Developing Small Medium Enterprises youth are the present

Developing Small & Medium Enterprises “. . youth are the present and future of the nation…” His Majesty the Sultan, while inauguration the 5 th session of the Council of Oman One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund Oman Economic Forum, 2012

OUTLINE 1. 2. 3. 4. 5. SME development – why bother? SME development – the challenges SME Fund & the 4 Point Plan – the solution Benefit to the Country & youth So What? One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 2 Oman Economic Forum, 2012

SME DEVELOPMENT FUND NEED FOR SMEs IN OMAN SME Contribution to Employment and GDP(median values) Part of: Vision 2020; 8 th five yr. plan; Budget 2012 Oman ? Source: Meghana Ayyagari, Thorsten Beck, and Asli Demirguc-Kunt; World Bank paper 3127 One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 3 Oman Economic Forum, 2012

SME DEVELOPMENT FUND CHALLENGES (internal & external)… 1. Insufficient interest in & understanding of entrepreneurship 2. Inadequate understanding of cash flow, marketing, management 3. Market access: private customers and government tenders 4. Gaps in the delivery of finance: a. Availability - 200% collateral, delays kill opportunity b. Inadequate monitoring leads to bad debt. 5. Business discipline, commitment and customer focus, among existing entrepreneurs Others: rentals, technology, equity, manpower, administrative procedures source: World Bank 2004 report; Booze Allen 2009; NCPM survey 2011 One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 4 Oman Economic Forum, 2012

SME DEVELOPMENT FUND SOLUTION- THE FOUR POINT PLAN 1. ‘Creating’ Entrepreneurship (create new SMEs) Ø Entrepreneurial Campus Ø Developing Senior Potential Entrepreneur 2. Nurturing (making SMEs ‘bankable’) Ø Software; Accounting Support Ø Monitoring Ø Mentoring 3. Funding Ø Speedy & Flexible Financing Ø Interest Subsidy – for compliance with ‘nurturing’ discipline 4. Legitimizing Ø Helping SMEs to break into ‘big boys’ club Ø Website based transparency Work with all stake holders to create a ‘cluster’ of competence One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 5 Oman Economic Forum, 2012

SME DEVELOPMENT FUND SME FUND AND NCPM- Operating Structure SME DEVELOPMENT FUND (under formation) NCPM* Grants, Staffing • CAPITAL RO 100 MILL • PENSION FUNDS/ INVESTORS • GRANT ($30 mill -1 st tranche) • SOFT LOAN ($ 65 mill) • OFFSET PARTNERS Outsourcing Funding, monitoring Nurturing Legitimizing EXTERNAL AGENCIES Training UNIVERSITY STUDENTS & POTENTIAL ENTREPRENEURS SMEs *NCPM is. One the who manager thethe SPV through grant finance ($30 mill) routed to the Fund aims&for stars shootswhich higher than the one who aims for the trees. . . 10 SME Development Fund Oman Economic Forum, 2012

SME DEVELOPMENT FUND THE GOAL (10 yrs. ) 1. Achieve profitability from year 2 2. Target 500, 0001 students over 10 yrs. 3. Multiplier difficult to estimate - ‘goal’: • • • 7, 500 SMEs; some growing to ‘large’ – depends on ‘Legitimising’ 50, 000 additional jobs contribute RO 1, 000, 000 to GDP annually 4. Nurture and finance 20001 SMEs Cluster of support services – accounting, training, incubation, angel investors 1 Light touch training to 500, 000 students; 2000 SMEs based on available data One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 12 Oman Economic Forum, 2012

SME DEVELOPMENT FUND SO WHAT? . . Billion Rial question Commercial opportunities 1. Financier – opportunity equal to all six leasing Cos 2. Market access / logistics – both ends of value chain 3. Business Advisory services 4. Incubation- no capacity in manufacturing, logistics • Link in to the Fund; other financiers; NTBI 5. Angel investor network (indebted youth) • Symbiotic relationship: SMEF; Sharaka; Growfin; incubators SME Fund – NCPM will be glad to help raphael. parambi 1@post. harvard. edu One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund Oman Economic Forum, 2012

Thank You “. . youth are the present and future of the nation…” His Majesty the Sultan, while inauguration the 5 th session of the Council of Oman One who aims for the stars shoots higher than the one who aims for the trees. . . SME Development Fund 15 Oman Economic Forum, 2012