ODB EXPERIENCE IN FINANCING SMEs Present by: Eng. Ahmed Al-Hajri Prepared by: Eng. Mahmood Al-Yafai

The role of the Oman Development Bank (ODB) in financing SMEs Presentation Section A look at our presentation agenda SMEs in the World SMEs Definition in Oman The role of the Oman Development Bank (ODB) in financing SMEs Prepared by: Eng. Mahmood Al-Yafai

Section End Difficulties Facing SMEs Sector Based on ODB experience Challenges: External & Internal Suggested solutions to the challenges facing SMEs Section End A look at our presentation agenda Prepared by: Eng. Mahmood Al-Yafai

SMEs in the World --------------------------------------------------------------- Small and medium-sized Enterprises (SMEs) are one of the pillars of the economy in the world and represent 95% of the total registered companies and provide between 40% to 60% of the total employment. SMEs (officially) contribute about 33% of the GDP of the developing economies as they offer up to 45% of employment. Prepared by: Eng. Mahmood Al-Yafai

SMEs Definition in Oman ----------------------------------------------------------------------------------------------- Micro Enterprises: with less than 5 working people and annual sales of less than OMR 25,000 (nearly USD 65,000) Small Enterprises: between ( 5 - 9 ) working people and sales ranging between OMR(25,000– 250,000) USD(65,000 – 650,000) Medium Enterprises: between (10 - 99) working people and sales range between OMR (250,000 -1.5Mn) USD(650,000- 2.6Mn) Prepared by: Eng. Mahmood Al-Yafai

The role of the Oman Development Bank (ODB) in financing SMEs ODB Mission Provide subsidized loans to various economical and developmental activities in the country and focus on projects with value added. Additional Tasks Carried out By ODB: Beside the core business, ODB is managing the following Portfolio and Programs: Government Soft Loan Portfolio. Al Rafad Fund Portfolio. Government Grants. Agriculture & Fisheries Researches Fund. Prepared by: Eng. Mahmood Al-Yafai

Financing Sectors Development sectors, which the bank financed 02 04 06 Information Technology Fisheries Health 01 03 05 Agriculture & Livestock Industrial Educational Prepared by: Eng. Mahmood Al-Yafai

Offices & professional institutions Financing Sectors Development sectors, which the bank financed 08 10 Offices & professional institutions Light Workshops 07 09 Tourism Traditional crafts Prepared by: Eng. Mahmood Al-Yafai

Portfolio Performance ---------------------------------------------------------------------

--------------------------------------------------------------------- Past Dues Percentage ---------------------------------------------------------------------

--------------------------------------------------------------------- Accumulated Loans Portfolio from 2009 to 2016 --------------------------------------------------------------------- No. of Jobs Created (Estimation ) No. Of Loan Loan Amount (Mn OMR) Turnover (Mn OMR) Criteria 19 18 158 4,083 92 44 96 3,673 32,849 160 1,263 68,115 404 50 53 4,120 33,364 272 1,570 79,991 Large Medium Micro Small Grand Total Prepared by: Eng. Mahmood Al-Yafai

--------------------------------------------------------------------- Accumulated Loans Portfolio from 2009 to 2016 (Sector Wise) --------------------------------------------------------------------- No. of Jobs Created (Estimation ) Loan Amount (Mn OMR) Sectors No. Of Loans Services 3300 32 8,540 Industries 5610 80 16,303 Education 579 18 3,094 Health 145 5 709 Agriculture 8171 7 17,360 Tourism 184 37 1,965 Fisheries 15375 54 32,020 Total 33,364 272 79,991 Prepared by: Eng. Mahmood Al-Yafai

Challenges : Internal and related to projects --------------------------------------------------------------- Challenges at the inception period: Challenges after inception : Absence of feasibility study and unawareness of its importance. Financial Issues Idea of the project is based on copying other similar projects. Managerial Problems Marketing problems Lack of investor’s expertise experience and required skills (Know How). Lack of self financial resources of the investor and high leverage. Absence of proper planning and thus, fear of failure. Financial issues in terms of liquidity shortage to meet project needs, not maintaining accounting records, continuing selling in credit with out monitoring the company needs of cash flow, overlap between the owners bank accounts and business accounts. Managerial problems due to lack of full-time involvement in the project, inefficiency of personnel , labor issued, lack of strategic planning and marketing plans. Marketing problems as a result of the lack of target market study and marketing plans due to lack of experience. Prepared by: Eng. Mahmood Al-Yafai

--------------------------------------------------------------- Challenges : External --------------------------------------------------------------- The weakness of technical support and advisory services. Unavailability of information and databases of markets. Roles overlap between the different entities serving the same sector. Limitation of the market size and getting affected by surrounding environment. Limited volume of cooperation, coordination and coherence between SMEs and large corporate, thereby reducing the positive results between sectors (Backward & Forward Linkage). Prepared by: Eng. Mahmood Al-Yafai

--------------------------------------------------------------- Suggested solutions to the challenges facing SMEs --------------------------------------------------------------- Administrative Full-time involvement in project operations. The qualification and experience in the area of the project. Good selection of management. preparation of an integrated action plan Financial Good management of the financial resources because the successful business requires good financial control Marketing Readiness of operational and marketing plans and trained staff before the commencement of the project operations in order to implement the business vision and achieve targets. Prepared by: Eng. Mahmood Al-Yafai

solutions Set up of business incubators for some economic activities operating under the scope of small and medium-sized enterprises. Establishment of communication channels (audio and visual), to strengthen the role of the media to create awareness. At the social level, to continue in the dissemination and promotion of self-employment culture among young people. Prepared by: Eng. Mahmood Al-Yafai

SMEs pioneers focus should not be on funding only Set up a national rehabilitation center for sick projects under the supervision of governmental authorities Create customize programs to finance SMEs To give priority in the support of enterprises owned by nationals to enable them provide their services more efficiently and effectively. SMEs pioneers focus should not be on funding only as a key factor to encourage and motivate those projects, but through training and rehabilitation, especially for beginners, pioneers, owners, and individual initiatives, and providing technical support and advisory services, and continue coordination between lenders and other supporting enteritis to create the appropriate environment needed for such projects. Create customize programs to finance SMEs under the Venture Capital model and strengthen the loan guarantee programs and networks in support of pilot projects, Especially with the reluctance of many conventional organizations funding this sector due to the high risks. Prepared by: Eng. Mahmood Al-Yafai

Thank You Present by: Eng. Ahmed Al-Hajri Prepared by: Eng. Mahmood Al-Yafai