(MENAFN - Muscat Daily) With Oman reviving its interest in small and medium enterprises, recognising their contribution to economic growth and employment generation, the country has developed programmes to set up new units, support them and help them succeed. His Majesty Sultan Qaboos bin Said has stressed on the economic importance of SMEs in national development and also announced a new fund dedicated to the sector.
SMEs in the sultanate, like in many developed countries, have the potential to become engines of economic growth and the backbone of the job market. SMEs account for more than 90 per cent of the total businesses in Oman and their contribution to the GDP is currently around 13-14 per cent. Khalifa al Abri, acting CEO of the Public Authority for SME Development, said SMEs are the backbone of the private sector, where they provide the majority of jobs.
''There could roughly be 160,000 to 170,000 SMEs in Oman, but the active ones are less than 70,000. Among the active SMEs, those being run and operated by Omanis are even less, and we have to work hard to change this trend.'' The Authority aims to achieve overall development of the SME sector, to strengthen its role in providing more employment opportunities, reinforcing competition between established SMEs as well as assisting them in adding value to the economy and economic diversification.
''Currently the contribution of SMEs to the GDP is roughly between 13-14 per cent. Our aim is to increase this contribution to around 20 per cent of GDP in the next five years,'' Abri said. He added that in today's competitive business environment packaging has become a critical factor in determining the success of selling a product, and one of the main focus areas of the Authority is in providing SMEs with training support in developing business plans, design, packaging and marketing of products.
''Many SMEs in Oman create good quality products but they are unable to present them in the market due to the poor quality of design and packaging,'' Abri said. Hailing Oman's efforts in supporting SMEs, the IMF recently said that Oman's focus on developing SMEs has the potential to improve economic diversification and create employment. Additionally, new measures announced recently by the government and the Central Bank of Oman (CBO) related to funding seem to have made SME financing easier. Following decisions emerging from the SME Symposium in Bahla earlier this year, a new fund, called the Al Rafd Fund, has been created to support SMEs in Oman.
The CBO recently mandated all banks operating in Oman to allocate at least five per cent of their total credit to SMEs by end of December 2014. The central bank also urged all licensed banks to show more interest in financing SMEs. According to Abri, ''With all these new measures and initiatives, I believe SME financing is not going to be a big challenge. Many of the aspiring entrepreneurs do not need monetary support, but they lack in business plans and management of business. Developing a right business plan and executing it properly remains a challenge for many SMEs.'' The National Business Centre (NBC) at Knowledge Oasis Muscat, which serves as an incubator for entrepreneurs, has become a premier platform for training, mentoring and supporting Omani entrepreneurs. Malak al Shaibani, director general of NBC, said,
''We are keen to aid our incubated companies to grow and compete in the local and global markets. We recently started an incubation centre and want to accommodate those small businesses that are serious and have ideas that can grow into viable businesses. Increasing the survival rate of businesses is very important as there is a high failure rate among startups around the world.'' Malak also stressed the importance of market, product and pricing research by SMEs before starting any new business.
Among the best SME models, are those of some European countries like Germany. Most of German exports are driven by highly innovative SMEs rather than large corporations. SMEs constitute over 99 per cent of all companies, employing almost 80 per cent of all employees in Germany. Compared to SMEs in advanced economies, Oman's SME sector is at a nascent stage, but experts believe that if Oman's renewed focus is successfully translated into creating a vibrant SME sector then it could become a key contributor to economic g