Small and medium enterprises (SMEs) play a vital role in driving economic growth and development across the globe. Countries like the United States, Germany, and India have demonstrated the power of SMEs in fostering innovation, generating employment, and contributing significantly to their respective economies. In the Gulf Cooperation Council (GCC) region, Oman stands out for its commitment to nurturing a robust SME ecosystem.
Oman's SME landscape has witnessed remarkable progress in recent years. The number of SMEs registered with the Authority for Small and Medium Enterprises Development (ASMED) surged by 30%, reaching 135,064 by the end of 2023, compared to 104,141 in 2022. Among these, approximately 29,000 enterprises hold the entrepreneurship card (Riyada), accounting for 22% of the total registered SMEs.
SMEs in Oman have made substantial contributions to the economy, driving business growth, trade development, and job creation. The government recognizes the immense potential of SMEs and has implemented various initiatives to support their growth and success.
Oman's Vision 2040 recognizes the crucial role of SMEs in achieving economic diversification and sustainable growth. The vision sets clear targets for increasing the contribution of SMEs, enhancing their competitiveness, and creating a conducive business environment. The success of Oman's economic diversification strategy is directly linked to the development and growth of the SME sector.
Oman's private sector is made up of three main parts: large family businesses, government and semi-government companies, and SMEs. Among these, SMEs, especially micro-enterprises, make up the biggest part of the private sector. These smaller businesses play a critical role in transforming Oman's economy. However, the dominance of large family businesses and government-linked companies across various sectors has made it difficult for SMEs to grow and thrive.
To tackle these challenges and encourage the participation of all private sector players, especially SMEs, the government of Oman take deliberate action and implement a comprehensive policy framework. This includes breaking the monopoly of large family businesses and government companies, creating a level playing field that gives all companies equal opportunities for growth and success, regardless of their size. The government put in place mechanisms to support SMEs through targeted incentives, making it easier for them to participate in government procurement and tenders, and promoting local content. Attracting local and foreign investments and encouraging new business models, such as community-based SMEs in different governorates, is also important. These deep strategic interventions are necessary to empower SMEs as key players in Oman's private sector, building their capabilities to become leaders in the nation's journey towards becoming a developed country.
To foster an entrepreneurial mindset and equip entrepreneurs with the skills they need, Oman has invested in entrepreneurship education and implemented policies to create market opportunities for SMEs. The In-Country Value (ICV) programme requires large companies, especially in the oil and gas sector, to prioritize local procurement and partnerships with SMEs. This initiative has opened up new avenues for SME growth and development.
Despite the progress made, there are still challenges in Oman's SME ecosystem. Access to financing, particularly for early-stage startups, remains a hurdle. Improving the regulatory environment, simplifying business registration processes, and promoting a culture of entrepreneurship are ongoing priorities for the government.
Looking to the future, there are many opportunities for SMEs in Oman to thrive. Key sectors such as technology, manufacturing, tourism, and logistics present enormous potential for SME growth. The government's continued support, together with private sector participation, can unlock new investment opportunities and take the SME ecosystem to new heights.
In conclusion, Oman's commitment to developing a vibrant SME ecosystem is clear through initiatives like Riyada, funding programs, entrepreneurship education, local content policies, and free zones. The oil and gas sector, along with sector holding companies, has played a crucial role in supporting SME development. As Oman continues to invest in SME growth, in line with its Vision 2040, it is well-positioned to create a resilient, diversified, and innovation-driven economy. The success of SMEs is directly linked to achieving Oman's economic diversification goals, and with the right support and collaboration, they can become the backbone of the nation's sustainable growth and prosperity.
Dr Yousuf Hamed al Balushi
yousufh@omaninvestgateway.com
www.omaninvestgateway.com
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