By Conrad Prabhu — MUSCAT: Jan. 8: Sharakah, credited with pioneering Omani entrepreneurship and small business development in the Sultanate, has pledged to prioritise funding support for Omani start-ups that revolve around manufacturing and related production activities. This is in line with a broader strategic national effort, spearheaded by the government, to accelerate the pace of economic diversification by encouraging investments in non-oil sectors, chiefly manufacturing, minerals and so on.
“We have decided that in 2017 our priority will be on manufacturing projects because we believe that in order to create a strong and sustainable economy, the manufacturing sector has to be really empowered,” said Sharakah General-Manager Abdullah al Jufaili (pictured). “We have to encourage utilisation of local resources to produce locally made goods that can be eventually exported to regional and international countries,” he added in comments to the Observer.
The award-winning agency, which has invested millions of Omani rials in dozens of small businesses across the Sultanate, is making a strategic shift from an hitherto predominant focus on food and beverage related projects.
“The majority of projects supported by Sharakah typically pertain to the food and beverage sector — not by choice but because majority of applications coming to us related to food and beverages. This will change in 2017. Currently we have 12 new applications in hand, all of them pertaining to industrial projects,” said Al Jufaili.
Going into 2017, Sharakah is also pursuing two key initiatives that, if successful, will dramatically enhance its ability to handle a larger number of funding requests, as well as boost its financial contribution to individual projects.
“Firstly, we are looking at increasing the quota size per project,” said Al Jufaili. “At the moment we provide finance up to a limit of RO 200,000 per project. We are looking to increase that amount per project, subject to further analysis and approval by Sharakah’s Board of Directors. A report that shows the benefits of providing additional financial support at a larger ticket size than currently being done has been submitted to the Board.”
Given its ongoing success in supporting Omani SMEs, the agency has also been attracting pledges of financial support to help grow its funding base. “We have been approached by a number of organisations that have seen what we are doing, and are offering to give us additional funds to support more projects. We are seriously negotiating with one organisation that, if everything goes well, will provide us with additional financial support to manage more projects on their behalf.”
Agreement on the score will be a “game-changer” for Sharakah, the official stressed. “Instead of targeting around 12 projects per year, we could increase financial support to at least 25 projects annually, while the ticket size will be slightly larger than RO 200,000.”
To this end, serious negotiations are ongoing with one government-lined entity, and two private sector organisations which “appreciate what we have been doing and want to consider the possibility of supporting us”, Al Jufaili stated.
In 2016, a record 16 projects received funding support from Sharakah, up from a typical portfolio of 10 – 12 start-ups that receive assistance annually, says Abdullah. Applications have become increasingly innovative and sophisticated as well.
“In the past it used to be mainly job-seekers who would approach financial institutions to start a business, but now you have people who are interested in leaving their jobs or retired early to start a business. These are some of the trends we have seen over the past year.”