Project description

Title: Economic development and employment promotion in Montenegro
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Montenegro
Lead executing agency: Ministry for Economic Development, Montenegro
Overall term: 2005 to 2012

Context

There are great structural differences in Montenegro between the poor north of the country, the central region, where industry and administration are relatively well developed, and the south, which is dominated by tourism. Small and medium-sized enterprises (SMEs) are taking promising approaches to economic development, especially in tourism. However, the companies have little experience of a market-oriented economy and there is insufficient support from governmental business promotion services, private-sector service providers or training institutions. A lack of expertise and practical experience in the development of business promotion structures and instruments for SMEs is compounded by a lack of experience in adapting the legal foundations to meet European standards.

Objective

Effective promotion structures and instruments are improving the opportunities for development and growth in selected areas of the private sector.

Approach

The project enables government institutions to plan and implement effective promotional measures for SMEs, and to assess their success. It provides advisory services to Montenegrin institutions on analysing the business climate for SMEs, and on the development and introduction of measures to improve that climate. This includes advice on adapting the legal framework to meet the requirements of the internal market of the EU. This part of the project is being co-financed by the EU under its Accession to the Internal Market (AIM) project.

The project assists public business promotion institutions, business associations and other private service providers, as they develop business support services. It is, moreover, encouraging cooperation between these service providers.

The project analyses the economic effects of tourism as the most important business sector in Montenegro. It provides advisory services on the introduction of a planning instrument for strategic decisions by Montenegro’s Ministry of Tourism and Environmental Protection and supports the development of sustainable tourism concepts. The ministry is co-financing this work.

Results achieved so far

In 2007, the Montenegrin government adopted the SME Promotion Strategy, which was drawn up with project support. In 2010, the strategy was updated to provide guidance on promotional measures up to 2014. Meanwhile, the governmental Directorate for Development of Small and Medium sized Enterprises has acquired the capacity to consistently monitor the implementation and success of the strategy.

Since 2009, an annual survey of SMEs has provided information on their economic situation and their business prospects. The survey also reveals what the SMEs view as the major barriers to their business development.

Trade associations have been set up in the business sectors supported by the project. The Montenegro Tourism Association (CTU) has established itself as the organisation representing the tourism industry and as a service provider for the industry’s small and medium-sized enterprises. In 2007, more than half the members of the CTU increased both their turnover and their staff numbers.

An association of women entrepreneurs, formed with the support of the project, is now vigorously championing the interests of its members and provides services and training specially tailored to their needs.