Small and medium-sized enterprises (SMEs) are the backbone of most global economies. Although the exact parameters vary by country, SMEs are non-subsidiary, independent firms, which employ fewer than a given number of employees. Under the EU definition, an SME is considered as an enterprise with up to 250 employees and turnover of no more than €50m or a total balance sheet of no more than €43m. The World Bank, the United Nations, and the World Trade Organisation all have varying definitions of SMEs.
Here in Oman the Ministry of Commerce and Industry defines a small enterprise as one that has between one and nine employees, while a medium enterprise employs between 10 and 99 workers. It is estimated that at least 90% of business organisations in Oman would fall under this SME definition. While more than 40% of the sultanate’s SMEs are in the retail sector, small businesses have also established a significant presence in construction and contracting.
So why do we think SMEs are important and how can we help nurture their development? Our government is preoccupied with a number of interconnected goals, namely the promotion of SMEs and entrepreneurship among young Omanis, job creation, Omanisation and economic growth. The promotion of SMEs is regarded as likely to have a positive result on the other areas of concern. The private sector must be the key driver and engine for growth, specifically through dynamic SMEs, while government focus needs to be on creating the framework and environment conducive to growth.
Under the wise leadership and directives of His Majesty Sultan Qaboos bin Said Al Said, a number of initiatives have been established by the government to promote and encourage SMEs. The Oman Development Bank provides SMEs with term loans for the promotion of economic activities in the country including: educational, health, agriculture, fisheries, industrial projects and professional loans.
Sharakah Fund provides capital for new projects by young Omanis and helps equip them with technical assistance and managerial support. The Knowledge Mine (TKM) business incubator has been created by the Public Establishment for Industrial Estates to provide training and consulting to Omani entrepreneurs who want to start their own technology-oriented SMEs.
TKM is located at Knowledge Oasis Muscat in order to facilitate greater networking opportunities.
SANAD is another programme which provides aide to young men and women between the ages of 18 to 40 through start-up loans of up to OR5,000 (US$13,030).
Finally, the Intilaaqah Enterprise Fund is a $10 million fund that was established by Shell in 2005 and acts as a revolving fund dedicated to SME development.
The directorate-general for the development of SMEs (DG-SME) acts as a much needed support framework for the sector. The DG works with local stakeholders and international agencies concerned with creating a strategy for SME sector development in Oman. Studies are also being conducted with the World Bank regarding SME development in the sultanate and bringing awareness about the support services available.
The DG-SME has also made a compendium that provides detailed information on the various programmes and services offered by different government and private sector agencies, including the funding options available from the major financial institutions. Finally, the DG-SME organises seminars anchored by national and international speakers, and conducts an SME conference and exhibition that focuses on different themes and success stories in Oman.
Despite the many initiatives designed to promote and support SMEs, there are still many challenges that inhibit growth. These predominantly result from a lack of experienced and capable management; poor profitability leading to defaults; heavy borrowing; and issues obtaining appropriate guarantees. These challenges are being addressed, but more still needs to be done.
Young entrepreneurs need more training and mentoring from professional organisations and experienced business people to guide them on the road to success.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.