Loan scheme will give hope to unemployed Omanis
Jamal Hassan was close to tears when he walked out of the bank with approval papers for a 25,000 rial (Dh238,784) state loan, knowing he could now start his own business and would no longer have to stand in the unemployment line.
Hassan, 26, is one of 735 young Omanis who have been approved for loans since March under a government self-employment financing plan aimed at reducing the number of job-seekers in the country.
Mr Hassan plans to invest his loan in a tour guide company in his hometown of Jaalan Abu Ali, in eastern Oman.
“I did not believe my luck,” he said. “Finally, I am going to control my own financial destiny. I will not let ODB [Oman Development Bank] down and I am determined to make it a success.”
According to the ministry of manpower, nearly 60,000 Omanis are looking for jobs, mostly graduates.
More than 1,500 projects worth 14 million rials were financed by the state-run ODB as part of the government’s self-employment financing plan. Under the scheme, the bank offers so-called “soft loans” with either very low or zero interest rates, depending on the amount borrowed.
Loans above 5,000 rials have a 2 per cent annual interest rate and a one-year repayment grace period, while loans of 5,000 rials or below have no interest rate (but there is no repayment grace period).
In October, Oman pledged to create 25,000 jobs from December as the country faces its worst unemployment crisis in 40 years.
In March, the government allocated a budget of 11 billion rials to help generate thousands of jobs over the next five years.
Khalifa Al Mabsali, 27, used his 25,000-rial state loan to launch a traditional cooking pots business in his hometown of Sohar, in northern Oman.
“I am reviving the old tradition of cooking vessels made of alloys of metals like copper, silver, steel and tin,” said Mr Al Mabsali. “There is a big demand for it since new cooking pots do not last long.
“It is six months since I started this business and I have already sold more than a thousand items.”
It is not just young men who are taking advantage of the soft loans offered by the scheme.
Many young women are using it to achieve their dreams of independence.
One of them is Maya Al Kindi, 26, who in July launched an interior decorating business in Muscat after having a loan of 20,000 rials approved a month earlier. Ms Al Kindi was not intimidated by competition from big companies that dominate the industry.
She said she had “an ace up my sleeve” to stay ahead of well-established competitors.
“My designs reflect Omani customs for the conservatives. For those who like the best of both worlds, I combine local traditions and western flavour,” she said.
“In this regard, I am unique and I believe I am the only one in the country who is catering for this type of interior decoration.”
People like her could help to relieve the employment headache facing Oman.
There are no available statistics on how many Omanis work for self-employed entrepreneurs like Mr Hassan, Mr Al Mabsali and Ms Al Kindi, but between them, the three employ 14 school graduates in various positions, from drivers and administrators to salespeople.
But financing experts warn that although there are benefits to schemes like the one offered by the ODB, there are also considerable risks if recipients are not given the proper training to launch their own businesses.
“All these young people are not experienced when it comes to establishing and managing businesses,” said Mahmood Al Essai, a retired SME executive for Bank Muscat.
“Though the ODB is doing a commendable effort ... a condition should be imposed that all of them must be trained.
“For example, they need to understand how to have a sustainable business plan, understand budgeting and know how to market their businesses. This training will make sure that they stay afloat and make profits in the long run.”
According to the ministry of manpower, nearly 60,000 Omanis are looking for a job