17 Nov Harnessing the power of local SMEs
Oman’s push to support entrepreneurialism has paid off, with SMEs now accounting for around 26% of Oman’s GDP
Four years ago at the Oman 2040 Future Vision National Conference, it was revealed that Oman would continue to prioritize greater private sector integration into the economy by placing a strong emphasis on developing small and medium-sized enterprises. At the time, SMEs accounted for around 15% of GDP but there was hope that this figure would rise in the years ahead.
Now, thanks to the extraordinary effort of the government, SMEs account for 26% of GDP. This significant rise has been achieved through numerous incentives and programs aimed specifically at supporting promising businesses and startups.
The sector also received support from Haitham bin Tariq, the Sultan of Oman, who spoke about the importance of both SMEs and entrepreneurship, especially in regard to startups that are focused on innovation, artificial intelligence and advanced technologies.
This has helped Oman’s capital, Muscat, to make huge strides in establishing itself as a hub for tech entrepreneurs, with startups such as payment platform Thawani Technologies, IoT-enabled logistics company Emushrif and transportation app Otaxi all flourishing in recent years.
Another relative newcomer that is leveraging technology is Fundsmen, a wealth management company that provides advisory services, investment management and investment financing. It has developed its own algorithms to identify opportunities and risks in the market and is able to provide agile investment solutions for investors.
The country has also launched a Rising Omani Startups Programme which has the goal of enabling innovation, supporting the establishment of startups, linking founders with business opportunities and identifying investment opportunities for expansion outside of Oman.
According to the Startup Genome Foundation, an international organization that specializes in developing startup ecosystems and innovation, the total market value of Omani startups exceeded $300 million last year and the Sultanate ranks highly in the Middle East and North African region when it comes to the development and efficiency of startup ecosystems.
Oman is also utilizing its strong ties with the US to further bolster the SME sector, as Said Mohammed Al Saqri, Minister of Economy, explains: “We have a program led by the Ministry of Transport, Communication and Information Technology called the Makeen program. Its objective is to enable local small businesses, entrepreneurs and sole proprietors on a technical level. We have signed an agreement with international US firms to train them, with the ultimate objective being to attract investments from major US companies.”
Perhaps one of the most impressive feats surrounding the SME sector is the fact that it was able to grow even during a tumultuous period as the full force of the COVID-19 pandemic was felt by countries around the world. This was thanks to the government acting quickly and providing the necessary support for startups and young entrepreneurs.
“There were a couple of initiatives such as emergency loans offered by the government in 2020 and 2021 for small and medium-sized enterprises in Oman. In 2022 these loans were waived by royal decree for many borrowers and we have now seen the number of SMEs rise by close to 40% over the last three years,” reveals Abdulwahab Al Maimani, the owner of Abdulwahab’s Office, a leading investment management company.
“Furthermore, if you are the owner of an SME in Oman and are working on developing the company without multiple jobs, you can receive loans of $250,000 or more from a government bank without requiring guarantees and the interest rate is quite competitive.
“This was introduced by the government to facilitate businesses and enhance the ease of entrepreneurs receiving credit. Additionally, there is an initiative to create a secondary market for SMEs so they can be listed and traded as a stock on the Muscat Securities Exchange. This will connect individuals to SMEs in terms of investment and credit.”
Al Maimani, himself an entrepreneur who has founded numerous companies, believes that with access to funding becoming easier through loans and crowdfunding initiatives, the SME sector will continue to flourish and play a significant role in moving Oman’s economy away from a reliance on oil and gas.
“By the end of 2023, there could be as many as 10 crowdfunding platforms to support SMEs and the government will continue to provide collateral-free loans to those who are fully committed to operating their businesses,” adds Al Maimani. “While there are high risks associated with new sectors growing here in Oman, this expansion always creates comprehensive economic growth.”
The Muscat Stock Exchange (MSX) is also doing all it can to support the growth and sustainability of the SME sector, as CEO, Haitham Salim Al Salmi, explains: “We signed a memorandum of cooperation with the Small and Medium Enterprises Development Authority to establish a specialized platform where SMEs could be listed with relaxed measures and disclosure requirements and trade on similar terms to other types of listed securities.
“We aim to create an attractive listing environment for SMEs, especially those operating in sectors that are perceived as high priority under Oman’s tenth five-year development plan. MSX incorporates not only publicly traded companies but also closed joint stock companies. There are more than 300 companies listed, with 126 of them considered SMEs. We want to make sure we trace back these companies and ensure they are listed in the proper market.”