Overview
Small and medium enterprises in Oman’s manufacturing sector represent a critical but underdeveloped segment of the value chain. The Riyada (Public Authority for SME Development) and Al Raffd Fund provide financing and incubation support, while the National SME Development Programme targets raising SME contribution to 35 percent of GDP by 2040. Within manufacturing, SME participation is concentrated in services, maintenance, and distribution segments.
Key Indicators
| Indicator | Current | 2040 Target |
|---|---|---|
| SME Share of Sector | ~25-35% | 50%+ by 2040 |
| SME Employment | Growing | Major employer |
| Access to Finance | Limited | Improved |
Analysis
The SME ecosystem surrounding Oman’s manufacturing sector shows both promise and structural constraints. While large enterprises like Sohar Aluminium, Raysut Cement, OQ, Oman Cables, A’Saffa Foods anchor the sector, SMEs fill essential roles in supply chains, maintenance, specialised services, and last-mile delivery. Government procurement mandates requiring 10 percent SME allocation have increased opportunities, but access to finance remains the primary barrier. Bank lending to SMEs carries high collateral requirements, and venture capital availability is limited. The sector’s total investment of USD 12 billion in active and pipeline projects creates substantial subcontracting opportunities for qualified SMEs.
Challenges
Access to finance, limited management capacity, regulatory compliance burden, and competition from larger firms constrain SME growth. High energy input costs for non-subsidised operations, limited domestic supply chains, skill shortages in advanced manufacturing, competition from Saudi and UAE mega-factories, and reliance on imported raw materials.
Opportunities
Government procurement set-asides, incubator programmes, e-commerce platforms, and value chain integration with anchor tenants offer pathways. Downstream aluminium value addition (extrusions, cables), food processing for regional export, pharmaceutical manufacturing (Oman Pharma), building materials for GCC mega-projects, and defence manufacturing under the IKTIFA programme.
Vision 2040 Targets
Raise manufacturing GDP share to 15 percent; double non-oil exports; create 150,000 new manufacturing jobs; achieve 50 percent Omanisation; establish Oman as a GCC advanced manufacturing hub.