Nortal HQ, November 13, 2022
The thoughtful transition of Oman toward a diversified, innovation-led economy is well underway.
At a recent event organized by Nortal, Oman’s planned economic transformation, set out in its Vision 2040 blueprint, was described by H.E. Qais Mohammed Moosa Al Yousef, Oman’s Minister of Commerce, Industry and Investment Promotion, as its ‘Renaissance 2.0.’
“The nature of competition is changing as the global economy evolves,” he said. “We can’t rely on our traditional advantages if we are to fulfill our economic ambitions.”
Oman’s government is keen to learn from the experience of other nations in encouraging a strong start-up sector. The goal of this event was to share the best practices and ideas learned from Estonia, another small country that has built a successful start-up ecosystem with the support of Nortal.
A vibrant start-up and SME community are central to Oman’s plans. A healthy start-up sector would not only bring greater economic diversification, it could also inject new levels of innovation and disruption into its established industries and sectors attracting high levels of investment, such as hydrogen and other green energy sources. Entrepreneurial start-ups create digitally enabled solutions that could benefit the entire economy.
Oman’s government has already taken several legislative steps which will encourage domestic and foreign entrepreneurs to choose Oman as a base, including:
With the support of Nortal, the Omani government has also launched the Invest Easy platform. This online platform acts as a single window to interact with the government, from setting up a new company to submitting annual reports. The portal minimizes paperwork, saves costs and time, and provides all vital information, such as updates on laws and regulations.
As a result of these changes, foreign direct investment into Oman has increased sharply in recent years and reached almost US$3 billion in 2020. But the government of Oman wants to go much further in creating an appealing and supportive ecosystem for start-ups that attracts entrepreneurs from across the world.
What are the most effective further steps that Oman can take? The legislative changes and the launch of Invest Easy form a strong foundation for building a healthy start-up community. But other initiatives have proved effective in different countries and could provide a roadmap for Oman.
Growing businesses need finance, and typically, start-ups are funded through a mix of business angels (in the early stages) and venture capital investment. Governments often play a critical role in financing new businesses, as the presence of a quasi-state investor provides the confidence that attracts private investors – the balance of private and state-backed funding, though, inevitably shifts over time.
The Oman government has invested significant amounts already, diverting $200 million from its sovereign wealth fund to create the Oman Technology Fund (OTF) in 2016. The OTF invests in start-ups and VC funds in Oman and across the Middle East and North Africa, focusing on innovation in the technology sector. Investments are made at the early ideas stage (through the Techween program), at the acceleration stage (through the Wadi Accelerator program), and in the growth phase (through Jasoor Ventures).
A small number of private venture capital firms have also begun to emerge in Oman, including Phaze Ventures, established in 2018, which aims to fund early-stage disruptive technology companies – but more needs to be done to attract investors. The presence of venture capital funds and business angels is essential to the success of a start-up ecosystem as it brings not only the necessary funding but the experience, advice, and support of seasoned entrepreneurs.
Entrepreneurs thrive on the exchange of ideas and need a solid and supportive network of peers, advisers, and potential investors around them. The Oman government has taken steps to build collaborative networks through a range of initiatives, including the Oman Startup Hub, a platform for entrepreneurs, business owners, advisers, and investors to connect and collaborate. It will be essential to build further on this initiative.
Oman benefits from a young population – around 40% of its 4.6 million inhabitants are under the age of 25. Arguably, younger generations are more willing to take risks in their career and are more open to joining a start-up business. But even so, a strong start-up sector is fueled by an open, global services market.
While encouraging talented young people into the entrepreneurial sector will be a priority, the Oman government has also taken steps to ease its immigration requirements to promote entrepreneurial investment. Investor visas, for example, are available to eligible entrepreneurs and investors who are relocating to Oman to manage their businesses. At the same time, the Investor Residency Program is open to foreign investors looking for longer-term residency rights.
There are mixed views about the education system’s role in preparing the future workforce for entrepreneurial business careers. Increasingly, the private sector has addressed shortages in essential skills, such as coding, by setting up training establishments. In Oman, many workers in the oil and gas sector will have highly transferrable skills but would benefit from advice and guidance on what they need to do if they want to change their career path. Analysis will be required to identify where investment in education, training, and skills – especially the STEM skills critical to the start-up community – will have the most significant impact.
As Oman continues to develop its start-up ecosystem, it is essential that a close and collaborative relationship is maintained between the government and entrepreneurs so that any challenges or requirements can be quickly identified, and the needs of start-ups and entrepreneurs rapidly met. In other nations, this has been achieved through a panel of experienced entrepreneurs who meet regularly with the government to discuss emerging issues.
Every region will have specific needs and unique challenges in encouraging a strong and successful start-up environment. However, there are many lessons to be learned from the experiences of new and established entrepreneurial hubs worldwide – and from organizations, like Nortal, that have advised them. Oman has clear and ambitious goals and has made a strong start in its plans; its willingness to learn from the experience of other nations with small populations, such as Estonia, is indicative of its robust approach. Soon, the Sultanate will enjoy the many benefits of a thriving community of fast-growing, innovative businesses – and ambitious entrepreneurs will find an appealing new home.