Evaluation of the USAID-Kosovo SME and Agriculture - Economic ...

EXECUTIVE SUMMARYI. FINDINGS1. USAID-supported projects reviewed—10 in all—have had positive impact on economicgrowth, capacity development and job creation in Kosovo. They started early—IFDC in1999, FINCA in January 2000, KBS in October 2000, and provided the broadly targetedassistance needed in the emergency reconstruction period. USAID provided across-thesectorssupport to SME and agribusiness development to provide early positive benefits,and to show other donors what could be accomplished by direct assistance to the privatesector.2. During the last four years, the economic circumstances have changed, there areincreasingly competitive markets occasioned by a downturn in donor funding andremittances. In 2002, all KBS sectors were positive, with average sales for 177 clientsincreasing 39% and profit up 67% from the previous year. In 2003, the businessenvironment became much more competitive. Of 8 sectors served by KBS, four haddecreased sales for the year, three negative profit. Overall, the 57 clients tracked fromthe prior year had sales increases of 13% and 28% increases in profits over 2002. Thesituation has changed from the early days of easy money, fueled by heavy foreignassistance spending and the release of pent-up consumer demand, when nearly allbusinesses were buoyed by a rising economic tide, to a market in which businesses canlose money if they are not agile and adroit.3. The next generation of projects/programs must respond to this new competitiveenvironment, one in which imports will not be able to continue to be 75% higher thanGDP. The program must provide more intensive, directed and specific assistance toallow enterprise groups (we will argue later for the cluster concept) to achieve marketpenetration, serious import substitution and, in some selected products, export growth.The new projects/programs will be made better by the start that has been given from thepast and ongoing projects in USAID’s portfolio. Much of the ground has been plowedand past efforts to build capacity and development SMEs and local institutions will payoff in the near future.4. Here are summary judgments on the reviewed projects past performance andcontributions that this project has made to future programs:• Kosovo Business Support (KBS), October 2000 to September 30, 2004. $15million. Excellent broad-based business development services early in thereconstruction. Provided skills and training local staff in enterprise accounting,strategic plans, marketing, access to financing, trade and investment linkagescertified accounting training, all performing well. Good results with less thanoptimal targeting in competitiveness areas, including agribusiness and nonagriculturalsectors beginning in late 2002. There were too many areas selected, toolittle time, and too few resources for them all. Nevertheless, KBS has established aEvaluation of the USAID/Kosovo SME vi May 2004and Agriculture/Agribusiness ProgramsVolume I