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Mon 26 Sep 2016 01:39 PM

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A test of patience: Setting up shop in Oman

Tamara Pupic analyses why it takes a lot of patience, persistence and perseverance to grow a start-up into a successful business in Oman

A test of patience: Setting up shop in Oman
Qais Al Khonji is a British-educated serial entrepreneur from Muscat.

The Sultanate of Oman, holding a strategically important position at the mouth of the Persian Gulf, has the population of just above 4 million people, the National Centre for Statistics and Information (NCSI) reported earlier this year. Omanis constitute 54.8 percent of the total population.

Traditionally less attractive among foreign workers than its powerful neighbours, namely the UAE and Saudi Arabia, Oman has nevertheless managed to attract many expatriates in the past five years, from 29 percent in 2010 to 43 percent of the country’s total population in 2015.

The increased interest is partially due to the job opportunities stemming from the government’s plans to cut its reliance on oil exports – Oman has the 25th largest oil reserves and the 27th largest natural gas reserves in the world – and to diversify its economy by developing the non-oil sectors.

From the outset, His Majesty Sultan Qaboos Bin Said Al-Said, who has ruled the country since 1970, has insisted on improving the education system with an aim to develop a knowledge-based society. It led to the number of public schools across the country rising from three to 1,200 during his reign. Furthermore, His Majesty Sultan Qaboos has urged Omanis to develop the SME sector and increase its economic contribution to the country’s GDP.

The SME Development Symposium, held at Saih Al Shamekhat in 2013, was a turning point for the local start-up community. It led to the establishment of Riyada, an organisation offering training and advisory services to fledging entrepreneurs, and the Al Raffd Fund. The fund backed more than 1,668 projects in different economic sectors, according to the Oman Development Bank data published last year.

The Riyada Entrepreneurship Awards, launched to praise and promote local entrepreneurship, saw 13 winners out of a total of 581 applications in 2015, and 21 winners out of 481 applications this year.

However, Qais Al Khonji, Muscat-based founder of Qais United Enterprises Trading, prefers to describe the Omani market with two words: “small and slow”. “It is small because we have population of only 1 million people in Muscat,” Al Khonji says. “It is also slow. To obtain paperwork, it can take you a few months, almost a year. During that time, you nevertheless have to pay your rent and similar. It really is a challenging market to start up a business in.”

The British-educated serial entrepreneur – Al Khonji’s umbrella company incorporates Dais Genesis International, a payment solutions provider, Genesis International, a medical education company, and Genesis Projects and Investments, an enhanced oil recovery business – starts by explaining that education needs to play a more important role in encouraging entrepreneurial behaviours in the country.

“We should introduce entrepreneurship in schools,“ he says. “I believe that if we introduce it between grades 10 to 12, it will open the mind of students to the third option. Today, students who graduate from college first think of government jobs while working for the private sector is their second option. They never think of starting their own business.”

Al Khonji is supporting start-up founders as a board member of Sharakah, a fund established by a royal decree in 1998 to support the government’s diversification programme, known as Vision 2020, which was announced three years earlier. He explains that most of them face a challenge due to Omanis being traditionally reluctant to trying new ideas.

“I tried to import some very unique products from China, which were not available in the market,” he says about his first business Qais United, a trading company, set up in 2010. “It was not successful because we are lacking proper marketing firms in Oman. I could not deliver the product to the right customer because we did not have proper marketing. Customers in Oman do not accept new products unless it is a branded product.”

Jokha Al Hussaini, the first Omani female engineer and founder of Shumookh Engineering Consultancy, set up in 2011, agrees. “In Oman people do not accept local companies easily,” she says. “They think that we are still not capable of producing high quality work. I was challenging them.

Jokha Al Hussaini, founder of Shumookh Engineering Consultancy, is the first Omani female engineer.

“I used to take smaller government projects, for only OMR200 (AED1,910), just to show to them who I was. I wanted them to compare an Omani company with an international company. That is how I showed to them that I am equal with all those big companies. The only difference was that I had just started and they had been in the market for 10 and more years.”

Her story is one of courage and perseverance. Failing to secure a university place after finishing high school, Al Hussaini took up a clerical position. However, five years later she decided to pursue her dreams of becoming a civil engineer again, and consequently managed to enrol in the Caledonian College of Engineering in Oman.

“My family didn’t accept my decision to study civil engineering. So, when I enrolled in college in 2002, I told my family that I was studying accounting,” she says. “Before graduating in 2005, I won the first prize for the model of a highway project at a competition organised by the college and Muscat Municipality. The story about it and a photo of me appeared in local newspaper the day after.

“My father was shocked, but he told me to continue. He even said: ‘It was my mistake. I was hesitant because mostly men work in that industry, but if you love it, go ahead.’”

As a fresh engineering graduate, Al Hussaini started working for Hurley Consulting, an international company that acted as a sub consultant to ADPi, a French company engaged on the new Muscat International Airport project. She credits her British boss Brian Pratt, who was the director of Hurley Consulting Oman office at the time, for encouraging her to take the plunge into entrepreneurship.

“When I started this business I had only OMR2,000 ((AED19,000)in my pocket,” she says. “It took me six months to get the licence and register my business. In order to register your business in Oman, you cannot work anywhere else. If you have a job, you have to resign. So I was really suffering for six months without working and earning a salary. At the same time, I had to rent an office and pay the rent for all those six months while I was waiting for the licence.

“However, my boss was encouraging me. He got me my first project as a sub-consultant on the airport project with ADPi. When he was leaving the company, he gave me a cheque for OMR10,000 (AED95,400) and said: ‘Jokha, I have already resigned and I am going back home, but now you have your career and your future.’”

During the difficult three years that followed, her biggest challenge was earning the trust of both public and private sector clients. “They would always require something additional,” she says. “One of my colleagues even told me that it would be better for me to close the business immediately. I said: ‘Okay, if it is like that, this is my challenge.’

“Then I decided that I would take any project, with no profit, just to show to them that I can do something. After that, once I showed them my capabilities, I’ve got many projects from the Ministry of Transport and Communication.”

Shumookh Engineering Consultancy now enjoys steady organic growth due to the high quality of deliverables and high customer satisfaction.

Al Hussaini has since won a number of awards for her business success, including the Entrepreneurs Conclave 2015 award and the Al Wathbah Businesswomen’s Award 2016.

The Entrepreneur’s Conclave was launched in 2014 by Zameel Ameen, an Indian entrepreneur who moved from Dubai to Muscat to set up his events management business Experiment Events a few years ago. Ameen’s goal has been to build a platform for young entrepreneurs in Oman to network and grow their businesses.

Zameel Ameen, founder of Experiment Events and The Entrepreneur’s Conclave.

“I think that a lack of networking is a major disadvantage for entrepreneurs here in Oman,” Ameen says. “When I say networking, I am not thinking of a dinner where you can exchange your business cards but not really crack a conversation. That is why we wanted to establish a platform where established entrepreneurs can network on a very personal basis with young entrepreneurs. For example, one year we organised a sailing activity for all of them. That was an amazing experience for many of them since they had not done anything similar before. They still have to learn more about teamwork and being actively involved in the ecosystem.“

A study conducted by the National Poll Centre in March 2015, showed that only 37 percent of the 206 respondents in Oman were found to be aware of Riyada’s entrepreneurship-related programmes, 22 percent had heard of Bank Muscat’s al Wathbah programme, while less than 10 percent knew about the programmes organised by local universities. Intilaaqah, one of Shell’s social investment initiatives aimed at SMEs in Oman, was recognised by 43 percent of the respondents. Startup Oman is another recently launched platform to help identify the challenges start-ups and SMEs in Oman face.

This year Oman made a significant improvement in the World Bank’s ‘Ease of Doing Business’ ranking by being placed 70th globally and fourth in the GCC region, ahead of Saudi Arabia (83) and Kuwait (101), but behind the UAE (31), Bahrain (65) and Qatar (68). However, Oman recorded a big fall in ease of ‘starting a business’, where it ranked 149th out of 189 economies against 121 in 2014. Al-Khonji explains: “Most entrepreneurs who have established themselves in Muscat plan to expand to Dubai because of its flexible rules and regulations. There is an example of an Omani entrepreneur who faced a problem here because of slow and complicated procedures and decided to close down and open an outlet in Dubai. So I think that Dubai is an open market that established entrepreneurs should look at.”

Al Hussaini concludes by saying that the Omani market requires entrepreneurs to be patient. “I know that my colleagues who are SME owners want to open today and get money tomorrow. That is impossible,” she says. “I waited for three years, with zero profit. Also, most of them are worried when making decisions. Entrepreneurs need to be confident and believe in what they are doing.

“Lastly, do not feel shy. In our culture, ladies are always shy to talk. No. You have to be proud of yourself and of what you are doing. In my case, this is a very difficult sector to enter for a female, and I am proud of what I am doing. Most people are now proud of SMEs in Oman. Also, SME owners support each other. For example, when I cannot accept a project, I give it to my colleagues. It is not a lobby, but we call it Omani teamwork [she laughs].”

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