Highlights from the 2nd Annual Conference on Support to SME Development in BiH

The main emphases from the opening remarks, the first and the second panel discussions at the 2nd Annual Conference on Support to SME Development in BiH, held on November 20, 2019 in Sarajevo, can be classified into four groups:

  • on the importance of supporting the development of SMEs and entrepreneurship;
  • on harmonizing support;
  • on support priorities (from SME perspective);
  • on the role of domestic institutions, donors and international projects.

In addition, the fifth group consists of clarifications in response to the questions raised by the conference participants on the cards during the first panel discussion.

1. Why it is important to support the development of SMEs and entrepreneurship more and better

  • Because small and medium enterprises represent the backbone of the economy of Bosnia and Herzegovina as a whole and of each of its constituent parts. To illustrate this: of the total number of enterprises in BiH, 99% are small and medium-sized; with 60% contribution to BiH GDP; they employ 68% of the total number of employees in BiH.
  • Because small and medium-sized enterprises grow independently and develop spontaneously, and with their results they show that they deserve systemic support.

2. Why harmonization of the legal and strategic support framework is important 

  • Systemic support can be provided by aligning with EU rules and regulations, and above all by aligning legislation and strategic frameworks within BiH.
  • Small Business Act, designated by the EU as a reference for the Western Balkan countries, is a common denominator for harmonizing our support for SME development with the framework applicable in the EU, as well as for internal harmonization of legal and strategic frameworks in BiH at different levels of government.
  • Harmonization of the legal framework to support the development of SMEs and entrepreneurship between the Republika Srpska, the Federation of BiH and the Brcko District of BiH, which is at an advanced stage, is the first significant step in a good direction.
  • Thanks to the high level of cooperation and agreement of the key ministries for SME development and entrepreneurship regarding the harmonization of the strategic framework, a unique opportunity is created for the first time to have the whole country “covered” with harmonized policies and support strategies for the development of SMEs and entrepreneurship, at the same planning period (2021 to 2027), which is also used by the European Union, and according to a standardized methodology developed jointly by teams of responsible departments of the state, entities and Brcko District of BiH. It is the second significant step in the same direction and requires intensive coordination and proper formalization by all the institutions involved, starting with the BiH Ministry of Foreign Trade and Economic Relations, as the carrier of coordination and harmonization.

3. What are the strategic priorities for supporting the development of SMEs

  • Support should primarily focus on what SMEs, by their very nature, cannot handle on their own:
    • to facilitate technical and technological development, with product and process innovations, with which they adapt to changes in technology and demand in global markets, creating greater added value;
    • to enable them to have a quality workforce and to facilitate the acquisition of business and professional skills, in order to maintain and improve their competitiveness,
    • to facilitate the introduction of technical standards and export to very demanding markets, and to strengthen and protect domestic manufacturers and the domestic market by building quality infrastructure,
    • to support the gradual transition to energy efficient operations and the use of renewable energy sources.
  • Also, support should focus on connecting and enhancing interactions:
    • with big companies and investors because they are the generators of innovation;
    • with support institutions to adapt support to the needs and priorities of SME development;
    • between small and medium-sized enterprises in the country, in order to strengthen their role and influence in the public-private dialogue on supporting the development of SMEs and entrepreneurship at all levels.
  • Domestic institutions at all levels, with the support of projects and independently, should continuously work on fiscal burdening of the economy and improvement of the business environment.
  • It would be good to create support mechanisms to more easily overcome crises in which sectors, or SMEs, may find themselves due to stagnation and/or recession in global value chains.
  • The job of businessmen is to constantly and systematically work on the image and branding of companies, and the job of politicians, domestic institutions, embassies and representative offices abroad is to work on a positive change of image and branding of a country abroad, especially in markets where our SMEs have significant exports. Only with synergy can we go forward and only together can we make a step towards a better future for BiH.

4. What should be the role of donors, international support projects and domestic institutions

  • It is recommended that domestic institutions, donors and international projects include, to a much greater extent than before, the angle of view, needs and priorities of SMEs when designing their strategies, policies and instruments of support.
  • It is recommended that donor support and projects focus more on creating and testing new instruments and structures to support the development of SMEs, tailored to the domestic context, in areas that are relatively new to both SMEs and domestic support institutions, and that domestic institutions gradually take over the instruments and structures that prove successful.

5. Answers to additional questions from the conference participants

  • Creation of Strategic Guidelines for the harmonization of support to SME development at the B&H level begins in December 2019, and the draft should be completed in June 2020, when it is to be adopted by the Council of Ministers of B&H. In the RS, the process of creating the RS SME Development Strategy begins in December 2019. In the Federation of B&H, due to the need to finalize the FB&H Development Strategy, the process of creating the SME Development Strategy is expected to start in January 2020. Creation of the SME Development Strategy in BD B&H is expected to start in January 2020, simultaneously with the development of the BD B&H Development Strategy, of which it will be a part. These strategies (in RS, FB&H and BD B&H) should be completed in June 2020 and enter the process of formal review and adoption by the competent institutions.
  • It is planned to produce a joint report at the B&H level on the implementation of all SME strategies, together with a progress report on SBA implementation, as the monitoring and reporting methodology will be adapted to include monitoring of progress across all dimensions of the BiH SBA profile, which will be covered by the strategic framework, both at Entity and BD BiH level, and for BiH as a whole.
  • MoFTER B&H will be responsible for preparing Strategic Guidelines for supporting harmonization for SMEs, as well as coordinating and harmonizing policies and instruments of support during the preparation of the overall Strategic framework, with intensive cooperation with the FB&H Ministry of Development, Entrepreneurship and Crafts, RS Ministry of Economy and Entrepreneurship and the Department for Economic Development, Sport and Culture of BD B&H. MoFTER B&H will also be responsible for preparing the report on the implementation of the Strategic Guidelines for the harmonization of SME support and the entire strategic framework for supporting the development of SMEs in general.

Based on introductory remarks, panellists’ discussions and participants’ comments during the conference, prepared by the project team of Enterprise Development Agency Eda and confirmed by the partners in the organization of the conference: Ministry of Foreign Trade and Economic Relations of BiH, Foreign Trade Chamber of BiH and Foreign Investors Council in BiH.

Note: The main highlights from the 2nd Annual Conference on Support to SME Development in BiH will be used in the process of preparing strategic documents in accordance with a standardized methodology for strategic planning and development management of SMEs in BiH. Your suggestions and comments on preparation of SME development strategies are still welcome and can be sent between December 2019 and May 2020 by email: [email protected] (with a subject: For SME development strategies).

Highlights from the 2nd Annual Conference on Support to SME Development in BiH are also available in the pdf format: http://bit.ly/2qg9izc

The 2nd Annual Conference on Support to SME Development in BiH was organized within the project “European Small Business Act as a framework of SME strategies and policies in BiH – SBA in BiH”, funded by Sida through the Embassy of Sweden in B&H.