Al Raffd Fund to fi­nance 200 small en­trepreneurs this year

The fund pro­vides loan with low in­ter­est and other as­sis­tance to young en­trepreneurs to set up small busi­nesses, which will cre­ate not only jobs, but also in­cul­cate an en­tre­pre­neur­ial cul­ture among lo­cals.

Times of Oman - - MARKE - A E JAMES

MUSCAT: More than 200 small Omani busi­nesses op­er­ated by young en­trepreneurs are ex­pected to re­ceive fund­ing from the sta­te­owned Al Raffd Fund this year.

The fund pro­vides loan with low in­ter­est and other as­sis­tance to young en­trepreneurs to set up small busi­nesses, which will cre­ate not only jobs, but also in­cul­cate an en­tre­pre­neur­ial cul­ture among lo­cals.

“This year we are tar­get­ing about 200 (young en­trepreneurs). But it can go above that level,” Tarek bin Su­laiman Al Farsi, chief ex­ec­u­tive of­fi­cer of Al Raffd Fund, told Times of Oman, on the side­lines of the sign­ing of an agree­ment be­tween the fund and San­dan.

So far this year, some 40 to 50 young en­trepreneurs have re­ceived fi­nan­cial sup­port from the Al Raf­fad Fund.

Al Farsi said that the fund has a large cor­pus of OMR40 mil­lion, but it would not ex­tend seed capi- tal on a mas­sive scale. “We have no prob­lem as far as fund­ing is con­cerned. But we do not want to see fail­ures. We are try­ing to see the right peo­ple, who have ei­ther ex­pe­ri­ence or at least un­der­gone train­ing,” said Al Farsi.

Oman has more than 30,000 small and medium-size en­ter­prises (SMEs), which are reg­is­tered with Riyada (Public Au­thor­ity for Small and Medium En­ter­prises De­vel­op­ment). If a small en­ter­prise is not reg­is­tered with Riyada, it will not be el­i­gi­ble to re­ceive ben­e­fits pro­vided by govern­ment agen­cies. The to­tal num­ber of SMEs in the Sul­tanate, ac­cord­ing to Al Farsi, is es­ti­mated at 80,000 busi­nesses.

“We have fi­nanced around 1,842 small en­ter­prises (since the Raf­fad Fund was es­tab­lished more than three years ago). I as­sume by the end of this year, it will reach 2,000 units,” added Al Farsi.

Elab­o­rat­ing on dif­fer­ent fund­ing pro­grammes avail­able through the Al Raf­fad Fund, Al Farsi said that the agency has sev­eral schemes to suit var­i­ous types of busi­nesses. “We have dif­fer­ent sup­port schemes – a pro­gramme for a loan amount of OMR200,000, another two schemes for OMR150,000 and OMR100,000. We have a spe­cial pro­gramme for es­tab­lish­ing fran­chise busi­nesses,” the Al Raffd Fund chief said.

Al Farsi noted that the max­i­mum in­ter­est rate for soft loans is set at 2 per cent, and there is no need for col­lat­eral se­cu­rity to avail the fi­nan­cial as­sis­tance. “We of­fer loans even at 1 per cent for job­seek- ers,” noted Al Farsi. The in­ter­est in­come gen­er­ated from the ben­e­fi­cia­ries is used for hir­ing con­sul­tants and ad­vi­sors to sup­port and train Omani en­trepreneurs.

The Al Raffd Fund has ar­range­ments with third party in­sti­tu­tions for train­ing young en­trepreneurs. Fur­ther, the Al Raffd Fund pro­vides mar­ket­ing sup­port to SMEs with con­tin­u­ous ad­ver­tise­ments on Oman TV and out­door bill­board pro­mo­tions.

The Al Raffd Fund chief said that the fund is now fo­cus­ing on in­dus­trial ac­tiv­i­ties, tourism and lo­gis­tics, which will add value to the na­tional econ­omy. “We have ex­cluded 29 ac­tiv­i­ties for fund­ing projects,” he noted.

Re­fer­ring to the un­healthy prac­tice of small en­trepreneurs al­low­ing ex­pa­tri­ates to run their busi­ness, Al Farsi said that this trend is now on the de­cline. “If you go to dif­fer­ent wilay­ats in Oman, 100 per cent of small en­ter­prises are now run by Oma­nis them­selves.” Al Raffd Fund and other govern­ment agen­cies ear­lier dis­con­tin- ued fi­nanc­ing busi­nesses in which ex­pa­tri­ates run the busi­nesses, which re­sulted in a dras­tic de­cline in such prac­tices.

Al Farsi said that com­mer­cial banks have been un­able to dis­trib­ute a min­i­mum 5 per cent of their loans to SMEs, mainly due to the lack of col­lat­eral se­cu­rity on the part of small busi­nesses to back their bor­row­ings. Banks have to fol­low Basel I and II, which reg­u­lates re­quired col­lat­eral, and these in­sti­tu­tions are not in a po­si­tion to of­fer loans at a low in­ter­est rate. “That is why Al Raffd Fund came to close that gap,” said Al Farsi.

The de­fault rate of Al Raffd Funded small en­ter­prises is cur­rently some 2.5 per cent. “How­ever, our monthly per­cent of re­pay­ment is more than 80 per cent, which varies from month to month, de­pend­ing on de­fer­ments and reschedul­ing. But ev­ery en­tre­pre­neur pays, al­though the per­cent­age of re­pay­ment is less,” he said, adding, “We have resched­uled some of the loans and given more grace pe­ri­ods.”

— Is­mail Al Farsi/Times of Oman

Tarek bin Su­laiman Al Farsi.

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