“..youth are the present and future of the nation…”

Developing Small & Medium Enterprises “..youth are the present and future of the nation…” His Majesty the Sultan, while inauguration the 5th session of the Council of Oman

OUTLINE • SME development – why bother? • SME development – the challenges • SME Fund & the 4 Point Plan – the solution • Benefit to the Country & youth • So What?

SME DEVELOPMENT FUNDNEED FOR SMEs IN OMAN SME Contribution to Employment and GDP(median values) Part of: Vision 2020; 8th five yr. plan; Budget 2012 Oman ? Source: MeghanaAyyagari, Thorsten Beck, and AsliDemirguc-Kunt; World Bank paper 3127

SME DEVELOPMENT FUNDCHALLENGES (internal & external)… • Insufficient interest in & understanding of entrepreneurship • Inadequate understanding of cash flow, marketing, management • Market access: private customers and government tenders • Gaps in the delivery of finance: • Availability - 200% collateral, delays kill opportunity • Inadequate monitoring leads to bad debt. • 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

SME DEVELOPMENT FUNDSOLUTION- THE FOUR POINT PLAN • ‘Creating’ Entrepreneurship (create new SMEs) • Entrepreneurial Campus • Developing Senior Potential Entrepreneur • Nurturing (making SMEs ‘bankable’) • Software; Accounting Support • Monitoring • Mentoring • Funding • Speedy & Flexible Financing • Interest Subsidy – for compliance with ‘nurturing’ discipline • Legitimizing • Helping SMEs to break into ‘big boys’ club • Website based transparency Work with all stake holders to create a ‘cluster’ of competence

SME DEVELOPMENT FUNDSME FUND AND NCPM- Operating Structure Funding, monitoring • SME DEVELOPMENT FUND • (under formation) • CAPITAL RO 100 MILL • PENSION FUNDS/ INVESTORS • NCPM* • GRANT ($30 mill -1st tranche) • SOFT LOAN ($ 65 mill) • OFFSET PARTNERS Grants, Staffing Outsourcing EXTERNAL AGENCIES Nurturing Legitimizing Training SMEs UNIVERSITY STUDENTS & POTENTIAL ENTREPRENEURS *NCPM is the manager & the SPV through which grant finance ($30 mill) routed to the Fund

SME DEVELOPMENT FUNDTHE GOAL (10 yrs.) • Achieve profitability from year 2 • Target 500,0001students over 10 yrs. • Multiplier difficult to estimate- ‘goal’: • 7,500 SMEs; some growing to ‘large’ – depends on ‘Legitimising’ • 50,000 additional jobs • contribute RO 1,000,000,000 to GDP annually • Nurture and finance 20001 SMEs Cluster of support services – accounting, training, incubation, angel investors 1Light touch training to 500, 000 students; 2000 SMEs based on available data

SME DEVELOPMENT FUND SO WHAT?....Billion Rial question Commercial opportunities • Financier – opportunity equal to all six leasing Cos • Market access / logistics – both ends of value chain • Business Advisory services • Incubation- no capacity in manufacturing, logistics • Link in to the Fund; other financiers; NTBI • Angel investor network (indebted youth) • Symbiotic relationship: SMEF; Sharaka; Growfin; incubators SME Fund – NCPM will be glad to help raphael.parambi1@post.harvard.edu

Thank You “..youth are the present and future of the nation…” His Majesty the Sultan, while inauguration the 5th session of the Council of Oman

“..youth are the present and future of the nation…”