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  • 1. US Agency for International Development Mission for Kosovo Kosovo Collective Reform Initiative ADVOCACY MECHANISM Final Report By SEGURA/IP3 Partners LLC Contract No. AFP-I-00-03-00035 Task Order No. 801 August 16, 2004
  • 2. TABLE of CONTENTSI. Executive Summary……………………………………………….. p. 1II. Advocacy Mechanism………………………………………………p. 4III. Steering Committee………………………………………………... p. 6IV. Working Groups……………………………………………………p. 8V. Administrative Support …………………………………………...p. 12VI. Advocacy Campaign Plan………………………………………….p. 13VII. Concluding Observations…………………………………………..p. 16AppendicesA. Members of PISG, UNMIK, NGO/Donor and Business CommunityB. Challenges or Barriers CitedC. What is Positive? Underexploited Aspects in Kosovo i
  • 3. I. EXECUTIVE SUMMARYThe Kosovo business community needs to improve its business environment by minimizing themany challenges and barriers that presently hinder its success. The consultants met over sixtypeople from the Albanian and Serb business community, PISG, Pillar IV, and internationalsdonors. Based on these interviews, the consultants determined that in order to stimulateeconomic development and job creation in Kosovo, a mechanism to minimize businesschallenges for the Kosovo business community is essential. The mechanism is to help organizethe business community to take ownership of the problems that it can solve on its own and tohelp it advocate before PISG and Pillar IV when necessary.Need for Solution is AcuteThe timing to create and launch a mechanism is fortuitous, because frustration in the businesscommunity is very high. While some challenges and barriers may require business to lobby toPillar IV or PISG to implement, enforce, or remove laws, the business community itself canresolve many issues. In fact, one of the major problems in Kosovo is that the businesscommunity and relevant decision makers at UNMIK, PISG and the NGO/donor community needto engage in constructive dialogue significantly more often than at present. A major purpose ofthe mechanism is to create mutual understanding between relevant players.Mechanism CompositionThe mechanism needs to consist of a Steering Committee, Working Groups, and businessassociations and relevant entities that want to participate in making their voices heard. TheSteering Committee should consist of the Prime Minister, President of the Parliament, the Headof the Municipal Associations, Pillar IV, and have inclusive representation of the businesscommunity.In order for the advocacy mechanism to be successful, the Prime Minister should chair theSteering Committee and relevant experts should be involved in the Steering Committee andWorking Groups. Most people, to whom the consultants spoke, believe that if the mechanism ishoused at the Prime Minister’s Office and if it has visible support from USAID, it will besuccessful. It is very important that the business community commit well-qualified professionalswho will become the mechanism’s forceful engine. These professionals will be critical inhelping Working Groups write resolutions for the Steering Committee, organizing andresponding to businesses queries, working with the media and administering other importantaspects such as calling meetings, writing minutes, etc.Advocacy Campaign PlanAt the initial stages of the mechanism implementation, international support is essential to enablethe business community to take ownership of this initiative. It is important that USAID and 1
  • 4. EAR facilitate a few meetings between key business chambers and associations and thenbetween business and UNMIK, PISG, and NGO/donors. These meetings will be very useful forrelevant players to become used to working with each other constructively and will help a medialaunch of the mechanism to be successful.After these meetings and with election results, the first Steering Committee should meet todiscuss the priorities and the calendar for the next twelve months. A launch with the mediashould follow shortly.Other OptionsIssue DrivenIf in the initial meetings of the business community and the Steering Committee, the participantsfelt that there are too many working groups, one option could be that they choose 3-5 majorissues that they can begin analyzing and solving. The most oft repeated pressing issues were:• Trade reciprocity• Customs are too high• Interest rates are too high and grace periods are short• People do not know how and where to start a business• Training co-ordinatedHowever, due to the Consultants’ experience, the process of getting the various factions of thebusiness community to meet and start working constructively has to take place, before they candecide whether the recommended mechanism or some variation thereof would be acceptable.Sequential Working GroupsAnother option worthy of consideration would be that if the business community is comfortablewith the number of recommended working groups, but feels that beginning all at once, is toodemanding, they could vote on the top two groups and add one new working group everyquarter. This would give the business community time to learn to work together and with themechanism. This would also provide the business community with a useful opportunity toconstantly have press announcements to keep the public informed about its activities. 2
  • 5. Steering Steering Committee Committee Infra- Infra- Access to Access to One Stop One Stop Trade Trade Training Training Investment Investment Integration Integration structure structure Finance Finance Shop Shop Business associations & entities affected by barriers to barriers to lack of lack of integration to integration totrade to filter poor or lack oftrade to filter poor or lack of lack of lack of access to access to entrepreneur entrepreneur investment investment region & region & issues issues infrastructure infrastructure training training finance finance ship ship promotion promotion Europe Europe 3
  • 6. II. ADVOCACY MECHANISMAn advocacy mechanism is essential for the Kosovo business community in order to help it turnsits significant frustration into positive energy and results. The mechanism should help to trainthe business community to unite itself in order to resolve problems within and by itself, andwhen necessary, to lobby UNMIK or PSIG constructively and with positive results.Important features of the mechanism are that it: • Shows a united business community that o knows its challenges and is well informed o can communicate challenges to government and UNMIK and offer solutions, o is realistic and talking about one or two issues, not a huge litany of complaints • Requires the business community to be committed to this initiative o the business community needs commitment from its members to dedicate well-qualified personnel, resources and time to the initiative o the mechanism needs to have co-coordinators for administrative support • Be well positioned o Housed in the right place to have credibility and has Prime Minister as the Chair • Be focused o otherwise too broad o and could turn into just another “talk show” o could raise unrealistic expectations o confuse the issues • Produce immediate results o go after “low hanging fruit,” otherwise business community will quickly become disillusioned o business community must learn to tackle issues that it can solve on its own and which do not require advocating before Pillar IV or PISG • Have enforcement o Announce initiatives and results every quarter publicly1 through • internal newsletter to business members • radio/ television/ newspapers to inform all of Kosovo community • Albanian • Foreign media1 Serves as a “name and shame’ if people do not co-operate and raises profile of mechanism and of businesscommunity 4
  • 7. • Have a facilitator/mediator in the Steering Committee and Working Groups o Facilitator needs to have experience in the subject area o Each task force/subcommittee needs someone who can be a mediator o Mediator needs to keep group focused on key issues o Mediator needs to help group keep from descending into “finger pointing”The advocacy mechanism will consist of a Steering Committee and Working Groups. Businessassociations and other relevant entities such as universities will be key in bringing issues to theattention of working groups. 5
  • 8. III. STEERING COMMITTEECompositionThe Steering Committee should be composed of senior level individuals in the businesscommunity, PISG, UNMIK, and NGO/donor community. The Steering Committee should havevoting members and non-voting expert observers. The Prime Minister should chair thecommittee to enhance the mechanism’s credibility and influence.The proposed voting members, on whom major business organizations have agreed, are: PISG (Prime Minister, Parliament President, and Head of Municipalities), UNMIK (Pillar IV), and from the Business Community AKB/KCC/American Chamber of Commerce and two other businessesOther suggested businesses are an organization that represents women, Agriculture Association,or a senior professional in media.The proposed non-voting members of the committee are to be known as the Expert Observers: RIINVEST, World Bank, Lawyer (Arbiter)EAR, USAID, individuals who understand Standards (one from UNMIK and one from PISG), and at least one person from the business communityPurposeThe two main purposes of the Steering Committee are to: • Link and co-ordinate the Business Community, PISG, UNMIK, & NGOs/Donors so that communication improves, and • To vote on the initiatives brought forth by the working groups.The Steering Committee should meet quarterly or on a needs basis to vote on issues broughtforth by Working Groups. The voting outcome will be based on a majority basis. If the issueschosen by the Steering Committee require the creation, removal or implementation of a law, theSteering Committee will be responsible to lobby those requirements before the relevant body, i.e.UNMIK or PISG, until resolved. In the event that the Steering Committee rules that a resolutionby a Working Group is without merit, it must give the Working Group an opportunity to analyzethe resolution again and to re-submit it, should the Working Group desire. If a conflict remains,the non-voting experts should assist in adjudicating the dispute. 6
  • 9. The Steering Committee should evaluate on a quarterly basis whether new working groups areneeded and bi-annually it should evaluate whether existing groups are still necessary.The non-voting expert observers should provide their expert opinion when needed. They canalso facilitate discussion if it starts to go of course. If too many issues come forth to the SteeringCommittees simultaneously, the expert observers should help prioritize the issues before theSteering Committee.The Committee should also hold quarterly press conferences to announce the mechanism’sinitiatives, results, and remaining issues to be solved and should disseminate press releases atleast quarterly and on a needs basis.RIINVESTRIINVEST’s strong reputation as a think tank with high quality professionals will be invaluablefor the mechanism. Due to RIINVEST’s connection to USAID and to AKB, its neutrality hasbeen and will be called to question if it is a voting member. So that RIINVEST’s reputation isnot negatively affected and so that its usefulness does not decrease, the Consultants recommendthat it be a non-voting member in the Steering Committee. The Consultants have heard from allpotential business members of the Steering Committee that they believe RIINVEST would bevery useful to the mechanism.Additionally, the Consultants believe that RIINVEST, especially Professor Mustafa, will beinvaluable to the mechanism’s aim of reducing business challenges, if it is in the role ofSecretariat. This would mean that RIINVEST would be the mechanism’s engine. RIINVESTwould be responsible for making sure that the working groups and steering committee have clearagendas and are following them, organizing meetings, writing press releases, and undertakingother important administrative task.In order to be a successful Secretariat, RIINVEST will need resources. The Consultants believethat those members of the business community that are chosen to be in the Steering Committeeshould each commit at least one person to work on the mechanism. Administrative support isalso needed to read and categorize suggestions and complaints from businesses before they go tothe Working Groups. 7
  • 10. IV. WORKING GROUPSCompositionWorking Groups must consist of key people from the business community, PISG, UNMIK, andNGOs/donors. Every effort should be made so that participants from these four areas arequalified professionals in the relevant field of the working group.Each working group will have a chair; the chair can be on a rotating basis. A major responsibilityof the Chair will be to maintain groups focused on the issues selected and to keep discussionsconstructive. The NGO or donor in each working group can help facilitate meetings.Given that there will be foreigners in each working group, it is important that each workinggroup have at least two professional interpreters that can interpret during working sessions. Onemedia person should be in each working group, preferably a media person with expertise in thefield of the working group. Business community leaders feel that the presence of media willmake the mechanism transparent to the public.ResponsibilitiesThe working groups should meet each month and choose the issues that it will analyze and bringforth to the Steering Committee. After debating the issues given to them by business associationsor other relevant entities, the Working Group should choose two issues that it will be furtheranalyzing and presenting to the Steering Committee. One could be a longer-term issue that willbe worked on every month until ready to be presented to the Steering Committee.It is important to pick an easily resolvable problem. An immediate result in each working groupwould help build confidence in and credibility about the advocacy mechanism. While someworking groups may feel that all their problems are very long-term in nature, it is essential thateach group produce at least two positive results every six months.The announcement of positive results would raise the profile of the business community. This isvery important, since many members of the business community are frustrated not only withgovernment entities but also with existing business associations and chambers.If a problem requires legislative action or lobbying to PISG or UNMIK, the Working Group willprepare a resolution for the Steering Committee with the analysis, recommendation, and specificsteps needed to resolve the problem.Not all problems, however, may require any legislative or lobbying action. If the WorkingGroup finds a solution to the presented problem, it should resolve it on its own. There is no needfor resolved issues to be taken up to the Steering Committee. Also, once a problem is resolved,the Working Group should consult with its media member to see if it is worth it to send out apress release. 8
  • 11. Working Group PrioritiesThe business committee should vote on initial working groups and the priorities within eachgroup. Based on the interviews with members from business, PISG, UNMIK, and NGO/Donors,the consultants heard these principal challenges and barriers most often. The full list ofindividuals met is in Appendix A and interview results are in Appendices B and C.The main problem categories with summary issues are2:– Trade Issues o Trade reciprocity, customs, delayed VAT– Access to Finance o High interest rates, short or no grace period, untrained loan officers– One Stop Shop for Businesses o Lack of information on how to create a business, conduct research, or gather contacts; business registration problems (having to go to Pristine)-this is especially a problem for Serbs who do not feel safe coming to the Ministry of Trade– Investment Promotion o Lack of office to promote trade opportunities to foreigners or locals, no marketing on Kosovo– Training Co-ordination o Not enough qualified professionals train business people, people do not know where to get good training, no co-ordination amongst donors to provide training– Infrastructure o Lack of power, lack of transparency in local and international management of KEK o Bad roads and railroads o Expensive mobile– Integration to the Region and Europe o License plates o Travel documentsOther problem areas mentioned were fiscal policy (high taxes or double taxation) and corruption.2 These categories have been discussed several times with AKB, Kosovo Chamber of Commerce and AmericanChamber of Commerce. 9
  • 12. Business Associations and Relevant PartiesBusiness Associations, individual businesses and relevant parties such as universities, andmembers of government entities should address business challenges or obstacles to theappropriate working groups. In case a Working Group does not exist for a particular issue orquery, Administrative Support should catalog what type of issue is being addressed. Everyquarter Administrative Support should report to the voting and non-voting members of theSteering Committee whether there is an increase or decrease in any type of issue/query broughtforth. Trends may be indicative that new working groups need to be created or that existing onesare no longer needed.The business or other entity should describe problem and action desired succinctly. Thosedescriptions should be submitted electronically. A form for such a description could be thefollowing: 10
  • 13. Kosovo Advocacy Mechanism Form for presenting a business barrier/challenge to a Working Group Date: _______________________________________________ Submitted by Name of the Person: _______________________________ Representing Company: ____________________________ Company’s Location: ____________________________ Company’s Business: ____________________________ Company’s Size (number of employees): _____________ Representing Association: ___________________________ Submitted to Working Group: __________________________________________________ Briefly describe the business barrier or problem: ____________________________________ Why the change is necessary: ___________________________________________________ What result would you like to see with the change: __________________________________ ___________________________________________________________________________It is essential Working Groups and Admin Support respond to every issue/query. The responseshould say that the issue/query has been received, that it is being considered, and that if it is notsent to a Working Group, that it should be re-submitted in 2 months time. While this processmay require more effort from the Working Groups and Admin Support, responses will helppeople feel more inclined to be active at the grassroots level. Also, responses will help buildcredibility. 11
  • 14. V. ADMINISTRATIVE SUPPORTIt is important that the business community commit well-qualified personnel, resources, and timeto this mechanism. Administrative support will be needed for such tasks as: • organizing and responding to complaints/ queries from the public • helping working groups write resolutions to be sent to the Steering Committee • issuing invitations to meetings • calling people to remind them of meetings • writing minutes from the meetings • writing position papers • writing press releases before and after meetings • organizing press conferences when needed etc.An office with at least three personnel will be needed to provide these administrative services.Initially, it would be very useful for international personnel to train local personnel to run thismechanism. KBS, for example, described an initiative in Poland in 1992-93 where the EUproviding funding and training for personnel in the secretariat of that initiative. 12
  • 15. VI. ADVOCACY CAMPAIGN PLANOwnershipThe consultants will have presented their final draft of the Advocacy Mechanism to the businesscommunity, represented by Alliance of Kosovor Businesses, Kosovo Chamber of Commerce,and American Chamber of Commerce, by August 6, 2004. The business community needs tomeet as soon as possible to start getting used to working together. Thereafter, key businessleaders need to decide what other organizations should be included in leading this mechanism.Once all business leaders who will be in the Steering Committee are selected, they need to namethe mechanism. So far, only the local marketing firm, City Group, has suggested some names inorder of preference: Eureka, Horizont, and Keops.Who should be in the Steering Committee needs to be agreed upon. The number of participants,however, should be manageable because there is risk of trying to “satisfy too many”.A team of key business leaders with representatives from RIINVEST, EAR and USAID needs tomake a round of visits with individuals, who were initially contacted by the consultants, andother important officials, who have not yet been contacted. These individuals include • Prime Minister • President of Parliament • Head of UNMIK’s Pillar IV • Head of Municipal Association • Head of the local office of the World BankThese visits should ensure their interest, commitment, and participation in the SteeringCommittee. In addition to these individuals the team needs to start making rounds of visits withdifferent participants in working groups. These will include: • Ministry of Trade and Industry • Ministry of Finance • Ministry of Transportation and Telecom • Ministry of Public Services • UNMIK’s experts on customs and trade • Trade Unions • Local banks and KEP • BPK • Bankers’ Association • KTA • REA • KEK and other utility companies 13
  • 16. ProcessThe business community needs to gain the commitments of various participants in the SteeringCommittee and the working groups. It is essential that RIINVEST, EAR and USAID facilitateall of these meetings.Moreover, the business community needs to be analyzing and strategizing its priorities. Thisshould be done through the business associations as they know best the relevant issues and canadvocate them on behalf of the businesses.The preparation for the first Steering Committee meeting should be carefully planned. It isprobably a good idea not to have media involved in the first meeting so that the SteeringCommittee Participants have an opportunity to determine their working dynamic. The agenda forthe meeting should be, amongst other things, introduction of participants, understanding of theirroles, frequency of the meetings, professional interpreters, taking minutes, voting procedures,and implementation of recommended changes and decisions. The agenda should also includeapproving the working groups and their focus. 14
  • 17. TimetableThe following is a detailed schedule for the Advocacy Campaign Plan showing the dates andactivities that should happen within that time. Dates Activities AmCham and AKB have initial meeting to get to know each other’s activities; Aug 9-13 AmCham and KCC have initial meeting to get to know each other’s activities RIINVEST calls meeting with AKB, Kosovo Chamber, and AmCham, to Aug 16-20 discuss mechanism and to discuss what other business organizations should represent business community; USAID and EAR should be present RIINVEST/USAID meets other potential members of the business community to Aug 23-27 present the mechanism to them; new business members should be chosen Aug 30-Sept 3 Business leaders who will be in Steering Committee meet to name the initiative Leaders of business associations/chambers appointed to represent the business Sep 6-10 community will meet with key municipal leaders, including Head of Municipalities to explain initiative A team of key business leaders with RIINVEST, EAR and USAID canvas the Sep 13-17 Initiative to appropriate parties of PISG and Pillar IV to ensure their participation in the Steering Committee Business community with RIINVEST, EAR and USAID finalizes Sept 20-24 the Steering Committee voting and non-voting members (only PM and Head of Parliament have to be waited on until after election) Business community with RIINVEST, EAR and USAID meet to discuss Sept 27-Oct 1 working groups. This task may require several meetings A team of key business leaders with RIINVEST, EAR and USAID canvas the Oct 4-8 Initiative to appropriate parties of PISG, international community and businesses to ensure their participation in the Working Groups Oct 11-15 Canvassing for Working Groups continues Business representatives work on prioritizing business issues through business Oct 18-22 associations and commit administrative support and resources Oct 23 Elections Business representatives meet with UNMIK and relevant NGOs/international Oct 25-29 donors Post-Elections, Business community with RIINVEST, EAR and USAID canvas the Initiative to November newly-elected Prime Minister and Head of Parliament Post-Elections, First Steering Committee meeting takes place, approving the roles of November participants, procedures, voting, and establishment of working groups Post-Elections, First Working Group meeting takes place, approving its agenda and priority November issues. Post-Elections, Media launch November 15
  • 18. VI CONCLUDING OBSERVATIONSIn discussions with various parties, both international and local, it became clear that the KosovoBusiness Initiative as designed and presented is quite a new concept for the business community.Kosovo business community is fragmented and not ready to work together. However, with theinitial lead, guidance, and mediation of a significant international party, the business communityis ready to work together on the same issues that hinder their business.There are many challenges and barriers to conducting business in Kosovo, many related toKosovo status, but many can be solved by businesses themselves. The Kosovo BusinessInitiative will definitely help businesses to approach business problems in an innovative way.Initial meetings showed that the new Initiative has been well received and that it can serve as agood foundation for business cooperation.The resources that are needed to carry this new Initiative must include well-qualified personnelthat will become the engine of this undertaking. The business community must be inclusive andspeak with a united voice. 16
  • 19. APPENDICESA. Members of PISG, UNMIK, NGO/Donor and Business CommunityB. Challenges or Barriers CitedC. What is Positive? Underexploited Aspects in Kosovo:
  • 20. A. Members of PISG, UNMIK, NGO/Donor and Business Community3 NGOs/ Government/Regulatory UNMIK Donors BusinessOffice of Prime Minister GovernLiason World Bank Chambers Stability Pact Representative Head of Legal & Political USAID Kosovo Chamber of Commerce Economic Advisor KBS Am Chamber of CommerceMinistry of Trade KTA Business Assoc Private Sector Development Privatization EAR AKB REA Womens Business AssocMunicipalities Kosovo Womens Bus Network Head Munic Association UNDP RIINVEST Exporters Association, AKB Agricultural Association, AKB Kosovo Employers Assoc & Women’s Assoc Serb run Financial Institutions Banks Pro Credit Raifeissen Micro KEP Private Companies Sector Nerakond Food iPKO NET Tech Bonita Beverages Koni Poultry Jaha Construction Thai Restaurant R21 Media City Group Marketing Serb owned DTS Kondi Food Minel-Enim Power Equip Piramida Engineering SOEs Vreshtaria e Venës Wine POEs KEK Power 3 These are the players with whom we met. With some, we met several times. A-1
  • 21. B. Challenges or Barriers Cited4 ISSUES Who says prob? Who says no? Trade Trade agreements BusCom Trademark protection BusCom High Customs UNMIK,iPKO, Wine Agents not trained BusCom VAT BusCom Not reimbursed/delay Red tape Access to Finance Loan officers are too risk averse Banks, BusCom Loan officers lack training Banks, BusCom Rates are too high BusCom Short or no grace period BusCom, Donors Power shortages Everyone KTA KEK Generators&Imported fuel BusCom Non-payment KEK Socio economic groups Serb enclaves Training not enough Gov/BusCom/UNMIK not demand driven MinTrad no defined standards: MinTrad wrong people are training no strategy BusCom/MinTrad no donor co-ordination BusCom/MinTradDonors UNMIK Not prepared, came as SWAT Corrupt BusCom Employees abuse privileges BusCom Capacity Building4 By people we interviewed listed on Appendix A B-1
  • 22. Government UNMIK/BusCom/Don No coherent Kosovo strategy ors UNMIK/BusCom/Don Between ministries orsLacking Competitive Analysis UNMIK/BusCom/Don Capacity ors UNMIK/BusCom/Don Low salaries ors Red tape BusComCorrupt BusComKTA Slow Not answering municipalities or answeringlate Hindering industrial park developmentMunicipalities Implementing laws without debate Capacity issues Intl, PSIGLaws Implementation Intl/Don Enforcement KEK/IntlTaxesdouble UNMIK,IPKO, NBI(wine)no enforcement to collect IntlBusiness Registrations UNMIKNot enough registration inspectors World Bank Intl Head ofMunicipalities want registration locally Municipalities World BankCorruptionAll levels BusCom WineLack of Co-ordination Between Gov, UNMIK Everyone donors, and business B-2
  • 23. C. What is Positive? Underexploited Aspects in KosovoSecurity Low crime Women/children are safeInternational Focus on Kosovo Political level Untapped foreign residents moneySize Small Easy to see several things in Kosovo in a day Close to other interesting countries in the areaPeople Entrepreneurial Optimistic Friendly(esp. to Americans) Provide good service at shops & restaurants Increasingly multilingual Do not want extremismNatural Resources Good water Lignite Wood Great ProduceRestaurants Great coffee Good food Variety of restaurants is beginningWeather Sunny Snow for skiingTourism Potential Lakes, parks, hiking, agric Wine/beer Culture(churches, mosques, museums) PicturesqueShops Clothes Crafts Shoes Book shop Jewelry shops C-1
  • 24. TransportLots of cabsBusesCommunicationsPhones workLots of internet cafes C-2