The three-day seminar, which started on Monday, is jointly organised by Oman Development Bank (ODB) and the Association of National Development Finance Institutions in Member Countries of the Islamic Development Bank (ADFIMI) at the Crowne Plaza Muscat. The seminar was held under the patronage of H E Dr Ali al Sunaidy, Minister of Commerce and Industry.
Dr Abdul Aziz al Hinai, CEO of ODB, in his opening speech, highlighted the key role played by SMEs in Oman’s economy as the vast majority of registered companies in the sultanate are SMEs. He said SMEs provide more than 45 per cent of the total jobs for Omanis and contribute for nearly 33 per cent of Oman’s GDP.
In his opening remarks, Datuk Mohammad Yunus, vice-chairman of ADFIMI, said access to financing has always been one of the most challenging aspects of SMEs not only in many developing countries but also in high-income economies. “With advancement of financial technology and competitive financing product offerings, we need to work harder to sustain the relevance of alternative Sharia’a-compliant financing.”
“SMEs play an important role in socio-economic development and prosperity of many countries. Their role in terms of production, employment generation and in facilitating equitable distribution of income is extremely critical,” Yunus added.
The SME seminar aimed at strengthening rapport among development finance institutions in Islamic Development Bank (IDB) member countries. Experts discussed the current issues and challenges faced by the SME sector in the Middle East, and examine entrepreneurial development policies and good practices as well as success stories from the region, apart from sharing strategies for SME development and innovation.
Khaled Mohammed al Aboodi, CEO of Islamic Corporation for the Development of Private Sector (ICD), said SMEs are a vital component of the Middle Eastern economies but face barriers to reach their full potential.
“SME activities have become a significant contributor to the GDP and job creation in the region, but they still do not have the same significance as their counterparts in developed economies. Over 90 per cent of registered companies in the region are SMEs and they account between 20-40 per cent of all employment in the Middle East,” Aboodi said.
Aboodi noted that access to finance is one of the greatest challenges facing SMEs in the MENA region, where over 50 per cent of SMEs do not have access to finance. Total financing gap for SMEs in the MENA region is estimated to be between US$210bn-US$240bn, he said.
Citing a World Bank survey, Aboodi said the survey which covered 130 Arab banks shows that only eight per cent of total bank lending goes to SMEs across the MENA region, which is even less at two per cent for the GCC economies.