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

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

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

4. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund 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 4

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

6. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund REACHING FOR THE STARS ENTREPRENEURIAL CAMPUS 1.Mandatory Introductory module - NCPM trainers  An 8 hour orientation seminar;  video presentations with theme “you too can do it” 2.Entrepreneurship Society – seed capital NCPM  Arrange guest lectures by entrepreneurs & professional managers  Learn through company and factory visits  Entrepreneurship games and contests to simulate business.  Training in generating business ideas and preparing business plans 3.Campus Companies – ‘risk free’ entrepreneurship  Canteen, book store, laundry, etc.- gain experience; spread interest 4.Volunteer Faculty – trained by NCPM  ‘Advanced’ module (1 semester) – by volunteer faculty  Advanced module run by college - standardized curriculum by NCPMNCPM 5.Alumni outreach – NCPM will assist 6

7. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund REACHING FOR THE STARS NURTURING Accounting Support – outsourced to reputed accounting firms  Strengthen existing SMEs  Make SMEs ‘bankable’. Software Support – upgrade existing SMEs  low cost software (cloud being examined) Monitoring – major cause of failure of lending program  mandatory monthly monitoring – using accounting reports  Limited advisory support. Mentoring - launched once 4PP stabilized.4PP stabilized 7

8. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund REACHING FOR THE STARS FUNDING Convenient Financing – biggest challenge for SMEs & financiersfinanciers Funding will have following features: Interest Subsidy – @ 4% pa  to eligible SMEs – adherence to ‘nurturing’ discipline Timely financing Flexible terms and condition While ensuring loss only in 1 in 40 deals 8

9. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund REACHING FOR THE STARS LEGITIMISING Creating an Enabling Environment For my friends, anything, for my enemies, the law Helping SMEs break into the big boys’ club: With the help of MOCI, the Advisory Committee and other stakeholders: Tender board intervene to enlist support for SMEs Ministry of Finance: Liaise to expedite payments/ assignments Conferences to encourage private; government sector business Website - considering transparent online self-registry of SME o Turnover; Omanisation o Requires practical definition of SME; estimate of size of addressable market Market access at the micro level, through mentor-forum 9

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

11. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund REACHING FOR THE STARS GOAL-CREATING A CLUSTER OF COMPETENCE 1.All colleges converted to ‘entrepreneurial campuses’ 2.Micro Finance - will be referred to Sanad 3.Equity investing - will be referred to Youth Fund; Growfin 4.Diagnostics and Business advisory- referred to DGSME or TRC ‘Business Development Centre’ & consultancy firms; 5.Incubation – referred to KOM, etc. – scope for additional players 6.Angel Investing & venture capital- to be developed (private sector) 7.Marketing/ logistics support – SME oriented capacity required 8.Accounting – BPO capabilities in selected Audit Firms Cluster of Competence will spread SME development beyond the Fund 11

12. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund SME DEVELOPMENT FUND THE GOAL (10 yrs.) 1.Achieve profitability from year 2 2.Target 500,000 1 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 2000 1 SMEs Cluster of support services – accounting, training, incubation, angel investors 1 Light touch training to 500, 000 students; 2000 SMEs based on available data 12

13. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund 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.parambi1@post.harvard.edu raphael.parambi1@post.harvard.edu SME DEVELOPMENT FUND SO WHAT?....Billion Rial question

14. One who aims for the stars shoots higher than the one who aims for the trees...... Oman Economic Forum, 2012 SME Development Fund 1.The Case for SME development in Oman 2.The Challenge of SME development 3.SME Fund & the 4 Point Plan –the solution 4.Benefit to the Country 5.So What? – RO 1 bill opportunity SME DEVELOPMENT FUND CONCLUSION

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