SANAD Time to Take Stock

Five years after an enthusiastic take off, the Ministry of Manpower programme has come a long way — helping build more than 8,000 commercial activities and providing more than 17,000 job opportunities across the country. But questions are now being raised whether the Sanad drive has run out of steam, about bureaucratic obstacles and insufficient follow-up. Mehre Alam takes a close look at the issues involved, and some of the solutions suggested

It was an intrepid initiative, aimed at changing the destiny of the Omani youth. Since its inception in October 2001, Sanad — a programme launched by His Majesty and managed by the Ministries to encourage entrepreneurship among young Omanis — has come a long way. En route Sanad has attracted many a laureate, including a recent one by the United Nations Economic and Social Committee for West Asia (ESCWA) for encouraging small and medium enterprises (SME). Yet, some have questioned its efficacy: Has Sanad really taken off in the true sense of the word? Has it served its purpose as intended originally? Is the programme running out of steam? Does it require some serious revitalisation?

Before the Sanad programme arrived on the scene, the lower-end retail trade ( basically the grocery trade) in the Sultanate was dominated by expatriates. The Ministry of Manpower kicked off the Sanad programme to encourage local entrepreneurship, particularly among the younger Omanis.

But the young Omanis may well be facing some new challenges now. From among a cross-section of young Omanis OER talked to, there emerged a common refrain — that there’s an overdose of bureaucracy at Sanad. “Sixty per cent of the time gets spent on dealing with the government agencies — trying to get allocations, trying to get things done,” rues Aimn Al-Rahbi, winner of the Intilaaqah Young Entrepreneur Award 2005. Aimn, a celebrity in his own right, currently runs ‘The Spa Bar for Men’ and another parlour for women called ‘Nails’ at Jawahar Al Shatti in Muscat.

“How can a small enterprise afford to have PROs (public relations officers)?” Aimn asks. “At the Ministry, they give you the rules and tell you what these rules are. Sanad should have enough powers to say to the Ministry that they need to question the rules..”

However, Shahswar G. Al-Balushi, the CEO of OPAL (Oman Society for Petroleum Services), disagrees that red-tape could be dragging Sanad in any way. OPAL is the Omani petroleum industry’s first society to be officially approved and registered in the Sultanate. Its membership includes all companies working and serving the oil and gas sector in Oman, including producers and operators, main contractors, vendors, suppliers, sub-contractors, local community contractors as well as training providers.

Shahswar asserts that Sanad, as a concept, is new — both to the government as well as the individuals who seek its support. He explains: “There may be some challenges. It’s said that the Sanad team should interact with the young Omanis more to find out how to smooth out the process. But there are limits to where you can smoothen it out because it involves money; controls have to be put in place to avoid misuse of money etc. Moreover, the young people have to realise that they need to be supported in terms of knowledge and service support advice. The young men and women should not be in hurry. After all, it’s a life-long business that they are going to have.”

But even Shahswar admits to the presence of bureaucracy. “But isn’t there bureaucracy in all aspects of businesses?” he asks. “It’s, after all, a process to get things done. The Ministry of Manpower is doing its best to smooth out things. Once this experiment (Sanad) becomes a full-fledged process, you’ll see some adjustments.”

RO5,000: Is It Enough?
First things first: Is this amount enough? This, till August, was the upper limit of the Sanad support. (See Interview above). “The young Omani needs more than RO 5,000,” asserts Aimn. “Say you are paying rent of RO300 per month. If you have to deposit an advance amount for one year, you end up shelling out RO3,600 out of that RO 5,000. You need to spend on decoration, furniture etc. Pay wages to your employee(s). Only then, can you plan to buy your sale stock or invest in the product you want to sell! But how much are you left with?” asks the Intilaaqah Young Entrepreneur Award winner. “May be just enough to set up a small coffee shop at Muttrah,” he points out.

In fact, Aimn too had mulled over whether to approach Sanad. But the RO5,000 limit put him off. He says this sum can make one dependent — and not independent. “If we are trying to capture the high end of the market, the young Omani certainly needs more than RO5,000.”

Yahya Hameed Al Ghasani has a similar story to tell. He was assisting his father’s business when he decided to branch out and start his own business (water supply at Ruwi). “I got RO5,000 from Sanad — but just office decoration gobbled up the entire amount. I had to invest RO20,000 overall. So the Sanad fund did not suffice at all,” he laments.

This amount should be hiked to at least RO7,000, says Affan Fadhel Al Tamimi, who runs a foodstuff shop at Bousher in Muscat, and started his outlet with Sanad help. “I ended up spending 80 per cent of the RO5,000 in the first two months only after starting my venture,” he rues. “The suppliers were not really helpful earlier. I had to buy things in cash from hypermarkets and wholesale markets. It’s only now, during this Ramadan, that I started getting items on credit,” he adds.

However, Adil Ghouse, General Manager, Consumer Products Group, Khimji Ramdas, points out that the loan part was meant only for the initial phase of the Sanad programme. “In any case, this business does not require huge investment. I don’t think a huge investment is required to open a 50-100 sq. m. grocery. Banks too are ready to finance if a youth has a sound business proposal. They don’t have to go to the government for that,” he asserts.

But what about future investments — after the small enterprise reaches a take-off stage, say after 5-10 years?

Structural Issues
Most of the agencies for bulk purchase are UAE based. Their lack of presence in Oman is a major issue, say several young Omani entrepreneurs. For example, if they have to buy a US-made beauty product, they’ll have to approach the UAE agency — though it may be cheaper for them, as businessmen, to buy the product directly from the US.

Aimn says he has brought such matters to the notice of Ministry officials. “The government should make it very clear to these companies that they will not be allowed to sell these products in Oman unless they have their agencies here too.”

Another difficult issue for the Sanad entrepreneurs is to get Omanis to work for them, as the size of the fund is too small while pay expectations have risen. On the other hand, the government rule on the issue of the percentage of expatriates to be employed makes it a real ‘Catch-22’ situation, say some young entrepreneurs.

So what is the solution? One of the young entrepreneurs has a suggestion to make: Hike the fee for employing an expatriate but at the same time make it easier to employ them; and with the extra money that will come, the government can impart training to Omanis in the same sector. This way, in five-six years, the young Omani entrepreneurs will get enough Omanis coming in to say, “Hey, we are looking for jobs.”

One of the main problems with Sanad, points out Aimn, is the absence of a specialised committee to help the entrepreneurs on matters like “which markets to choose,” or “which areas to choose” etc. The ministry, he says, should have an advisorial section where they encourage people to come and get such things explained. “There should be a committee that will argue on your behalf, as many of the young entrepreneurs get too tongue-tied in a government office” he emphasises.

“Every time you go to the ministry, you run into procedural hassles. We are briefed about the rules. But we are not kids. We want to know more if we want to be seriously involved in the business,” says Aimn.

Shahswar (OPAL CEO) disagrees. “I am not in favour of encouraging continuous support. It’s better to put the young Omanis on the hot seat and let them find out solutions. They’ll make mistakes; they’ll also face problems. But the best way to learn is by trying to solve the problem oneself.

Methodology Debate
Does the situation call for some rethink on the methodology? Shaukath H. Assadi, Country Manager – Lubricants, Oman Oil Marketing Company (OOMCO), believes that the need is to develop training centres for programmes like Sanad for the young Omanis.

Shaukath elaborates his point further: “Motivating young Omanis — that has to be main goal. The training methodology should be more focused. First, the talent of the individuals should be identified. Then they should be trained accordingly.”

The selection of the young Omanis should be based on their aptitude, instead of asking them to do stuff like tailoring, driving etc. According to Shaukath, there is also a need to identify the various sectors where Omanisation can be done profitably.

Bottom Line: How effective has Sanad been? “It’s is a wonderful programme,” says Shaukath, and adds: “But adjustments need to be made to the system. There are so many fresh graduates who want to only join companies like Omanoil, Shell, BankMuscat, Oman Mobile or Nawras. They do not want to join smaller companies. And there’s this other category of youth that’s not educated enough and does not have the expertise to work in a particular field. So, it’s our moral responsibility to train the young Omanis. And a number of bigger companies should be involved in the training process.”

Other Challenges
Adil of Khimji Ramdas believes one of the key challenges associated with Sanad pertains to the mindset — rather a change of mindset. “Let us see it this way. There is this employee who knows he has a fixed number of hours to work, that his income is also assured, and that his holidays are assured too. But when you get into something like your own grocery business, it’s a 24/7 responsibility. It requires very long working hours. It requires a huge amount of attention to detail, even though it’s a small business.”

So how does he rate the performance of the young Omanis on that count? What are the main obstacles? “Over the last six months, we have seen that the Omanis are doing very well; they are managing their businesses very well,” says Adil.

For Shaukath of Omanoil, the challenge, for Sanad, is to overcome “that lack of energy.” Sanad programme was started with great zeal but it has slowed down, he says, adding, “But here’s an opportunity for the major companies and the government to join hands together to bring back energy and motivation into Sanad.”

Aimn too is hopeful. “Oman needs to improve its business milieu, and Sanad has the right credentials to help in the process.”

Perhaps, it’s time to reflect — both for the young individuals and the authorities. And then, go full throttle again with a renewed vigour. After all, youth is the future of the nation.