A look at the entrepreneurship ecosystem in Oman

By Munawwar Ahmed

Pre-1970, Oman was a traditionalist, closed economy with little to no international relations, no girls in school and a substandard communications network. Situated in the south-east corner of the Arabian Peninsula, the Sultanate of Oman, borders with Middle Eastern giants Saudi Arabia and the United Arab Emirates giving the nation a strategic edge desired by many.

Today, with literacy rates hovering at 90% and balanced gender scales in classrooms, the reinvented contemporary nation is punctuated with universities, avant-garde airports and a fairly infant ecosystem designed to propagate and sustain entrepreneurial ventures. With the realization that a sizable young population lies in the ranks, and in the wake of the current economic reality in the region, an entrepreneurial revolution deeply embedded into the system could perhaps be the viable solution for the Arab world.

Entrepreneurial Environment

The internal incubation environment of Oman, as described by Dr Yochanan Shachmurove, is a tax haven, where residents, investors and businesses benefit from the absence of levy. With the grass-root levels of innovation being tapped, several government and non-government organizations are looking to accentuate entrepreneurial awareness and nurture talents through incubation campaigns such as “I’m an Entrepreneur” and “Sharakah Youth Fund.”

With three major entrepreneurial components – fiscal, trade and labor freedom – ranked highly favorable in the ecosystem, Oman offers freedom unlike most of its counterpart nations. A higher profit-retention rate, cheaper duties and affordable non-monetary expenditures, such as health benefits, ensure business ventures in the sultanate are able to flourish.

Challenges within the Ecosystem

Although Oman fosters several non-energy business sectors such as tourism and light manufacturing, crude oil still constitutes 80% of government revenue. Overly dependent on a single source, the initiation of a multi-faceted income stream is perhaps a tad too late, but would nonetheless be another feather for the sultanate. There are however, several challenges that exist for the country’s growing startup ecosystem.

The primary inhibiting factor would be the restricted germination time start-ups have to become a mature venture and the subsequent urgency to diversify the economy. With the population growth rate substantially higher than the economic growth, there is a sustainability challenge which is likely to result in educational institutes unable to meet the rising demand. Approximately 45,000 jobs have to be created each year in the private sector to absorb graduating job seekers.

Recognizing the need for creativity, the Ministry of Education has made boisterous attempts with new curriculum and local competitions to promote innovative thinking and entrepreneurial ventures. Creating a more streamlined, rapid and non-bureaucratic regulatory procedure would certainly facilitate, and in some cases, accelerate the entrepreneurial momentum within the country. Today, Oman has certainly recognized the potential of entrepreneurs and actively seeks to create an innovative platform, optimum business conditions, supportive regulations and access to funding.

For Qais al Khonji, founder of Qais United Enterprises Trading and Genesis International, the challenge in Oman’s market is the two S’s: Slow and Small.

Al Khonji says ‘slow’ payment cycles hamper productivity and subsequently growth for any organization. Furthermore, with Oman’s ‘small’ population, everybody is vying for the same market making competition levels particularly high. But like any entrepreneur, al Khonji has dealt with the challenges head on, and managed to start-up 3 different organizations with plans to create one every year. A true Omani by nature, he can be viewed as a symbol of the entrepreneurial future Oman wishes to foster.

Omanization

Paradoxically, government intervention in the labor nationalization program, which dictates the minimum quota for hiring local and foreign workers in government and domestic entities, is carried out to ensure Omani nationals are integrated into the workforce. While this protects and fosters local manpower, start-ups which relied on cheaper, skilled foreign labor to flourish, now have to make do with expensive, less-skilled domestic workers, in order to comply with hiring quotas. According to Omani engineer Mohammed Al Said, however, “the average Omani would prefer to work in the government than slog it out in the private sector.”

Despite these economic challenges and Omanization, the country’s current incubatory environment and expanding population numbers provide risk-seekers with endless innovation possibilities which can be capitalized upon. With government backing, it is only a matter of time before the entrepreneurial revolution begins.

The real test lies in the face of time-stricken depletion of oil reserves, before which the young entrepreneurs will have to rise to the challenge and take the sultanate to new highs in the coming era. As Said aptly put it, “the engine of any economy is the smaller businesses.”

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