Youth urged to seize new SME finance opportunities
MUSCAT -- The Main Committee to evaluate loan at Al Rafd Fund examined the loan-applications of citizens at its first meeting since the start of the actual activity of the Fund, headed by Tariq bin Sulaiman al Farsi, CEO of Al Rafd Fund and Chairman of the Committee. The Committee reviewed 8 requests in various economic sectors, and after interviewing the applicants, the Committee approved the finance of 4 projects and the postponement of four other projects. Al Farsi said that Al Rafd Fund loans are open to entrepreneurs and those wishing to establish or support private projects by launching four funding programmes that match the target groups. The Fund provides support, counselling and all information on starting projects to provide adequate funding and technical support to ensure continuity of the projects after their founding.
The Public Authority for SME Development, Rafd Fund, and National Business Centre and SaaS Programmes, which serve as business incubators, have also developed a host of schemes to support start-up project owners. All these institutions acknowledge the fact that SMEs in the Sultanate have the potential to become engines of economic growth and that the Omani youth need to seize new opportunities. Recently, the Public Authority for SME Development sponsored 15 Omani youths to attend a condensed training course in England pertaining to Automobile Industry. Currently, the main SME finance schemes worth mentioning include the newly restructured Oman Development Bank (ODB) as well as the considerable attention being given to the Loan Guarantee Programme.
The 50 per cent government loan guarantee scheme, a joint programme with the Ministry of Commerce & Industry, ODB, Oman Arab Bank and Bank Muscat, has been especially designed to encourage the entrepreneurial spirit of young Omanis who have viable business ideas and are in need of the capital necessary to start their own enterprises or those who are wishing to expand their existing business. The loan guarantee programme provides a guarantee for 50 per cent of each SME loan, up to RO 250,000, with interest rates of only three per cent, while banks charge around six per cent interest on the remaining 50 per cent. All Omani SMEs with a project value of less than RO 500, 000 are eligible for the programme. According to experts the basis of SME financing is pretty much standard across the Omani banking industry, yet what puts Al Rafd Fund, established following the Royal Decree No 6/2013, in an advantageous position is the long-term support and dedication to develop the SME sector.
Additionally, Al Rafd Fund is all set to finance SMEs at a value of RO 70 million during 2014 with an additional RO 7 million every year and a promise to increase should the Fund have great success and demand. The Al Rafd's four new SME funding programmes are important. Mawrid Programme will target those under the social security system and disabled who can manage projects with a loan of RO 10, 000. Taasees Programme targets job-seekers who wish to start projects with a loan of up to RO 20,000. Riyada Programme targets all entrepreneurs, craftsmen, businessmen and women and rural woman with a loan ceiling of RO 100, 000. Taaziz Programme provides additional loans to beneficiaries of the fund and those who seek to expand their projects provided the beneficiary should have paid 50 per cent of the first loan and that the project age should be not less than three years.
The Central Bank of Oman last year asked all banks operating in Oman to allocate at least five per cent of their total credit to SMEs by end of December 2014. Therefore, all the commercial banks have launched various new SME finance schemes in order to show their support to the SME sector. For example, Oman Arab Bank provides various SME financing schemes such as working capital financing, indirect facilities, long term funding and asset financing based on the needs, requirements and capabilities of the applicant in order to support this sector's growth in Oman. The NBC provides credit counselling, entrepreneurship training and business incubator services to SMEs. After last year's SMEs Development Symposium in Bahla, the Sultanate no doubt has a highly reinvigorated interest in SMEs, recognising their key role in economic growth and employment generation.
In Oman, the SMEs account for more than 90 per cent of the total businesses and their contribution to the GDP stands around 14 per cent. Presently, SMEs are the backbone of the private sector, providing the majority of jobs. It is worth recalling that in response to the Royal Directives of His Majesty Sultan Qaboos, the SMEs Development Symposium (January 19-21, 2013) was held at Saih Al Shamikhat in the Wilayat of Bahla aimed at instilling a culture of entrepreneurship in Omani youths, providing more job-oriented education, and addressing hindrances in the development of this sector. With all these new measures, it is hoped that SME financing will no longer be a hindrance as it was in the past. (with inputs from ONA)
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