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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; 8th 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) Entrepreneurial Campus Developing Senior Potential Entrepreneur 2. Nurturing (making SMEs ‘bankable’) Software; Accounting Support Monitoring Mentoring 3. Funding Speedy & Flexible Financing Interest Subsidy – for compliance with ‘nurturing’ discipline 4. Legitimizing Helping SMEs to break into ‘big boys’ club 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 ($30 mill -1st tranche) •SOFT LOAN ($ 65 mill) •OFFSET PARTNERS Outsourcing Funding, monitoring Nurturing Legitimizing EXTERNAL AGENCIES Training UNIVERSITY STUDENTS & POTENTIAL ENTREPRENEURS SMEs *NCPM isOne 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 1,000,000,000 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 [email protected] 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