Sovereign funds play an important role in providing financial resources towards the annual budgets of their host governments. There are several Arab funds that occupy advanced ranks in this regard, but the Norwegian government pension fund comes first as the largest sovereign fund in the world, with assets amounting to $1,340 billion.
As for the Omani sovereign fund, it operates under the name of Oman Investment Authority (OIA) . It is a modest fund with assets of RO 18 billion ($46.5 billion) in 2022, comparable in size with some well-known sovereign funds, both in the region and the world.
The latest annual report of Oman Investment Authority notes that it provided RO 5.6 billion to the state general budget over the past seven years (2016-2022), which averages to around RO 800 million ($2.1 billion) annually. Return on investment averaged 8.8 per cent during the past year.
In support of its localisation efforts, the Authority also awarded contracts and tenders to small and medium enterprises totalling RO 190 million in value. This is a boon to small businesses, which had suffered many challenges and hardships during the past years, many enduring closures and losses due to the coronavirus pandemic. Many Omanis were laid off.
Foreign investments made by Oman Investment Authority are now distributed across 50 countries as part of its strategy to diversify them across multiple geographies and economic sectors. Not all investments have been profitable though. Some interested parties have been calling for the Authority to boost its investments at home across viable economic sectors, with the goal of creating more job opportunities for Omanis on the one hand, and increasing the added value of these projects, on the other hand.
Since SMEs need flexible financing with minimal interest, it is advisable to explore the establishment of a national bank owned 60 per cent by the Authority and the remainder offered to individuals and institutions in a public offering. This bank will be a new financing entity for SMEs offering a competitive interest rate.
This initiative will help spur the growth of SMEs who no longer need to depend on commercial lenders.
It must be stressed however that the Authority has done commendable work in establishing projects at home. But due consideration may be given to financing the operations of young Omanis and their small enterprises within the targeted sectors. This will impart due impetus to the growth of this key sector, its integration with the private sector, support job creation for the youth, and open up business opportunities for small and medium enterprises.
Oman Observer is now on the WhatsApp channel. Click here
