Economic potentials in the North Kosovo

Potencialet ekonomike ne veri të Kosovës

Economic potentials in the North Kosovo

October 2017 | Print | Book

Participation of all ethnic communities in Kosovo’s market economy
is crucial for sustainable economic development and improvement
of the welfare of all citizens. Both economic growth
and private sector development are fostered by using all existing
potentials that a country has to offer. Since 1999, government
institutions together with the international community have
marked a significant progress in ensuring political representation
of all ethnic communities in Kosovo. However, very little
has been done in strengthening the involvement of different
ethnic community owned businesses. In this line, the same
trend has been seen on the research side. Most of the studies
up till now have mainly focused on the business climate and
potentials of Kosovo-Albanian businesses. In this way a clear
picture of the needs and potential of Kosovo Albanian business
has been established. As an example is the Riinvest Institute
study on Business Climate in Kosovo (2014) where a survey
with 1000 businesses was conducted and potentials and barriers
of businesses were analysed. Meanwhile, very little research
has focused on depicting and analysing the overall businesses
environment, barriers, needs and channels for developments in
the four northern municipalities of Kosovo (collectively referred
to as the North throughout this study), that are predominantly
owned by members of Kosovo-Serbian community.1
As a result of an unclear picture of business environment in
the North, Riinvest Institute together with the Regional Environmental
Centre in Kosovo (REC) decided that a thorough
assessment of the businesses operating in this part of Kosovo
should be conducted. With the support of the European
Union Office in Kosovo, a survey with 129 businesses in the
North has been administered. The report aims at: (i) providing
a detailed description of the business profile of the North; (ii)
performance, sales trends and forecast; (iii) opportunities and
challenges faced by the businesses; and (iv) inter-business
cooperation. By covering all these points, actual business activities
and potentials of the North of Kosovo will be depicted.
The conclusions and recommendations drawn from this study
will help policymakers, donors, civil society organizations and
business community itself to understand the development potentials
and needs of the private sector in the North of Kosovo.
According to the survey and research results, the following are
the main findings:
The economic structure of the North is made up almost entirely
of small businesses which are mainly family owned and that
generate less than €10,000 per year. However, there are also
a small number of manufacturing and construction companies
whose revenues are higher than €100,000. Sector wise,
small wholesale and retail businesses make up most of the
market (47 percent), while the rest is composed of other sectors,
respectively, manufacturing (15 percent), other service
activities (14 percent) and accommodation and food services
sector (12 percent).
The vast majority of sales of the North businesses, 90 percent,
are done locally, around 6 percent are sold in other parts of
Kosovo and less than 3 percent of sales are done in Serbia.
The main buyers (62 percent) are Kosovo-Serbian households.
The average net profit rate for all businesses is 19.4 percent;
however, this result varies significantly with some businesses
having net profit rates higher than 40 percent. During 2014,
almost 47 percent of businesses have experienced a drop in
sales by 28 percent on average and 20 percent have experienced
sales increase by 20 percent on average. The outlook for
2015 is mor

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