Fueling Economic Growth

Serbia has made important progress in creating a legal and policy framework for economic growth, but important steps remain to ensure sustained stability. USAID works with Serbian government counterparts, non-governmental organizations and other US Government departments:
to help deepen structural reforms and improve the legislative process; provide support on implementation and enforcement of new legislation and improve governance; including the exercise of authority of key institutions and their responsiveness to the public. Public education and outreach are integral elements of almost all areas of engagement to promote understanding and support for reforms. This work at the national level is expected to result in heightened investor confidence in the rules and behavior of key institutions affecting economic growth and investments in Serbia. A more cohesive, accountable and responsive government should also lead to more domestic confidence and stronger support for continued advancement of democratic governance and economic reform.

At the same time, as Serbia moves closer to EU and World Trade Organization accession, enterprises are encountering both new opportunities and competitive challenges. In order to benefit from the changes that trade liberalization will bring, Serbia’s businesses need to modernize and increase efficiency. USAID works with promising SMEs in agricultural, industrial, and service sectors to improve productivity, upgrade the quality of their products and to expand into new markets. Targeted USAID assistance contributes to improving business practices, developing the workforce, enhancing marketing, attaining international standards and introducing new technologies. Building a strong and competitive business environment offers the best promise for long-term, sustained economic growth and employment.

Current programs that contribute to Serbia’s overall economic development include:

Agribusiness Project

This 5 year, $24 million economic development project provides assistance to Serbian agriculture and agribusinesses with the aim of increasing agricultural sales and exports by Serbian firms and creating new employment in this sector.

Project components include:

• Increasing the competitiveness and efficiency of Serbian agribusiness enterprises all along the value chain in six high-potential agricultural sub-sectors: Tree Fruits, Berry Fruits, Vegetables, Mushrooms, Herbs and Spices, Dairy Products, and Livestock.
• Creating a positive enabling environment, which includes favorable legislation and policies, as well as effective provision of essential agribusiness extension services, such as market information, annual agricultural production estimates, animal and plant health and food safety information, and regulatory oversight, such as licensing, labeling standards, and product certification, etc. 

Bankruptcy and Enforcement Strengthening (BES)

BES improves the investment climate for foreign and domestic investments and contributes to a more vibrant market economy through targeted technical assistance in bankruptcy and civil enforcement. BES supports the implementation of all aspects of Serbia’s new bankruptcy regime for the reorganization and liquidation of insolvent enterprises and sales to investors. It will also analyze and address problems related to the enforcement of commercial actions.

Project components include:

• Strengthening the Privatization Agency Bankruptcy Unit to help it privatize State and Socially Owned Enterprises through bankruptcy, reorganization and/or liquidation in a more efficient and effective manner
• Assisting the Bankruptcy Supervisory Agency in its effort to better regulate the bankruptcy administrator profession
• Strengthening the enforcement of creditors’ rights, execution of judgments from Commercial Courts, including post-judgment enforcement, non-judicial remedies and pre-judgment expedited procedures
• Identifying and reducing corrupt practices associated with the Serbian Bankruptcy Unit and the Agency for Licensing Bankruptcy

Competitiveness Project

The USAID Competitiveness Project is a four-year, $14.7 million initiative launched in October 2007 to promote economic growth by substantially increasing the competitiveness of Serbian SMEs in leading sectors to increase sales, exports, investment and jobs.

Sectors: Based on the findings from a study of 12 sectors in Serbia, the Project identified sectors with the greatest potential to compete in international markets: ICT, tourism, film and production, construction services, auto parts, wood processing and furniture, renewable energy. The Project reinforces the competitiveness of sectors through policy reforms, workforce development, and communications efforts.

The Project is undertaking both transactional and transformational activities to meet these objectives. Transactional activities include targeted sales and marketing efforts, e.g. trade shows, market research, B2B meetings, direct negotiations, while transformational activities seek to enhance the long-term competitiveness of a sector, e.g. supporting firms to attain international certifications and standards; building industry groups/associations to advocate on behalf of a sector; implementing workforce development initiatives that build technical skills needed; and international branding efforts to increase awareness of the benefits of investing in Serbia.

Municipal Economic Growth Activity

The Municipal Economic Growth Activity is a local economic development program which develops the skills of local governments to foster economic growth and employment by creating a business environment where the local private sector can flourish.

Program components include:

• Policy advocacy, support to legislative reforms and strengthening the capacities of the National Alliance for Local Economic Development (NALED) and the Standing Conference of Towns and Municipalities (SCTM);
• Building the professional ability of newly created Local Economic Development (LED) offices to strategically plan local economic development, promote investment, and support local entrepreneurship;
• Developing municipal technical capacities, such as debt management, investment project preparation, Public-Private Partnerships, and asset management;
• Facilitating private sector growth, by building networks of stakeholders, encouraging public-private partnerships, and introducing economic development tools and facilities;
• Providing matching grants to fund projects that advance LED Strategic Plan priorities.

Opportunity Bank Serbia

Opportunity Bank Serbia (previously Opportunity International Savings and Loans which converted into a bank in May 2006) provides banking services to entrepreneurs and clients with limited access to the banking system. Opportunity also works in rural areas to bring financial services to family farms as well as to viable Small and Medium Size Enterprises (SME’s) with demonstrated growth potential. Opportunity Bank has branch offices throughout Serbia, including in the south, where there is a limited number of banking services available.

Project components include:

• Granting loans to entrepreneurs, small firms, refugees, agricultural producers and other business ventures unable to access traditional financing due to the lack of either credit guarantees or a credit history.
• Granting loans to SMEs in support of their business needs and development, including start-up businesses.
• Providing domestic and international payment transaction services to its business clients.
• Offering Euro and Dinar deposit products to personal clients looking for good return on their savings.

Preparedness, Planning and Economic Security (PPES)

The Project helps municipalities be more resilient to crises and disasters, assists businesses in difficult environments grow and expand into new markets and works with Serbia’s youth to empower them for the future. The program has two components: 1) Preparedness and Planning and 2) Economic Security.

Project components include:

• The Preparedness and Planning component builds a sustainable and systematic approach to local-level disaster management by strengthening municipal disaster response systems and providing municipalities' with the tools to respond to natural and manmade disasters.
• The Economic Security component works to promote economic growth in underdeveloped municipalities by working with successful small and medium-sized enterprises (SMEs) and with Serbia’s youth to equip them with skill sets required to compete in a global economy.

Serbia Economic Growth Activity (SEGA)

Advises on the formulation and implementation of laws, policies and procedures relating to financial, fiscal and macroeconomic development.

Project components include:

• Improving capacity for macroeconomic policy development.
• Strengthening the supervisory oversight and risk management of the financial sector to improve the availability of credit and investment opportunities.
• Supporting reforms in tax policy and administration and fiscal decentralization.
• Improving Government’s outreach/public information and education on key reform agendas.
• Assisting capacity development of key governmental and non-governmental economic and financial institutions.

Small Enterprise Assistance Fund (SEAF)

Provides equity and quasi-equity (long-term debt) financing to small and medium enterprises in Serbia and in the region in accordance with the Fund’s investment policy.

Project components include:

• Financing small and medium sized enterprises in a diversified range of industries which show the potential for growth and meet fund criteria
• Training management at participating enterprises
• Promoting job creation within portfolio companies and more broadly through suppliers, distributors and other stakeholder

• Agribusiness project
• Bankruptcy and Enforcement Strengthening program (BES)
• Competitivness project
• Municipal Economic Growth Activity
• Opportunity Bank
• Prepardness, Planning and Economic Security program
• Serbia Economic Growth Activity (SEGA)
• Small Enterprise Assistance Fund (SEAF)