VZCZCXYZ0003
RR RUEHWEB

DE RUEHMS #1586/01 3181234
ZNR UUUUU ZZH
R 141234Z NOV 06
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 7399
INFO RUEHAD/AMEMBASSY ABU DHABI 0820
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS MUSCAT 001586 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ARP, NEA/PI, EB/CBA, PASS USAID 
ABU DHABI FOR MHOPKINS 
COMMERCE FOR COBERG 
 
E.O. 12958: N/A 
TAGS: ECON EFIN BEXP KMPI MU
SUBJECT: TRAINING KEY TO SME DEVELOPMENT 
 
REF: MUSCAT 1382 
 
This is an action cable.  Please see paragraph 7. 
 
------- 
SUMMARY 
------- 
 
¶1. SME training and development in Oman is largely 
facilitated through the Intilaaqah program, sponsored by 
Shell.  The program, which has graduated over 3,000 
participants and sponsors an annual award for best 
entrepreneur, is looking to refresh its course offerings. 
Oman's largest bank is also looking to develop its SME 
lending portfolio.  The Embassy requests further guidance on 
what USG assistance may be available in the areas of SME 
training and credit bureau formation.  End Summary. 
 
---------------------- 
INTILAAQAH "TAKES OFF" 
---------------------- 
 
¶2. In an October meeting with Econoff and Commercial 
Assistant, Dr. Andrew Wood, Shell Country Chairman in Oman, 
highlighted the benefits of the Intilaaqah ("take-off") 
program in creating a cadre of young Omani entrepreneurs. 
Wood noted that the program is designed to provide counseling 
and training for operating those microbusinesses that had 
been traditonally run by expatriates.  The program, part of 
Shell's social investment program, is modeled on a Shell 
program entitled "Live Wire."  In the 10 years that 
Intilaaqah has been in operation, the program has graduated 
3,236 entrepreneurs in such courses as "Bright Ideas," 
"Become a Successful Owner/Manager," "Beat the Business 
Blues," and "Business Planning and Ownership."  Sixty-four 
percent (2,085) of the graduates are female.  After attending 
the training sessions, 1,334 graduates started their own 
businesses, 870 found employment in either the public or 
private sector, 425 continued their studies, and 433 remained 
unemployed. 
 
¶3. In advertising SME development, Intilaaqah sponsors an 
annual "Best Entrepreneur Award."  In addition to recognizing 
entrepreneurial achievement, Intilaaqah also awards cash 
prizes for the "Best Business Idea" and "Most Promising 
Start-Up," among others.  On November 12, the Minister of 
Education, Yahya bin Saud bin Mansour al-Sulaimi, announced 
that a young female Omani was selected from among 200 
applications as the winner of the 2006 Best Entrepreneur 
Award. 
 
¶4. Wood cited a paternalistic government culture and a small, 
mercantilist business structure that crowds out small 
enterprise as obstacles to further SME development.  To 
overcome these obstacles, Wood noted that the Intilaaqah 
program would expand by creating an enterprise fund.  This 
$10 million revolving fund, to be managed by South 
African-based Grofen, would provide financing to those 
entrepreneurs unable to obtain bank financing on the account 
of lack of collateral.  The Intilaaqah program is also 
looking to recruit an organization specialized in SME 
development to strengthen the overall offerings, refresh 
course material, and train instructional staff. 
 
----------------------------------- 
BANK PERSPECTIVE ON SME DEVELOPMENT 
----------------------------------- 
 
¶5. Econoff met with Bank Muscat officials Ali Amin Ramadhan, 
Assistant General Manager for SME Credit and Marketing, and 
Abdulnasir Noori Ahmed al-Raisi, Head of SME Program Lending, 
to discuss the bank's efforts to support SME financing. 
Ramadhan noted that the bank offers a full-service department 
for SME financing under the "al-Wathbah" banner.  Under this 
program, Bank Muscat provides six main financing products for 
entrepreneurs, including contracts, equipment, imports, 
receivables, and capital financing.  In addition, the bank 
offers counseling to prospective clients in developing 
business plans, as well as a training center, where the bank 
brings in experts to advise clients on best practices.  Since 
the establishment of the al-Wathbah program, the bank has 
lent out $18.2 million to SMEs. 
 
¶6. Ramadhan commented that the establishment of the 
al-Wathbah program was the bank's second attempt to assist 
small business development.  On the previous attempt, the 
bank suffered significant losses through uncollectible loans. 
 For that reason, the bank is charging a lending premium to 
current SME clients.  The bank does not dedicate a certain 
amount of its funds to SME financing, but in order to 
facilitate growth in the SME sector, Ramadhan noted that 
further training should be offered in terms of business plan 
development.  He found that potential clients did not have 
the financial expertise to develop a credible financial 
forecast, stating that lots of entrepreneurs were "just 
guessing."  Another obstacle Ramadhan found was the 
reluctance of the clients to put up their own cash in the 
business.  In addition, the establishment of a government 
entity to guarantee entrepreneurial loans would encourage 
banks to increase their lending to SMEs.  Finally, Ramadhan 
called for the establishment of a credit bureau to assist the 
bank in understanding their potential customers better. 
 
-------------- 
ACTION REQUEST 
-------------- 
 
¶7. Per reftel, Embassy would be interested in learning 
whether MEPI would be in the position to work with a 
corporate entity such as Shell in efforts to refresh the SME 
training program provided by Intilaaqah. The Embassy would 
also appreciate potential assistance in the formation of a 
credit bureau, and would request guidance on assistance in 
efforts to create a loan guarantee agency for SME lending. 
 
 
 
 
 
 
GRAPPO