Interview: Hussain Al Lawati
How do banks, commercial lenders and government stakeholders enhance financial inclusion for underserved segments?
HUSSAIN AL LAWATI: Oman has made significant headway in advancing financial inclusion. Notable milestones have been achieved through the effective use of technology, strong collaboration among policy banks, government entities and commercial banks, leveraging a well-structured network. While progress is still needed to reach the desired level of access to financial resources, the Central Bank of Oman has played a critical role in establishing the infrastructure necessary to promote inclusivity.
While this approach has brought notable progress, certain challenges persist. Banks remain cautious about extending credit to small and medium-sized enterprises (SMEs). Additionally, many SMEs face gaps in their ability to manage funds and projects, as well as ensure that resources are allocated to core business activities. This has created a trust deficit, leading banks to adopt selective credit practices.
Which initiatives can mitigate risks and make SMEs more attractive to lenders?
AL LAWATI: The Development Bank plays an important role in SME financing. Unlike commercial banks, it assumes higher risks in underserved activities such as agriculture, fisheries, infrastructure and industrial projects. The bank offers subsidised interest rates for SME loans, with borrowers paying 50% of the interest while the government covers the rest. For specific projects such as modernisation school buses with safety and tracking systems, the organisation provides zero-interest loans with long repayment terms and minimal collateral requirements. This initiative, facilitated through contracts with the Ministry of Education, supports independent entrepreneurs while ensuring project sustainability through logistical and maintenance support. Beyond financing, the bank also provides capacity building and logistical assistance, helping SMEs to become more resilient.
To what extent do priority areas align with sectors that have high growth potential?
AL LAWATI: Unlike some neighbouring countries that adopt broader definitions of food security, Oman takes a targeted approach, focusing on essential items and avoiding unnecessary categorisations, such as including coffee shops. The sultanate has identified key supply-demand gaps and is directing resources towards high-growth sectors, including fisheries, agriculture and industrial manufacturing. Oman also prioritises reducing imports by leveraging its infrastructure to manufacture products locally. To encourage investment, the government offers incentives – fostering sustainable growth and reducing dependence on external resources.
What is your assessment of the prospects for sustainable financing in Oman?
AL LAWATI: Oman is grappling with climate change challenges, which underscore the urgent need for adaptation projects and sustainable development. In response, the bank has established a framework and a dedicated department to oversee sustainability initiatives, which have been integrated into the bank’s key performance indicators across all levels. The company is also seeking accreditation with the Green Climate Fund to attract green financing and liquidity, particularly for private sector-led projects. While Oman’s wealth is closely tied to oil, market volatility and competing national priorities make external funding critical for accelerating green initiatives. With the sultanate gaining international recognition as a centre for green hydrogen development, efforts to build infrastructure, establish clear targets and promote green finance will play a crucial role in advancing sustainability and environmental progress.
