge on diversifying revenue streams and reducing the oil and gas sector's contribution to GDP by up to 9% by 2020.

Since young people constitute more than 50% of the Sultanate's population, and with the current level of population growth, Oman needs to create more and more jobs in order to reduce unemployment, currently estimated at 15%. That is why, along with diversifying away from oil and gas, the Omani government has recently put a focus on strengthening the SME sector and providing more employment opportunities for young Omanis.

Supporting small businesses has been a major priority for the Omani government for more than a decade. In 2001, The Ministry of Manpower (MoM) established the self-employment program, aiming to create employment opportunities for young Omani nationals, thereby enhancing the development of Oman's labor market, promoting entrepreneurship, and boosting employment through the support of SMEs. The Self-Employment and National Autonomous Development Program (SANAD) encourages entrepreneurial initiatives by offering mentorship, assistance in government services, and support through soft loans.

Furthermore, the Public Authority for the Development of Small and Medium Enterprises (PASMED) has provided practical training to more than 13,000 Omani entrepreneurs. Commenting on the Authority's activity, Khalifa Said al Abri, the acting CEO of PASMED, told TBY, “People with an idea come to the authority and we work with them inclusively, determining the necessary tool-kits and programs that can help them secure and flourish."

Along with the government's efforts to increase the contribution of SMEs to the national economy, the Omani banking sector has shown great support for the development of the SME sector. In 2012, the Oman Arab Bank launched a product for SME financing, named Tomouhi, or “My Ambition," which aims to provide banking services to SMEs. Meanwhile, BankMuscat has launched a financing program designed specifically for SMEs and is offering loans of up to OMR250,000. Additionally, the bank offers Omani entrepreneurs consultancy, workshops, and seminars.

The enthusiasm for stimulating SME growth in the Sultanate seems likely to continue, especially after the recent Oman Economic Forum held in March 2014 in Muscat. The forum, organized by Oman's Ministry of Commerce and Industry (MoCI), in conjunction with the Al Iktissad Wal Aamal Group, the Oman Chamber of Commerce and Industry, and Duqm Special Economic Zone Authority, aimed to attract FDI to local businesses and encourage the establishment and financing of SMEs in the Sultanate.

Additionally, the MoCI has recently revised the definition of SMEs in the Sultanate. According to the new circular, released in mid 2013 by the Central Bank of Oman, “micro-enterprises" are establishments with fewer than five workers and an annual turnover below OMR25,000, while “small-enterprises" are establishments with a number of employees ranging between five and nine, and an annual turnover ranging between OMR25,000 and OMR250,000. Enterprises employing between 10 and 99 people, with an annual turnover ranging between OMR250,000 and OMR1.5 million, are considered “medium enterprises." Under the previous definition, the number of employees was the only criteria used to define the size of an enterprise. The Ministry claims that “the new definition will enable the provision of support to SMEs in a more efficient manner."