MUSCAT -- Oman has launched a new national fund for the development of small and medium enterprises (SMEs), adding new impetus to the government's efforts to nurture a strong entrepreneurial culture among youngsters in the Sultanate.
The SME Development Fund (also known as Al Namaa Fund) has been set up with a capital of RO 100 million, a key executive representing the fund manager announced at the weekend.
Raphael Parambi, CEO of National Company for Projects & Management (NCPM), said the fund is designed to help Omani entrepreneurs obtain debt finance ranging from RO 50,000 to RO 300,000 for their small and medium-scale enterprises.
"The RO 100 million fund was soft-launched in March when we had our first constitutive meeting and our first board meeting. The total capital will be raised in five tranches of RO 20 million each. At the moment, we have 12 investors: four from the private sector, and the remainder representing various pension funds, the State General Reserve Fund, and other government entities. The first tranche of RO 20 million has already been mobilised," Parambi added in comments to journalists after opening an Entrepreneurs' Club at the Caledonian College of Engineering in Al Hail, Muscat, on Thursday.
Similar entrepreneurship clubs will be set up at four other higher learning institutions in the capital region as part of a pilot programme that will eventually be rolled out across universities and colleges around the country, Parambi said.
"This programme is being piloted through five higher education institutions this current semester, rising to 10 colleges, covering over 10,000 students, in the next semester. By the third year, the programme will go national as we begin the process of taking the initiative to the roughly 63 colleges and higher education institutions located around the country. Over a ten-year horizon, we hope to see around 500,000 students go through the programme, ensuring that virtually every student coming out of the higher education system will be touched by the concept of entrepreneurship," the CEO explained.
The resulting benefits to the economy in terms of SME creation, employment generation, and GDP growth are potentially immense, he stressed. "This is the first time that a programme of this nature and on this scale is being conducted anywhere in the world. Assuming that even 1.5 per cent of the target student population become entrepreneurs, we will see some 50,000 additional jobs being created, and a contribution of RO 1 billion being made to the GDP annually. This is very significant for the country."
In addition to the RO 100 million in capital for the SME Development Fund, the National Company for Projects and Management will also manage around 50 million euro in soft loans that have also been earmarked for SME funding, said Parambi.
However, NCPM's training, mentoring and other support initiatives linked to the SME Development Fund will be financed through grants provided by the government via its Offset Programme. A budget of $30 million for the fund manager's activities over the first three years has already been approved by authorities, he said.
Depending upon the uptake of the fund, replenishment of the capital is possible through borrowings. "We are permitted as per our international charter to borrow three times our capital. So realistically we can borrow RO 300 million more. However, given the size of the SME funding market, which is estimated to be around RO 800 million at present, we think the present funding will be more than sufficient. After all, we don't intend to be the dominant provider of SME finance, but rather operate as a facilitator and partner," the CEO said.
Commenting on the Fund's longer term's plans, Parambi said the government envisions a public flotation of the SME Development Fund on the Muscat Securities Market around the time the third tranche is mobilised, tentatively in 4 - 5 years time.
Additionally, a role for the Fund in supporting government employees become self-employed entrepreneurs is also envisaged, he said. "For entrepreneurship development, the government is keen for employees of the government sector with a certain amount of seniority to set up enterprises of their own. We will seek to back that initiative as well, perhaps by drawing on some of the faculty that colleges already have as part of our training portfolio." -- OEPPA Business Development Dept
© Oman Daily Observer 2014
