Done By: Zainab Mohammed Hussain

Student Number: 22050

Tutor Name: J. Kasi Viswanathan
Due Date: 16/4/2005

Table of Contents

Subject Page

Introduction 2

2-3
Business in Oman
Diagram of the Sources of Finance 3

The Sources of Finance 4

 Youth Fund Program 5-6

 Sanad Program 7-10

 Intilaaqa Program 10

About my Business 11

Conclusion 12

Bibliography 12

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Introduction

Since you are in business to make money; it’s important before you start to find out what

money you will need to support yourself before your business gets going. It’s a mistake

to think that you will start earning an income from your entrepreneurial activity right

away; indeed, it may be two or three months at a minimum before you do, and it could

even be six months or more before you get paid. (Phillipson, 1995, p: 67)

Business in Oman

Between 1980 and 1990 Omanis were working largely for the public sector, they were al

most found in banking and oil sector. They were focused on light industries such as

agriculture and fisheries. Omanis during that period of time were receiving less attention

compared to other sectors. Most of the businesses at that time were owned by non-

Omanis. Therefore, there was lot of unemployment and on the other hand spending was

less.

Small businesses in Oman had lot of problems during that period of time. Some of these

problems are that all the businesses were running by non-Omanis; therefore, there was

lack of management skills and lack of trained staff. The government of Oman has taken

steps to solve these problems. The government is encouraging the young Omanis to start

their own businesses. There are some programs which were introduced by the

government to encourage the young Omains which are Youth fund program, Sanad

program and Intilaaqah program. The other steps which was taken by the government is

also Omanising many small business sectors, providing incentives to start-ups and

training.

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To start a business you need to think of the source which you will be using to finance

your business. Here we will be looking at the sources of finance in the Sultanate of

Oman.

Sources of Finance

Shareholders Family Savings

Banks Creditors Friends Business Angles
Government Finance Companies
Companies

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Different sources of finance:

1. Banks: obtaining a loan can be a problem if you are young, don’t have a track

record in business, or you don’t have the business skills that lenders are

demanding. (Phillipson, 1995, p: 75)

Some of the banks of Oman which provide loans to individuals are Bank Muscat,

National Bank of Oman, Oman Development Bank, etc… the Bank Muscat provide

the help to any individual who wants to start small business under certain conditions,

these conditions are:

 Must be working.

 Preferment project study.

 Salary of 4 to 5 months should bet transferred to Bank Muscat.

 Bank statement of the last 4 months.

In Bank Muscat, there are two ways in which money is got, the first one is OD; over

draft in which you are getting your money once, and the other way is the loan which

needs the mortgage. The bank provides a loan as a capital to start small business up to

10,000 R.O. and the interest rate is decided on the income of the business. Usually the

interest rate is between 11% - 13% according to Bank Muscat.

Oman Developing Bank (ODB) is set up to promote and encourage economic

development in the Sultanate of Oman by providing financial assistance to small and

medium projects in the field of Industry, Agriculture, Animal Resources, Fisheries,

Tourism, Education, Professional Offices, Conventional Crafts and Workshops. The loan

extend of ODB should not exceed 150% of the paid up capital of the project if

governorate of Muscat expect Wilayat of Quriyat, or 250% of the paid up capital if the

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project is inside Wilayat of Quriyat. In all cases the total amount of the loan should not

exceed 165,000 Omani Rials. The facilities provided by the ODB:

 Interest: 9% per annum, 6% Government Subsidy, 3% payable by the project.

 Period of the loan ranges between 2 to 7 years.

 Principal of the loan is repayable in equal quarterly installments after expiry of

the grace period.

 The ODB grants a grace period for repayment of the principal of the long ranging

between 1 to 2 years commencing from the date of signing the long agreement.

Similarly all the other commercial banks in Oman are having the same procedures.

2. Shareholders.

3. Government: the government of Oman has introduced some programs in order to

encourage the young Omanis, these programs either provides with finance

(money) or with training. Here we will be discussing about some of these

programs.

 Youth Fund Program:

The Fund for Development of Youth Projects aims to support Omani youth in starting

small businesses. The fund mission is to provide support to Omani Youth who are

interested in entering the field of private business by establishing and owning enterprises

which will benefit them as well as the communities in which they live. It will also

contribute to the social development of the country.

The method of the fund is to invest in the equity of small sized projects and to deliver

administrative, financial and technical support thereto. This package is necessary because

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academic studies as well as practical and gained experiences have proven that

development of small size enterprises cannot be achieved by only financial support.

Moreover the usual ways of funding have failed to satisfy these needs. The Fund for

Development of Youth Projects follows unique methods in providing various types of

support through direct participation in the project yet giving the young entrepreneur

complete freedom in managing the project and running the daily affairs thereof.

http://www.chamberoman.com/member/fund/index.asp

Conditions of the Youth Fund Program:

 Investors to offer full time to run the project.

 Investors to have basic level of education that will enable them to run the

business/ project.

 Minimum 50% of financial contribution from the entrepreneur.

 Funding limited to R.O. 50,000 in case of sole trader and R.O. 100,000 in case of

partnerships.

Sectors in which Youth Fund participated:

 Service sectors.

 Tourism.

 Handicraft.

 Trade.

 Small industries.

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  Sanad Program:

Sanad program is established to work under the supervision of the Ministry of Manpower

and execute the following duties:

 Sharing in finding work for Omani manpower.

 Encouraging and sponsoring the individual’s initiatives and the self employment

projects.

 Sharing in qualifying individuals and preparing them for working in the market.

 Developing the individual projects and preparing the programs and plans required

for popularizing them.

 Establishing nursery committee for supporting individuals interested in starting

small projects.

Targeted categories

1. Work seekers (male and female) including the fresh graduates who are interested

in starting small projects managed by them.

2. Craftsmen who are interested in starting new productive or serviceable work for

themselves.

3. Craftsmen and vocational who are practicing their work and interested in

expanding it.

Projects qualified to obtain small loans

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The targeted categories have more ability to decide the suitable projects. But there are

some successful sectors if provided with technical and financial support such as:

1. Grocery shops (sale of food stuffs) 2. Vegetables and fruit shops

3. Sale and supply of electrical items 4. Sale of watches, masterpieces and gifts

5. Sale of ready-made garments 6. Sale of natural flowers

7. Delivery vehicles 8. Carwash

9. Internet café 10. Photography shops

11. Sale of fish 12. Butchery shops

13. Poultry shops 14. Home appliances maintenance

15. Sale and repair of tyres 16. Electrical installation, sale and supply

of electrical items

17. Repair and maintenance of home 18. Painting of buildings

cooling appliances

19. House furniture upholstery 20. Carpentry shops

21. Iron smithery shop (metal doors and 22. Goldsmithery shops

windows)

General conditions:

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1. Age between 18 - 40 (Omani male or female)

2. Able to read and write well.

3. Not working at present.

4. Should be fully free for the project with an acknowledgement to be presented.

5. For the loans of sewing and designing clothes, a training certificate to be obtained.

6. Financing projects will be according to the fund rules.

7. Should have a personal guarantor (father, brother, sister….)

8. Should have a place for establishing the project (owned or rented).

9. Should have good reputation and behavior.

10. Should have a real interest for establishing the project with ambition and

insistence.

11. Should present two quotations for the prices of the machines and equipments of

the project.

12. Copies of the identity card or passport to be presented.

13. Should present a feasibility study of the project showing the cash flow during the

period of the loan.

14. Should present an acknowledgement to employ Omani manpower only.

15. Assets of the project will be mortgaged.

16. The commercial registration of the project will be mortgaged or present post dated

cheques.

17. Should sign abandonment to the fund regarding the project assets financed by the

Fund. In case the borrower does not adhere to the conditions of the loan agreement,

the Fund has the right to own these assets without referring to the borrower or any

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 other judicial authority.

18. Should insure them against theft or fire.

Loan amount and procedures of financing:

1. The maximum amount of the loan is RO 5,000 per person. More than one person

can participate in one project.

2. The loan will be given if it is approved as per the feasibility study and cash flow

presented by the owner and approved by the Fund.

3. Oman Development Bank will give the loan amount after approval and recover it

as per the Fund regulations. http://www.omanet.om/english/misc/omanise.asp

 Intilaaqah Program:

Is a private non profit making organization funded by Shell Oman Marketing. It was

launched in November 1995 and started operating in January 1996. This program helps

age group of 18 to 35 years, and it helps both employed and students who has business

ideas. There mission is to elevate awareness of young Omanis of the possibilities of

starting their own businesses as a realistic carrier option. The services of this program

are:

 Training in business planning and ownership for three months.

 Counseling, proper guidance.

 Organizing workshops.

 Annual awards for the best young Omani entrepreneur.

4. Family/ Friends: my business does not require that much of capital thus I will be

asking my parents for help if needed.

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 5. Savings (your own money): my saving account is having 12,500 R.O. which

myself will be using them as a capital to start my businesses.

6. Suppliers/ Creditors: if you have already started a business, you may then make

your sales on credit for few months till the creditor starts trusting your business.

7. Finance Companies

8. Business Angels and Venture Capitalization

About my Business

I want to start a business which sells natural flowers and gifts. This business does not

require too much capital, since the main objective is to sell natural flowers. We get

these flowers from Holland by air; it is not difficult to get the flowers since the

technology is improving day by day. My business requires around 40,000 R.O. from

which 10,000 R.O. will be taken al a loan from Bank Muscat. 12,500 R.O. are in my

saving account, my parents will be giving me 5,500 R.O. to get the rest of the

amount, I will be trying to get it from one of the government programs which are

provided to encourage the young Omanis. I will be trying in the Sanad program, thus

am not sure to get finance from their since the employees who will be suitable for the

sell of natural flowers are not Omains.

Conclusion

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Sultanate of Oman has different sources of finance and every individual may choose the

suitable one for them. In the private sector we have lot of commercial banks, and all of

the banks provide loans and over drafts. The government it self has introduced lot of

programs in order to encourage young Omanis. In the above lines we have seen in details

both the private and the government sector and how are they helping the young Omanis.

Bibliography:

 Interviewed Staff of Bank Muscat

 Phillipson, I. (1995), “How To Be An Entrepreneur”. Kogan Page Limited,

London

 Sanad Program, Retrieved: April 6, 2005, from

http://www.omanet.om/english/misc/omanise.asp

 The Oman Development Bank Booklet

 Youth Fund Program, Retrieved: April 8, 2005, from

http://www.chamberoman.com/member/fund/imdex.asp

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