News & Events

22 December 2014

Kosovo's private sector growing, albeit obstacles

Kosovo's private sector growing, albeit obstacles

A report on the state of the private sector in Kosovo, published last week by KOSME on behalf of the Kosovo Investment Enterprise Support Agency (KIESA), states that small and medium-sized enterprises (SMEs) form the main part of Kosovo’s private sector economy and accounts for approximately 80% of employment in the market economy.

In the period 2010-2013, Kosovo's private sector enterprises experienced dynamic growth. The total number of private sector enterprises increased by 26 % and the number of persons employed grew by 22%.

Notwithstanding its importance, however, the country’s SME sector as well as the wider business environment show some significant weaknesses which prevent this sector from developing its full potential in terms of employment, productivity and value added.

Against this background, strengthening and developing the SME sector is therefore a policy priority of the Kosovo government. This is reflected, in particular, in the government’s ‘Private Sector Development Strategy 2013-2017’ as well as in the ‘SME Development Strategy 2012-2016’ which aims to create a SME-friendly business environment, promote an entrepreneurial culture, and raise the (international) competitiveness of SMEs. The government has also established a dedicated institution, the Kosovo Investment and Enterprise Support Agency (KIESA) operating under the Ministry of Trade and Industry (MTI), which next to promoting foreign investments is responsible for supporting policies and programmes for micro, small and medium sized enterprises.

Effective, evidence-based policy-making for SMEs requires a sound and continuous assessment and monitoring of the SME sector. Consequently, KIESA’s predecessor agency SMESA and the MTI previously conducted surveys among SMEs in Kosovo and also produced statistical overviews based on the business register.

The present study is not only a continuation of these previous research and monitoring exercises, but seeks to further enhance the relevance and quality of the investigation of the SME sector by formally integrating formerly separate analyses, using other data sources, and carrying out new types of data analysis.

To investigate the overall structure and development of the SME sector as well as various aspects of business demography, anonymized micro data of all enterprises registered with Kosovo's tax authority within the period 2010 – 2013 were used.

Furthermore, an interview survey with 750 SMEs has been conducted to obtain further information on the features, strategies, perceived constraints and support needs of businesses. The sample for the survey has been designed in a way to take account of the heterogeneity of the SME sector and to provide reliable results for the main sectors, different size categories and the different regions of Kosovo.

Therefore, the study shall contribute to better understanding the SME sector, advancing SME policy making and, ultimately, the development of the SME sector.

KOSME provides capacity development to the Ministry of Trade and Industry with financial support from Austrian Development Cooperation and Swiss Development Cooperation and is implemented by ECIKS and KMU Forschung.

 

Full report is available for download at: http://eciks.org/en/publications

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