Taqi Ali Sultan, General Manager of Future Generations International of Towell group says entrepreneurs in SME sector need to dedicate fully for their cause and should focus on innovation. He adds that Towell group does not just distribute money but partners with SMEs to ensure success.
What is your assessment of the SME sector in Oman? What are the areas that need to be bettered?
Oman has a good number of small and medium enterprises (SMEs). However, there has not been a proper strategy for grooming SMEs and enhancing their capabilities to enable them function better.
One of the main problems faced by SME owners in Oman is their inability to raise adequate capital to develop their companies. Then, there is another important issue of de facto ownership of SMEs by expatriates. To elaborate, SMEs may be legally owned by Omanis but practically owned and managed by expatriates who are the de facto owners. While dealing with SMEs during my long career in the Banking sector, most of the interactions were with expatriates. Only at the guarantee part Omani owners used to come into the picture. They knew little about the company, plans etc. This is still the problem which government and banks face in terms of supporting SMEs
However, in the past couple of years, after Saih Al Shamikhat symposium for SME development held under the Royal directives of His Majesty Sultan Qaboos bin Said proper strategies and plans for the development of SMEs have come into existence. They focus on encouraging young Omani job seekers find opportunities as entrepreneurs rather than employees. Another important development is the creation of Public Authority for SME Development and its lending arm Al Raffd Fund with the ability to lend big capital and support SMEs is various aspects.
Has there been a qualitative difference in SME funding and development after the formation of Al Raffd fund?
It has been only a year since Al Raffd started functioning in 2014 and so it is too early to review its performance. Oman needs to build up the culture of entrepreneurship first, and youth should move away from culture of seeking employment. If people want to succeed in business they should look it as their primary source of income rather than the secondary source, which is happening today. Youngsters want to do business retaining their job. This will not produce the desired result as such entrepreneurs will not be able to give full attention. A half-hearted approach is not enough especially in the beginning. One has to gain first-hand experience whatever be the business, and depending on managers is not enough. A good beginning is most important for any business as it is the right time to set the course.
Many youngsters tend to just copy the successful. But it may not work always. Ideally one should have one’s own idea. Not that one should start from zero. One can take ideas, but should innovate on it. Innovation is the key and there should be some value addition. Entrepreneurs should be aware of risks also.
Many who encourage SMEs think that they can solve all problems by giving money. However, I think by giving just the money one creates problem. Here comes the relevance of our model. We tell SMEs that we are their partners and want to share the risk with them. We invest our money with theirs and both become partners committed to the success of the venture. The end result is both of us will benefit.
A Majority of SMEs in Oman complaint about lack of adequate finance. What do you think?
I don’t think that access to finance is a big issue now. Banks have created their own SME financing divisions. Many of the stringent conditions have been relaxed. Many guarantees that were mandatory earlier are not required anymore. However, banks take decisions on the basis of authentic information and failure to provide such may adversely affect issuance of loans. A section of SMEs don’t have proper accounts, management and clear strategic plans that may create problems when they deal with banks. Banks hold public money and are answerable to central banks, security markets and other regulators. So SMEs have to fulfil mandatory requirements. However, Al Raffd doesn’t have very stringent conditions. Another institution that provides funding on relaxed terms is ODB. Funding part is definitely improving.
Are the steps being taken to develop SMEs yielding results?
The increasing number of SMEs in Oman and their growth is evident at institutions like KOM and different business incubators in Oman. But SMEs are seen in only a few areas of service and are not spread evenly in all areas. Many of them don’t have proper set ups and some operate from home. We want to provide them proper set ups.
One can see many of them operating in sectors like manufacture of toffees, biscuits, perfumes; spices and similar products. However many produce only small quantities and couldn’t satisfy large demand. But despite all such drawbacks the silver line is many are serious about entrepreneurship at present.
How can big corporates help SMEs to develop?
The role of corporates in helping SMEs extends from training and guiding to providing necessary marketing support during different stages of growth. Big corporates can use products made by SMEs in several ways if they really want. Such products could be used in a smaller environment like a small division if it is not suited for a bigger scale. At Towell, we make special effort to use services or products of SMEs whenever they approach us. We scrutinize their work, watch their quality and guide them to perform better.
What is your advice for SMEs?
Entrepreneurship is not the just the initial idea. Ideas have to be developed continuously. Entrepreneurship calls for total dedication and continuous learning. Another important thing is SMEs need to be very careful when expanding. Those who want to become entrepreneurs should have the minimum required educational qualification in their field. Regarding education, Oman’s education system has to change which is happening now. Many organisations are implementing programmes at educational institutions to encourage entrepreneurship. One should have a master plan and should know his focus areas. It will be good if budding entrepreneurs select areas that do not need huge capital and can turn profitable quickly.
To conclude, I think Government of Oman is taking initiatives to study the SME sector properly and plan development project based on it. The strategy of the Government is good and will help development of SMEs in Oman.