Increasing Private Sector Growth and Investment

USAID works to stimulate private sector competitiveness and improve the business enabling environment in Kosovo. Activities focus on targeted sectors with demonstrated high growth potential including construction, agriculture and IT, as well providing technical assistance to businesses operating in these sectors. However it is critical that Kosovo address the policies, rules, procedures and regulations that currently discourage private sector investment and impede economic growth. USAID is working to streamline rules and regulations, lower trade barriers, increase efficiency & effectiveness of the financial sector, and make public tenders more transparent.

Kosovo's very large youth population (more than 50% of the total population under 25) presents challenges and opportunities. Youth and education programming is closely interlinked with broader goals in economic growth as economic sustainability in Kosovo depends on the emergence of a skilled and prepared workforce.

The financial sector in Kosovo offers a limited range of products to clients. Interest rates are higher than in neighboring countries, putting local firms at a competitive disadvantage. USAID continues to address the needs of the riskier but viable borrowers, i.e., entrepreneurs, farmers, processors, women and minorities with less experience, size and fixed asset collateral.

A $10 million Development Credit Authority (DCA) loan guarantee with Raiffeisen Bank targets the agricultural sector and has been fully disbursed, resulting in loans to 904 agricultural producers. Two additional DCA loan guarantees are planned, one with a private bank and the second with a microfinance institution. USAID also supports the provision of innovative financial products that directly contribute to an increase in productivity and employment. Through our assistance, Crimson Capital has provided $1.8 million in short term working capital to small and medium entrepreneurs, resulting in almost $20 million in additional sales. There are plans to offer equipment leasing services, especially to agricultural producers.

USAID is also working to resolve systemic problems in the financial sector by improving the credit and pledge registries - critical elements that can contribute to lowering interest rates on loans.


Current Activities

1. Kosovo Private Enterprise Program
2. Business Environment Enabling Program
3. New Opportunities in Agriculture
4. Commercial Finance fund
5. Center for Entrepreneurship and Executive Development
6. Development Credit Authority


Kosovo Private Enterprise Program

The Kosovo Private Enterprise Program is identifying market opportunities for Kosovo products, emphasizing development of local and regional capacity to promote competitiveness, and setting the stage for sustainability of the private sector.

To meet these objectives, USAID addresses four components critical to private sector competitiveness, supplemented by a Strategic Activities Fund to help address all areas.

• Private sector development of targeted sectors
  USAID is assisting sectors with clear end-market opportunities. Activities focus on discrete initiatives that help these sectors increase sales, exports, and/or employment, attract foreign direct investment or produce high value products. Targeted sectors include: agriculture, construction materials, forestry and wood processing, and information and communication technology. As opportunities for growth arise, USAID may provide limited support to other sectors including: recycling, tourism, metals, and decorative stones.
• Demand-driven development of business support services
  A local cadre of consultants are being trained to support work in targeted sectors and to ensure the long-term sustainability of these sectors. USAID also helps companies obtain international accreditation or certifications to compete in international markets.
• Improved business enabling environment
  Through our work with businesses in targeted sectors, USAID is identifying and working to remove constraints to doing business in Kosovo. Problems to be addressed include issues such as quality standards, certifications, licensing, or registration.
• Workforce development
  USAID is working with local vocational centers, companies, NGOs and other entities to develop the skills of the workforce in targeted sectors. This work includes internships and apprenticeships, training programs in product safety, and other skill-enhancement activities to improve employment opportunities.

Strategic Activities Fund
A $3.7 million Strategic Activities Fund provides flexible funding to work with businesses to fund or cost-share specific processes or equipment that can lead to improvements in the overall competitiveness of a sub-sector or value chain.



Business Environment Enabling Program

USAID began supporting the Business Enabling Environment Program (BEEP) in August 2010 with the stated goal of improving the business environment in Kosovo by:

• Improving/Streamlining Rules and Regulations
• Lowering Trade Barriers
• Increasing Efficiency & Effectiveness of the Financial Sector
• Making Public Tenders More Transparent

BEEP will work with national authorities, municipalities, and representative private sector groups to increase awareness and understanding of commercial laws, regulations and procedures. It will assist both levels of government to assure that rules, procedures, fees and resources for business are well-publicized and readily available. It will also help to lower barriers to trade and facilitate regional integration by working with the Government of Kosovo's trade officials and selected private sector groups to understand and make use of international trade practices and conventions.


New Opportunities in Agriculture

USAID's New Opportunities for Agriculture (NOA) program launched in February, 2011 with the primary goal of increasing Kosovo's agricultural output, exports, and rural incomes in support of USAID's ongoing economic growth strategy.

Assessments of the sector have identified several opportunities for growth in agriculture and agribusiness, including Kosovo's proximity to the EU and growing regional markets, a natural environment that favors agricultural diversification, and a young workforce eager for employment opportunities in rural areas.

The main objectives of this new program are to link farmers to new domestic and international markets, and to develop and maximize production of new high-value crops. The program also aims to improve food quality and safety by introducing international standards, giving small farmers better access to credit, and ultimately strengthening sector coordination and leadership by the Ministry of Agriculture, Forestry and Rural Development.


The Commercial Finance Fund – working capital for business

USAID's Kosovo Small and Medium Enterprise (SME) Commercial Finance Fund addresses the need for short-term working capital financing. The Commercial Finance Fund is a non-banking financial institution designed to address the needs of the riskier but still viable borrowers, i.e., entrepreneurs, farmers, processors, women and minorities with less experience, size and fixed asset collateral.

The program is uniquely positioned in the marketplace, addressing the needs of those that are not being adequately served by other financial institutions. It provides a range of short-term working capital products such as pre-shipment and pre-export working capital finance, accounts receivable, revolving credit, and leasing.

This type of working capital finance could benefit all sectors of the economy including agriculture, building materials, manufacturing, textiles, publishing, information and communications technology (ICT), metal processing and trade − all along the value chain − from primary producer to final customer.



Center for Entrepreneurship and Executive Development

The Center for Entrepreneurship and Executive Development (CEED) provides training to entrepreneurs and mid-level executives of high-growth small and medium sized enterprises (SMEs). This activity aims to accelerate the growth of SMEs and foster the development of a more knowledgeable entrepreneurial culture through the delivery of executive training courses and networking events.


The Development Credit Authority – Encouraging agricultural loans

Through the Development Credit Authority, USAID is increasing access to credit for agriculture and agribusinesses. Farmers and small and medium agricultural enterprises (SMEs) can access credit more easily because USAID has provided a 50% risk guarantee to loans issued by Raiffeisen Bank Kosovo to agricultural borrowers.

These loans have been issued to agricultural enterprises in areas such as dairy, livestock, poultry, lamb, animal feed, forage and crops, and fruits and vegetables, with terms ranging from 12 to 60 months.