SME fund to provide OMR15m loans next year

Muscat: Oman’s SME Development Fund (SMEF) plans to provide loans to the tune of OMR14.5 million next year to small and medium enterprises (SMEs).
The fund has disbursed OMR12.5 million this year, taking the total disbursement to OMR33 million ever since the fund was formed few years ago, said Sheikh Salah Hilal Al Maawali, Chief Executive Officer of SME Development Fund. “Some 350 companies have benefitted from the fund so far, and the companies who took loan from the fund provided employment to more than 1,000 people,” added Sheikk Al Maawali, who spoke to journalists on the sidelines of Oman Forum, organised by Alam Al Iktisaad Wal A’mal here on Wednesday.
The SME Development Fund has tailored a set of products that are specially designed to provide SMEs with flexible funding to meet their needs at a subsidised interest rate of 2.15 per cent. The fund’s financial products include asset financing, factoring or bills discounting, working capital, term loan and non-fund based facilities, such as advance payment guarantee and performance guarantee. The fund provides loans to both new start-ups and existing companies for their expansion projects.
Sheikh Al Maawali noted that the commercial banks, which are unable to achieve a minimum lending of 5 per cent to SMEs (as per the stipulation of the Central Bank of Oman), should be penalised. The commercial banks are unable to achieve the target, even after the government raised the annual turnover of companies under the SME category from OMR1.5 million to OMR3 million. “Banks have to grab the opportunity by extending lending to the SME sector, which constitutes 90 per cent of the corporate sector in Oman,” he mentioned.
SME sector contributes 13 to 14 per cent of the gross domestic product (GDP) in the country. However, the average contribution of SMEs in GDP across the world is between 55 and 60 per cent.
Banks must evaluate SMEs, both in terms of financial viability and technical feasibility. Banks can help SMEs overcome difficulties, especially in keeping proper accounts.
Sheikh Al Maawali also remarked that as many as 21 directives were issued way back in 2013 to develop the SME sector.
He mentioned that some 31,000 to 33,000 small enterprises were registered with the Public Authority of Small and Medium Enterprise Development (Riyada). However, the total number of SMEs in Oman could be some 126,000. He stated that different government agencies (Ministry of Manpower, Ministry of Commerce and Industry and Oman Chamber of Commerce and Industry) are using different criteria for classifying SMEs.
Sheikh Al Maawali observed that small enterprises played an important role in creating employment opportunities for youths. Citing the examples of the United States, Malaysia and Turkey, he said that these countries provide several incentives to promote SMEs, which are the backbone of the economy and provides immense job opportunities.
A coordinated effort is needed to resolve the problems faced by the SME sector in Oman, and Riyada has to play an important role in coordinating the work of agencies engaged in developing the SME sector, added Sheikh Al Maawali. “We have more than 14 agencies engaged in providing training to people and for funding small enterprises in Oman.”