Advancing Kosovo’s Economy

By Cinar Akcin,Senior Manager, Economic Growth and Andriy Shevtsov  manager, Economic Growth

In Kosovo, the USAID’s EMPOWER Private Sector project, in partnership with Sida, has created nearly 3,000 jobs in three years, including jobs for women, youth and minorities. 

EMPOWER’s primary aim is job creation. The project helps small and medium enterprises (SMEs) expand and improve their capacities to sell to buyers, while at the same time help workers obtain in-demand market skills. 

EMPOWER does this by working with SMEs to address principal competitiveness challenges that prevent them from realizing market opportunities. Companies targeted for support are primarily in the wood, apparel, energy, tourism, information and communications technology, and metal sectors. 

EMPOWER strongly supports the concept that Kosovo’s economic success depends on the full integration of women, youth and minorities in the workforce, at all sectors and levels. Almost 40 percent of all new jobs created since the beginning of the project have been among women, 42 percent have been among youth and almost one-tenth have been among minorities. 

The project engages in various activities that support, train and increase job opportunities for women in information and communications technology, apparel, and wood sectors. EMPOWER tackles youth unemployment through a variety of interventions, including workforce development and internship programs designed specifically for people between the ages of 18-24.  

The project works with a wide range of SMEs across the country, from companies of less than 10 employees to larger ones with up to 200 employees.

In just its third year, the results have been that more than 350 direct beneficiaries attributed increased sales over their baseline sales of $84 million, versus the cumulative target of $56 million through the fourth year.

Successful Wood Processors
Ten Kosovo wood processing companies participated in the two largest furniture fairs in Europe, resulting in €3.3 million worth of contracts for the SMEs, with more than €3 million in pre-contracts expected to be signed. These included three furniture companies exhibiting their products at the IMM Cologne (an interior design fair in Germany) and seven companies at the Swissbau, Switzerland’s biggest building trade fair. 

"In addition to establishing some very serious contacts with prestigious German, Swiss, Austrian, Dutch and English companies, we also made concrete sales deals,” said Ekrem Shahini from Palma, one of Kosovo’s leading wood processors.

The Kosovo businesses made more than 1,000 connections with individual and company buyers. Export deals were made with companies from the EU, Switzerland, UK, Africa and Saudi Arabia. 

One company was awarded the prestigious Archiproducts Design Selection Award 2018 from a professional jury for its chairs.   
The trade fairs provided exhibiting companies opportunities to display Kosovo-made furniture and expand their products to international buyers. This included displaying kitchens, stairs, modular walls, wooden houses, doors and windows, tables and chairs, sofas, and contract furniture for hotels, restaurants, and cafeterias (HoReCa). 

Cardno’s Approach
SMEs need finance to acquire production technology that will allow them to expand their physical supply capacities in order to meet market demand and hire additional employees. 

While the Kosovo banking system does supply finance, availability is limited, especially for rapidly-growing SMEs. When owner-capital is exhausted, which is the single largest source of financing in Kosovo, expanding production requires access to outside finance.

In order to deal with this challenge, EMPOWER employs a $4.4M Strategic Activities Fund (SAF) designed to co-finance the expansion of companies’ production operations.

SAF funds are invested in companies based on a target return on investment (ROI) – the number of jobs created. SMEs in the select sectors are encouraged to apply through an open and transparent proposal process, demonstrating their need for funding and impact on job creation. 

EMPOWER reviews applications and selects companies for support based on the following key criteria: impact, additionality, cost-share, realism and cost per job ratio. Once the funding is invested, EMPOWER monitors the progress of the SMEs in meeting their contractual employment targets or ROI.

A significant amount of project resources help SMEs widen their connections to buyers, mainly for exporting. This is done by connecting SMEs to buyers through international business fairs, business-to-business companies (B2B) and exhibitions in critical export markets, primarily in the EU. 

EMPOWER supports SMEs to obtain international certifications to meet export market demands. EMPOWER also coordinates domestic B2Bs, connecting SMEs with buyers from the Kosovar diaspora. These connections not only help SMEs secure contracts, but also increase the quality of production based on buyers’ requirements. 

The remainder of EMPOWER support goes towards technical support for SMEs and workforce skills development, conducted through in-company trainings of workers.

Cardno’s nearly 50 years of international development field work have yielded measureable impact and sustainable results across an exceptionally broad portfolio of countries of operation and donors. Our innovative models and approaches permeate who we are as development practitioners - working with the intimacy of a small business, harvesting the network and impact of a global firm.