It is important for SMEs to benchmark themselves against their leading counterparts across the region. SMEs should always strive to upgrade the quality of services and products they offer, says Abdullah Al Jufaili, General Manager, Sharakah fund.
What is your opinion on the state of affairs of SME sector in Oman at present?
Since the SME Symposium held at Seih Al Shamikat in January 2013, there have been many initiatives from both the private sector and the public sector to support the growth of SMEs. The economic environment has definitely changed. Earlier efforts concentrated on creating awareness and encouraging individuals to establish their own enterprises. The current focus is on helping SMEs grow to play their role in economic development. We are still at the early stages of that.
What all SMEs in Oman need to do to grow more competitive and dynamic?
It is important that SMEs realize that the world has become one village with all the technological advancements. The availability of high speed internet connectivity across the globe and the advancements in transportation systems have allowed businesses to offer services and deliver goods across continents.
SMEs are no longer just competing locally; the competition ground has grown internationally. It is important for SMEs to benchmark themselves against their leading counterparts across the region. SMEs should always strive to upgrade the quality of services and products they offer.
What does Sharakah offer to develop the SME sector?
Our concentration has always been on what we offer post financing. We believe that financial support is widely available and we also believe that SMEs need close monitoring in the first 3-years in particular, to ensure their survival and growth.
In terms of financial support, we offer up to OMR 200,000 in three different schemes (equity, loan and bill discounting). Our core services though are the administrative services post financing. We offer a package of services that includes reviewing the business plan, preparing a projected cash flow, preparing annual budget, reviewing financial reports, promoting the business, conducting a risk assessment, monitoring business performance and preparing marketing plan.
How do you rate the response of SMEs to your initiatives?
In the past 10 months, we have received nine applications for businesses that would only want to avail post financial support. We have always offered these services to those businesses that availed financial support. Given the increase in interest for such services, we are considering offering them to all other SMEs at a nominal fee. Overall, the performance of businesses that we have supported is promising and very encouraging. In the past 18 months more than 10 businesses fully paid the loan amount. Many of these businesses have grown. Some started with one branch and have now six branches. Financially, some of them have grown from a turnover of RO30,000 to RO80,000.
What are the qualities that helped those SMEs that received your help and emerged successful?
Being focused and having a clear plan of where they want to take the business in 3-5 years from now have helped them. Then continually improving the quality of their services and goods have also helped them to become successful.
What are the sectors where SMEs in Oman should venture into?
To identify potential opportunities a newcomer business owner can look at of the following scenarios:
Based on an estimate from The World Trade Organization, Oman Imported U$26,490,000,000 worth of goods in 2012. That is approximately OMR 10 billion and that number would only increase every year. The starting point for identifying potential business opportunities is to look at the list of top 100 most important goods required by Oman and then determine if such goods can be manufactured locally.
Middle East Economic Digest (MEED) business intelligence tool for the Middle East estimates that there are 400 active projects worth U$109 billion. There are many opportunities for SMEs within these large projects.
With the availability of high speed internet connectivity, businesses can reach markets across borders. We can now share information, documents, photos and videos from a mobile device to a user half way across the globe.
Several SME owners say access to financing is one of the key challenges faced by them. What is your response?
Financiers on the other hand are stating that there not many good businesses to be financed. I would say easy money is not available and would not be available. Businesses that have a clear business plan and close to accurate financial projections would always get financing. Indeed, banks support only existing businesses and would require collateral security, but there are many other SME support organizations that provide financial support. Some even provide funding for startups at no security, rules may apply off course.
What should they do to overcome this challenge?
Business owners need to have proper documents in place when applying for financial support. Existing businesses need to apply the best practices and maintain audited accounts. They also need to strive to improve the quality of services and goods they supply.
What are your future plans for the SME sector?
Our aim has been and will always be to grow sustainable SMEs. We would like to assist businesses grow from local to regional to international and we believe that many Omani SMEs have potential to do so. Based on demand from several SMEs, we will introduce non-financial services to those SMEs who have not availed financial support from Sharakah. These services will be provided at a nominal fee.
And how do you rate the future prospects of SME sector in Oman?
It is not starting to grow and I expect to see more good businesses surfacing in the next 5 years across different sectors. There are many Omani’s retiring early in their 30s and starting their own businesses having acquired the necessary skills from their previous jobs. If this trend continues, we will witness a business demographic change in the local market.
The public sector is also playing its role by improving the services being offered to the business community. A number of public sector organizations are offering services online. Wishful thinking, but probably before 2020 we would be able to register a new business from our mobile devices and renew basic licenses. I believe that the right motives are in place.