Regional development strategy - RDA South

REGIONAL PROFILEintroduction22.2RegionaldevelopmentstrategyFOR THEECONOMICREGION SOUTH2010 - 2013REGIONSOUTHAn EU funded project managed by theEuropean Commission Liaison OfficeImplemented by

REGIONAL DEVELOPMENT STRATEGY FORTHE ECONOMIC REGION SOUTH2010-2013(The official version of the document is in English)REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHThe English version of this document is the version of reference. The document has been produced with theassistance of the European Commission Liaison Office to Kosovo. The content reflects the views of the RegionalPartnership comprising the Core Partnership Working Group, the Thematic Working Groups and otherStakeholders, and does not represent the official views of European Commission Liaison Office to Kosovo.An EU funded project managed by theEuropean Commission Liaison OfficeImplemented by2

TABLE OF CONTENTSTable of Contents1. INTRODUCTION 42. REGIONAL PROFILE 72.1 Geography, Topography, Natural Resources and Climate Conditions 82.2 Population, Demographics, Human Resources and Labour Market 102.3 Economy: Infrastructure and Business Environment 142.4 Economy: Production and Service Sectors 172.5 Summary conclusions 202.6 Stakeholder views 213. REGIONAL SWOT ANALYSIS 214. STRATEGY 24PRIORITY 1 - DEVELOPMENT OF THE BUSINESS ENVIRONMENT 25PRIORITY2 - DEVELOPMENT OF AGRICULTURE AND FOOD PROCESSING 25PRIORITY 3 - DEVELOPMENT OF TOURISM 26REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH3

1INTRODUCTION1. IntroductionREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHRegional Economic Development(RED) started emerging in Kosovo inlate 2008 as an important model forcreating sustainable developmentin regions while, at the same time,helping to mitigate the social costs of transition,particularly by addressing unemploymentas well as part of an effort to build policyand organizational framework and institutionscompatible with those of the EuropeanUnion. At the initiative of the Ministry of LocalGovernment Administration, with thesupport of the European Commission LiaisonOffice to Kosovo, five inter-municipal partnershipagreements creating five EconomicAreas (Regions) and establishing five RegionalDevelopment Agencies (RDAs) have beensigned. The agreements mark the beginningof the EU RED process in Kosovo.Kosovo until now does not have a tangibleconcept of regional development policy. As adirect result of the turbulent period of conflictand post-conflict transition, followed by a relativelyshort existence as an independentstate, regional development has not emergedas a matter of priority. Consequently, there isno legal framework for regional development.The inter-municipal partnership agreementdescribes the reference framework in whichRDAs operate and institutional relations inthe following manner:With the aspirations to bring Kosovo closerto the EU, the inter-municipal agreement relatedto regional development may be seen asthe first step in the direction of creating specificregional development framework. The”The RDA will operate in the frameworkof the economic and structural policyguidelines determined by the nationalline Ministries dealing with topics relatedto economic, industrial and infrastructuraldevelopment in Kosovo. The principleof subsidiarity will be considered and corecompetences of the municipal administrations,which they are supposed to carryout by law, will remain unaffected.”EU RED approach is also aimed at introducingKosovo to EU economic and social cohesionpolicy. The European Commission has previouslyadopted this approach in several countriesof the Balkan region with a view to familiarisepre-accession countries withStructural Funds’ procedures and furtherstructures needed upon accession.An agreement related to Economic RegionSouth has been signed on 16 December 2008between the Mayors representing Municipalitiesof Dragash/Dragaš, Malisheva/Mališevo, Mamusha/Mamuša, Prizren, Rahovec/Orahovacand Suhareka/Suvareka.Subsequently, the Regional DevelopmentAgency South has been registered and fundedin June 2009. During the second half of 2009RDA South has established and equipped the4

INTRODUCTION 1premises and has achieved fully operationalstatus with staff hired, trained, statute andannual work plan approved by the Board ofPartners. Work on the first Regional EconomicDevelopment Strategy (REDS) has beeninitiated in October 2009 with the collectionof the socio-economic data and with the workleading to the establishing a regional partnershipgroup representing all groups ofstakeholders in the development process.The initial tasks of the stakeholder partnershipconsist of participating in the draftingprocess of the first REDS for Economic RegionSouth, building capacity to participate in theECLO grant scheme for EU RED as well as participatingin the creating of the developmentproject pipeline.The capacities for designing and developingconcepts for regional initiatives to enhanceinvestments and employment are still limitedin the region and generally in Kosovo as is experiencewith local support to the private sector.Under the RED approach, RDA South togetherwith the development partnership will coordinatedifferent efforts, design projects, mobilizeboth Government and donor funds, and providea vehicle for effectively implementing thearea based development strategies. The preparationof a REDS serves a number of purposessuch as providing a strategic framework for balancedeconomic development in the region;serving as a strategic document for the programmingof future EU funds, other donors’funds and eventually, local funds; and providingthe basis for future participation in the EU’sstructural funding.In summarizing the EU best practices in thearea of regional development planning, thecharacteristics and qualities of an effective regionaldevelopment strategy could be describedin the following way:An effective regional development strategy:• is embedded in its organisational, economicand social context;• establishes a widely-shared vision for thefuture development of the region;• engages stakeholders in an open and productivemanner during preparation of thestrategy;• communicates its key messages clearly to avariety of audiences;• identifies clear mechanisms for delivery;• phases and sequences key investments andactions;• establishes a simple but effective frameworkfor monitoring.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH5

REGIONAL PROFILE 22. RegionalProfileThe strategy development processstarted with the collection of socioeconomicdata relevant to the region.This data has been presentedto the Core Partnership WorkingGroup (CPWG) and subsequently published bythe RDA South as ”The Socio-Economic Profileof Economic Region South” which constitutesthe current description of the region expressedin economic terms. This status of the regionlends itself to further analysis of the regionalpotential. The purpose of this section is tosummarize the regional profile as well as identifythe key issues related to current conditionsand needs of the region that need to beaddressed by the strategy.Subsequently, the regional potential andneeds assessment (expressed as Strengths andWeaknesses) combined with the external factors(Opportunities and Threats) constitutesthe SWOT inventory which has been the startingpoint for further SWOT analysis carriedout by the CPWG or the Thematic WorkingGroup’s established by the partnership.This sub-section of the document is focusedon those facts and preliminary conclusionswhich can be used as a good basis for strategicorientations of the Regional Economic DevelopmentStrategy for Kosovo Economic RegionSouth. Data collection, their refinement andanalysis is a continuous task of RDA South.Additional data and further analysis of datawill be used for various phases of the strategybuilding process and for other purposes regardingthe assessment of different economicand social issues in the region, particularly atthe Programming Phase.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH7

22.1REGIONAL PROFILEGeography, Topography, Natural Resources and Climate Conditions2.1 Geography, Topography,Natural Resources andClimate ConditionsREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHThe Region South lies in the South-Western part of Kosovo. It bordersAlbania to the West, the FYR of Macedoniato the Southeast, the municipalitiesof Gjakovë/Ðakovica to the Northwest, Shtime/Štimlje to the Northeast and Shtërpcë/Štrpce to the East. The region has a totalarea of 2031 km2 (18.66% of the territory ofKosovo and consists of 6 municipalities: Prizren,Dragash/Dragaš, Suhareka/Suvareka,Malisheva/Mališevo, Rahovec/Orahovac andMamusha/Mamuša, that differ significantlyin size - from the largest one of 640 km 2 (Prizren)to the smallest one of 12.5 km 2 (Mamusha/Mamuša)with the remaining four municipalitiesof an average size (280-430 km 2 ) forKosovo.The topography is mixed and includes highmountains, rolling hills, valleys and plains.The land elevation ranges from about 400 to2.750 meters across the mountain areas (peaksof the Sharri Mountains). On the mountainsthere are extensive forestlands and some naturalgrazing lands with the abundance of wildanimal life and vegetation.While the climate features of the region aredominated by those that are characteristic tothe mid-continental climate (with cold wintersand hot summers), there is also a significantinfluence of milder Mediterranean climate.The maximum temperatures duringthe summer season reach an average of 24.6°C while the lowest temperatures in Januaryaverage -10 °C. The total rainfall ranges from511 mm to 1.108 mm per year. The climate conditionsin combination with relatively goodsoils make for good base for developing agriculture.Rolling hills with optimal sun exposuremake it possible to set up quality vineyards.The region is considered to have adequatesupply of water. None of the rivers is bigenough to organize navigation i.e. river transportationfor commercial use, but they couldWestEconomicRegionNorthEconomicSouthEconomicRegionCentralEconomicRegionEastEconomicRegionRahovec/OrahovacMalisheva/MališevoMamusha/Mamušabe used for tourism purposes orfishing. Majority of smaller riversand streams join the Drini iDragash/Bardhe River, which has the Dragašlength of 122 km and is located inthe Western part of the region. Thismakes it possible to irrigate goodportion of arable land. Consequently,a considerable part of agriculturalland in the region, over12.500 hectares, is covered by irrigationsystems. This compares with a total of about55.000 hectares under irrigation in the entireKosovo (about 23%). Kosovo has a nominal projectedcapacity for irrigation of 72.440 ha. Significantportion of that untapped potential isbelieved to be in the Economic Region South.Large proportion of land with good qualitysoils combined with possibilities of furtherprogress in irrigation (Economic Region Southalready has higher than the average area forKosovo of irrigated land) makes the region appropriatefor integrated agricultural development.Availability of graze land creates an opportunityfor expanding livestock productionand makes it feasible to improve the technologyand livestock quality. Good soils, adequateexposure combined with favorable climateconditions make the region suitable forPrizrenSuhareka/Suvareka8

22.2REGIONAL PROFILEPopulation, Demographics, Human Resources and Labour Market2.2 Population,Demographics,Human Resources andLabour MarketREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHPopulation DataPopulation numbers for Kosovo show an increasingtrend. During the period between1948 and 2004 the annual numbers of birthshave been increasing. The total populationcount has also been growing with the exceptionof the period between 1992 and 1996 whena massive emigration took place. While currentlythere are no precise data for the populationdue to the lack of any recent census,therefore the determination of the populationfigures is done by using various methods. Accordingto the latest calculations, the latestnumber for population of Kosovo is estimatedto be close to 2,124,400 inhabitants.It is estimated that the current populationcount of the Economic Region South is about513.000 inhabitants which constitutes about24% of the population of Kosovo. The trend forthe population in the region is growing.While the region covers less than 19% of theterritory of Kosovo, the population density istherefore higher than average.Municipalities in the Region differ significantlyin population density, with Municipalitiesof Mamusha/Mamuša and Prizren beingthe most densely populated (respectively 458persons/km 2 and 375 persons/km 2 ) and Malisheva/Mališevobeing the most sparsely populated(212 persons/km 2 ).The ethnic structure of the Region’s populationis mixed where the Kosovar Albaniansconstitute over 88,5% (454.005 individuals) ofthe population. The other main ethnicitiespresent in the Regions are of Bosniak and Goraniethnicity with the share of 8% (41.040 individuals),ethnic Turks with 1,8% share (9.234individuals), ethnic Roma-Ashkali-Egyptiancommunity with 1,3% (6.669 individuals) andethnic Serbs with 0,4% (2.052 individuals)share of the population.Demographic DataRegion South has a population that can becharacterized as young. A study shows thatover 37% of the population is under the age of18. This is related to the average size of thehouseholds and the average number of childrenin the household which in this Regionare both much higher than the same figuresfor the entire Kosovo. The average size ofhouseholds and the number of children in themunicipalities of the Region South in comparisonto the average numbers for Kosovo ispresented in the table below.The age structure of the Region’s inhabitantsis such that increasing number of peopleare entering a professionally active age bracket(or „available for work”) which is consideredto be a significant potential. The proportionof children of the age of up to18-years-oldto the total population of this region is 37,1%.The gender structure of population is almostequally distributed with 50% female and 50%male population. For some municipalities ofthe region this structure may vary within therange of +5%. Number of births in the RegionTABLE 1: Assessment of population and territoryof the Economic Region SouthMunicipalityNumberof populationSurface (km 2 )Dragash/Dragaš 45.000 435Malisheva/Mališevo 65.000 307Prizren 240.000 640Rahovec/Orahovac 76.500 276Suhareka/Suvareka 81.000 361Mamusha/Mamuša 5.500 12Total for Region South 513.000 2.031% of total for Kosovo 24% 18.66%10

REGIONAL PROFILEPopulation, Demographics, Human Resources and Labour Market22.210.0CHART 1:Average size of households and number of childrenper municipalitiesAverage size of households7.55.0Average numberof children2.5South in 2004 was 35.063 where 18.213 or 51,9%of the newborns were males and 16.850 or48,1% of the newborns were females.The average life expectancy in the EconomicRegion South in 2004 was about 61 years.There are significant differences (of 20 years)between municipalities of the region in termsof life expectancy. They figures vary fromabout 50 years for Municipality of Malisheva/Mališevo, up to 70 years in the Municipality ofDragash/Dragaš. In Prizren Municipality theaverage life expectancy is 65 years, in Rahovec/OrahovacMunicipality 61 years, whilein Suhareka/Suvareka municipality an averageof 60 years. There are no data the newestMunicipality of Mamusha/Mamuša. The significantdifferences can be attributed to suchenvironmental factors as the quality of waterand air, to historical factors and to the differencesin the quality of living conditions ingeneral.According to a major internationally sponsoredresearch ”The demographic, social andreproductive situation in Kosovo” in 2003,people aged up to 24 years of age constitutedsome 53% of the total number of residents. Inthe Region South the average share of theyoung population in the 15-29 years brackethas been 27,7%. The highest percentage shareof young population has been in the Municipalityof Dragash/Dragaš (32,3%). The lowestshare has been in the Municipality of Rahovec/Orahovac(only 14%) which may be anindication that a large number of young peopleleave the municipality to pursue education-relatedopportunities elsewhere. Interestingly,only Rahovec/Orahovac Municipalityhad 63% of the population in the 30-49 yearage group as compared to all other municipalitiesin the region that had a share of the same086420Dragash/DragašMalisheva/MališevoPrizrenCHART 2:Average size of households and number of childrenAverage sizeof householdsAverage forRegion SouthRahovec/OrahovacSuhareka/SuvarekaAveragefor KosovoDragash/DragašMalisheva/MališevoAverage numberof childrenAverage forRegion Southage group in the 22-24% range. It needs to bepointed out, however, that in the absence ofthe hard data from the population census, thedata above is quoted after the study mentioned.The data reflect the conditions prevailingin 2003 and their reliability is also unknown.As a result of the latest war and ethnic conflicts,the population of the Region underwentduring the most recent decade and ahalf some significant demographic and ethnicchanges. The development opportunity ofthe Region is to emerge from these changeswith the stronger society that is build on thefoundation of mutual tolerance and cooperation,particularly in the areas related to economicdevelopment. The population agestructure and overall growth over time is certainlyan economic asset of the region but, atthe same time, it is also compounding challengesthe region will face in the areas of educationand employment generation.PrizrenRahovec/OrahovacSuhareka/SuvarekaAveragefor KosovoREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH11

22.2REGIONAL PROFILEPopulation, Demographics, Human Resources and Labour MarketREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHHuman Resourcesand Labour MarketHuman resources available in the region arecharacterized by a relatively broad range ofskills. This is in part due to a historical factorwhere a fair number of industries representedby now defunct SOEs that have been presentin the region. While most of the SOEs havebeen liquidated and some of them spun offand underwent deep restructuring, most ofthe previous workforce in the middle agebracket possesses skills that are not fully utilizedor are unlikely to be utilized.The second significant factor contributingto the wide range of skills of the workforce isthe system of vocational training. As an example,educational institutions of the regionduring the school year of 2007/2008 have offeredfollowing ten areas of vocational training:• Machinery and metal processing• Electro-technical• Building Construction• Traffic• Apparel and Leather• Chemistry, Graphics• Trade and Tourism• Economics and Legal• Medicine• ArtsDue to the age structure (large share of theyounger population segment), on the averagethere is good knowledge of ICT and graphicdesign. This is a competitive advantage of thelocal work force which increases the attractivenessof the region to foreign investors,particularly in the services sector.UnemploymentStructureThe cumulative number of unemployed registeredat the public employment services forthe entire Kosovo until the end of 2008 hasbeen 334.595 people. The data for 2008 illustratesan average annual increase of unemploymentfigure of 0,4% which is significantlylower as compared to the increase of annualunemployment rate in 2007 and still muchlower than the results from the precedingyears. The most recent data related to unemploymentin Kosovo in May 2009 peg the unemployedpopulation figure at 338.618 unemployedindividuals, where 47.2% were females.TABLE 2:Unemployment by level of qualificationQualifications levelRegistered%UnemployedUnqualified 40.134 60%Semi-qualified 2.676 4%Qualified 6.020 9%Secondary Education 16.722 25%Higher Education (min.two years post secondary)669 1%University Education 669 1%TABLE 3:Unemployment by ageAge Registered%unemployed15-24 20.200 30.2%25-39 29.500 44.1%40-54 13.043 19.5%55-64 4.147 6.2%TABLE 4:Unemployment by ethnicityEthnicityRegistered %unemployedAlbanian 60.870 91%Serb 1.376 2%Other minorities 4.644 7%The latest data for Region South cover thefirst quarter of 2009 and show 66.890 unemployedpeople. The official publication ofMLSW corroborates the figure of 57.890 unemployed,with additional 9.000 unemployedfrom Malisheva Municipality are erroneouslyattributed to Region West instead of being includedin the Region South figure. As expected,the data in Table 2 illustrate that there is astrong correlation between unemploymentand the level of qualifications.As far as the age average is concerned, thevast majority of unemployed in the cumulativefigures refers to the age of 25-30 year-olds.As in the previous years, the highest pressurein terms of unemployment is still among theyoungest group of the age, which is illustratedby the increase in registrations (+3%) andthe entry rate into the group of unemployed.In general, the unemployment rate in theRegion remains high with nearly 67.000 peoplewithout a job. The unemployment growth12

REGIONAL PROFILEPopulation, Demographics, Human Resources and Labour Market22.2rate, however, shows a declining trend overthe past several years. This may be due to thefact that a younger and better educated segmentof the population is entering the workforce.In general, younger people have betterqualifications in the computer and technology-relatedfields and may be more attractive toemployers in both, the service and the manufacturingsectors. Nevertheless, the unemploymentpressures are highest in the youngerage brackets.EmploymentDuring 2008 the public sector in all of Kosovohas created 6.937 new job opportunities. Thisis an increase of more than 6% over the previousyear. Precise data related to the EconomicRegion South are not available; however,there appear to be significant differences innumbers of new job opportunities offered bythe public sector among the region’s six municipalities.Municipality of Prizren has createdthe highest number of jobs in the publicsector. The major factors responsible for thedisparity include the degree of urbanizationand the level of public services offered.In terms of employment, the public sectorof the region is still the largest single employerand the annual job growth rate of this sectoris about 8%. The structure of job opportunitiesoffered by the private sector remainslargely unchanged over the past several years,with 64% of jobs offered by the service sub-sector,followed by 19% of jobs offered by manufacturingsub-sector and 17% offered in agriculture.In general, by comparing employment andunemployment figures, it is evident that EconomicRegion South is characterized by a remarkablyhigh degree of unemployment in allmunicipalities of the region.TABLE 5:Monthly income by region in Kosovo (euro)Incomes per regionThe highest average of wages in Kosovo in2008 have been reported for the Economic RegionCentre (262€ per month) and followed bythe Economic Region South (254€ per month).Much lower average wages have been paid inRegions East and West. Employees of these areas,however, enjoyed a much higher than averageannual wage increases.The average of monthly income in the RegionSouth reported for 2008 was 254€, whichis an increase of 53% in comparison to 2002.However, the income growth over the last severalyears is much slower than the averagegrowth rate for the entire Kosovo. This couldbe seen as a warning sign of stagnation in theregion’s level of business activity.Region 2002 2004 2006 2008 Growth (2006-2008)R. East 166 165 222 241 5.7%R. North 166 206 231 247 4.2%R. West 205 212 223 243 6.6%R. Centre 202 209 256 262 1.2%R. South 166 199 242 254 2.8%REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH13

22.3REGIONAL PROFILEEconomy: Infrastructure and Business Environment2.3 Economy:Infrastructure andBusiness EnvironmentREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHRoad networkRegion South is characterized by a developednetwork of local, regional and main roads,but the majority of them are in relatively poorcondition. One of the most important goalsfor Kosovo in terms of transport developmentis providing the linkage with the Pan-Europeanroad corridors. Economic Region South iscurrently not linked to any of the corridors ofthe Trans-European Network (TEN). Withinthe medium term time horizon of the currentstrategy the region will be connected to theE10 corridor through the highway Durrës –Prizren – Prishtinë/Priština - Merdare. Thehighway construction is close to completionon the Albanian side (with the exception ofthe tunnel that needs to be upgraded to accommodate2-way traffic) and currently thehighway stretches up to the village of Vermicain the Municipality of Prizren. The freewayconstruction will continue on the Kosovo sideup until Merdare (on the Kosovo – Serbia border),passing through the outskirts of the Cityof Prizren, as well as municipalities of Suhareka/Suvarekaand Malisheva/Mališevo.Preparatory work is underway on the Kosovoside. It is certain that the construction of thehighway will considerably increase the prospectsof the region, i.e. the highway itselfwill offer a great number of development opportunitiesby integrating the region in theEuropean road network in an adequate way.In Kosovo, the roads are classified as highwaysor national roads, regional roads and localroads. National and regional roads arewithin the competences of the Ministry ofTransport andPost-Telecommunications and are rankedhigh in terms of importance. Local roads,which are the lowest in the ranking, are withinthe competences of local governments (municipalities)and have a total length of about6000 km. In the Region South there arearound 1200 km of local roads. More than 50%of them or 633 km are asphalted. Inter-regionallinks of road network are in average condition.They are mostly characterized by heavytraffic at the entrances and exits of the citiesand towns. In some cities of the Region South,such as in Suhareka/Suvareka, Rahovec/Orahovacand Malisheva/Mališevo, there are notransit roads and the entire traffic is beingrouted through the town. In concluding, theexisting condition of the local road network inthe Region South can be characterized as relativelygood – particularly due to the fact thatmost of the local roads are already paved withasphalt and have proper access to the regionalroad network of Kosovo. The technical conditionof the road network can be characterizedas one that is in need of continuous improvementand maintenance.Road fromPrizren toPristina.14

REGIONAL PROFILEEconomy: Infrastructure and Business Environment22.3Railway networkSimilarly to most of Kosovo regions, lack of operationalrailway system makes it impossibleto use the railway transport, which is seen asan obstacle for the regional development. Inthe Economic Region South there is only onepotential railway connection with the Kosovorailway network. This is the line that used torun from Prizren through Xërxë and Klinë/Klinato Fushë Kosovë/Kosovo Polje. It was completedin 1963 and had a total length of 58,43km. Both, the line itself and the terminal inPrizren are currently dysfunctional. As a resultof the lack of investment in maintenance, thetechnical condition is currently quite marginal.Railroad infrastructure is practically nonexistent.The rails are damaged by unauthorizedcrossing points, there is a lot of illegalconstruction in the railway belt and there arepiles of garbage accumulated on the tracks.There are no viable plans to address this weaknessin the short- or medium-term.The main inter-regional railway knot in Kosovois the Fushë Kosovë/Kosovo Polje facilitywhich provides connections with Skopje andBelgrade. The Prizren-Xerxe-Fushe Kosovo/KosovoPolje connection has deteriorated to suchan extent that it may never be economically feasibleto reconstruct it.Lack of investment in the Prizren – Fushë Kosovë/KosovoPolje railway line is seen as a significantimpediment to the development of theRegion South. It creates an additional pressureto speed up the highway construction on Kosovoside. Without access to convenient transportcorridors the sustainable development of theregion would be seriously hampered.Access to portsand airportsConvenient access to seaports and airports hasa direct impact on business development, as itinfluences the transportation costs and accessof goods to international and regional markets.Kosovo currently has only one internationalcivil airport in Slatina near Prishtinë/Priština as well as another one for KFOR militaryneeds - near Gjakovë/Ðakovica.Prishtina International Airport services onaverage of 20 flights per day and the numberis steadily increasing. In 2008, for the firsttime the number of civilian passengers hasreached 1.137.000 passengers and, in addition,the military personnel of 100 thousand.Prishtina International Airport also handlesthe air cargo. The data related to the volume ofcargo handled by the airport is not readilyavailable but it provides services to some globalcompanies such as FEDEX, UPS, TNT, DHL,AES Cargo & Move One.As Kosovo is landlocked and has no direct accessto the sea, the only access to the seaportsof Durrës and Shengjini is through the newlyconstructed highway Morina – Kukës – Durrës.Closest logistic centres for transporting ofgoods of the Region South are at the Prishtina/PrištinaAirport, at the port of Durrës andat the railway terminal in Fushë Kosovë/KosovoPolje.EnvironmentalinfrastructureWater supply and sewage management inEconomic Region South are provided by a publiccompany “Hidroregjioni Jugor”. The levelof services is classified by the Water and WasteRegulatory Office as lower than average forKosovo. Water supply network covers some49% of the territory of the Region and sewagenetwork about 44% of the territory (as comparedto respectively 70% and 50% for Kosovo).Service provision is mostly concentrated in urbanizedareas. Lack of resources is seen as anobstacle to further development of the networks.The sector cannot achieve profitabilityas pricing is controlled publicly and reflects astate social policy and in addition, there arecollection problems. Currently there are noplans to treat the sewage in the entire region.Sewage represents a serious environmentalproblem in the Region and possibly contaminateswater. While Kosovo does have a basicset of environmental laws and standards,their enforcement is still very weak.Solid waste management is provided by apublic company “Ekoregjioni”. It provides servicesto some 39% of the Region’s area which isan average for Kosovo but still regarded ashighly insufficient by European standards.There are currently no programs in place inthe Region South to sort solid waste, to collectsorted waste nor to process it (or eventually recycle).There are also no major efforts to raisethe environmental awareness of the population.Addressing effectively the environmentalissues seems to be a very urgent matter asit affects the quality of life in the Region andhurts Region’s aspirations to strongly developthe tourism sector.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH15

22.3REGIONAL PROFILEEconomy: Infrastructure and Business Environmentfor production or heating purposes. Access toLPG is handled through the petrol sales points.TelecommunicationinfrastructureREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHHydropowerplants ofDikanci inDragash/Dragaš.Energy infrastructureand supplyOver 87% of electric power consumption inKosovo is covered by local generation capacityof the Obiliq/Obilić Power Plant and about13% is imported. Currently the network ofelectricity supply is spread throughout the RegionSouth and covers 99.5% of its territory.Energy infrastructure in terms of electricpower is good throughout the region (with99.5% coverage) but the supply is insufficientand irregular. It depends partly on the categorizationsystem based on bill payment adoptedby KEK and partly on the technical problems(breakdowns) experienced by the Obiliq/Obilić electric power plant and the power distributionnetwork. The technical condition ofthe network is in need of improvement.The Region has potential to take advantageof renewable energy sources, particularly inthe form of hydro energy. The two existinghydropower plants of Dikanci in Dragash/Dragaš (with a capacity of 2200 kW) and theone near Prizren (with a capacity of 1500 kW -currently under feasibility study conducted bythe Ministry of Energy and Mining) need significantinvestment and rehabilitation. Thereis also a ready project for the construction of anew larger hydropower plant in Zhur (nearthe border with Albania) with a capacity ofaround 300 MW which is yet to receive funding.Finalizing all three projects related to hydroenergy would be a positive factor boostingthe development potential as well as contributingto limiting pollution.There is no network (pipe system) in place tosupply the industry and households with gasis an important factor for the development ofany region. There are two main operators oftelecommunication – the PTK (with landlinesand Vala mobile services) and IPKO (a privateoperator concentrating on mobile services.The coverage of the two mobile operatorsjointly reaches 90% of the territory of the RegionSouth. Landline systems are also well developed.Licensed internet services via ADSLare offered by PTK while two private operators(IPKO and Kujtesa) offer their internet accessservices primarily through cable modem technologyand wireless networks operating in anunlicensed 2.4 GHz band. The infrastructurefor telecommunication is generally in goodcondition, particularly that operated by PTKwhich has a policy of purchasing up to dateequipment.Industrialinfrastructurein the region is considered to be poor. Only onemunicipality has a well defined and convenientlylocated industrial zone under development(160 ha in Suhareka/Suvareka Municipality)which has been established bymunicipality and is currently supported by thelocal Business Support Centre. There is anothersmall industrial zone (approximately 30-35ha) under development in Prizren Municipality.This one has been created as an initiative ofprivate foreign investors and is convenientlylocated near the future highway. Other municipalitieswhich are planning to establish industrialzones have suitable land and somebuildings which are suitable for industrialpurposes, but often times they are scattered allover the area, often partially destroyed, unusedor poorly maintained. In most municipalitiesthere are yet no finally defined zonesor zoning standards. In order to maximize theuse of land under municipal control, it is importantto evaluate, design and establish suchurban zones to appropriate standards.16

REGIONAL PROFILEEconomy: Production and Service Sectors22.42.4 Economy: Productionand Service SectorsGeneral CommentsOver the past few years Kosovo’s economy hasshown significant progress in transitioningto a market-based system and maintainingmacroeconomic stability, but it is still highlydependent on the international communityand the Diaspora for financial and technicalassistance. Economic growth is largely drivenby the private sector, mostly small-scale retailbusinesses. The official currency of Kosovo isthe Euro. Kosovo has so far maintained abudget surplus as a result of efficient valueadded tax (VAT) collection at the borders andless than efficient budget execution. In orderto help integrate Kosovo into regional economicstructures, United Nations Mission inKosovo (UNMIK) signed (on behalf of Kosovo)its accession to the Central European FreeTrade Agreement (CEFTA) in 2006.In December 2008, Kosovo was designated asa beneficiary country under the GeneralizedSystem of Preferences (GSP) program. Underthis program, a wide range of products Kosovomight seek to export are eligible for duty-freeentry to the United States. Current Kosovo exportsthat are eligible for GSP benefits includewood products, charcoal, and dried fruits.Other main exports include mineral products,base metals, leather products, machinery,and appliances. Kosovo’s main export partnersare Italy, Albania, FYR of Macedonia, andGreece. Imports include live animals and animalproducts, fruits and vegetables and relatedproducts, minerals, base materials, machinery,appliances and electrical equipment,textiles and related products, wood and woodproducts, stone, ceramic and glass products,and chemical products. The country’s mainimport partners are the EU, FYR of Macedonia,Serbia, Turkey, and Albania.Regional economy, similarly to the rest ofKosovo, is relatively stable but stagnating. Asa result of this trend and the stability providedby the Euro currency, the inflationary pressuresare very low. Significant internationaltrade deficits are being balanced by the Diasporaand by the international communitywhich provide financial and technical assistance.Regional economy suffers from excessiveand unnecessary reliance on importedgoods, which could easily be substituted bydomestic production.Transition to the market driven economyhas essentially been completed with the privatizationprocess largely finalized and theeconomy is currently driven by the private sector.The privatization of the socially-ownedenterprises (SOEs) brought significant revenueto Kosovo’s treasury but new investorsstill have not been successful in creating viablelocal industries with a notable exceptionof the region’s wine industry. Many of theother privatized enterprises have downsized,continued to struggle and are far from reachingpre-conflict production levels.Structure andprofitability of thebusiness sectorAccording to the Statistical Office of Kosovo,by the end of 2008, there were some 12,000businesses registered in the Economic RegionSouth and that number continues to grow.The attrition rate (companies going out ofbusiness) over the past several years has beenat the level of about 8% and it has been morethan compensated by a new start-up rate.Comparing the number of registered businesseswith the numbers related to the employmentthey generate leads to the conclusionthat, within the private sector, economicgrowth of the Region is largely driven by theSmall and Medium –sized Enterprises (SME’s)rather than by the small number of largerbusinesses.Financial data related to the state of the regionaleconomy and profitability of businessoperations tend to be fragmentary and are theleast reliable for a variety of reasons includinglocal business culture. Consequently, the analyticalcomments made in this section are notalways backed by a consistent set of data coveringall the municipalities of the region. Ad-REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH17

22.4REGIONAL PROFILEEconomy: Production and Service SectorsREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHCHART 3: Distribution of registered businesses inthe Southern Region by sectors● Wholesale and retailtrade, repair of motorvehicles● Processing Industry● Hotels and Restaurants● Transport, depots andcommunication● Construction● Other social andpersonal activities● Real estate, renting andbusiness activities● Health● Agriculture, Huntingand Forestry● Education● Other12%49%11%9%5%5%1% 1%2%2% 3%equate disaggregation of the national economicstatistics is not readily available.However, many of the observations related tocertain aspects of regional economics appearto be symptomatic and valid enough to be presentedhere.The sectoral distribution of registered businessesin Region South shows heavy dependenceof the economy on the service sector. Almosthalf of registered businesses (49%) are inthe wholesale and the retail commerce combinedwith the automobile trade and auto servicesector. Some 11% of businesses are in thetourism and hospitality services (hotels, restaurantsetc.) followed by transport (9%). Only12% of businesses are involved in processing(including food industry) and further 5% inconstruction. Only 5% of registered businessesare active in the agricultural sector.Industrial SectorThe privatization of Kosovo’s socially-ownedenterprises (SOE’s) conducted with the internationalassistance, has generated around€385.5 million since the year 2004. Accordingto the Privatization Agency of Kosovo, duringthis period, over 9,000 local and foreign investorshave at least at one point in time expressedinterest in the privatization process.While Kosovo has been laying the foundationsof a market-oriented economy for the pastnine years it is still struggling to develop viableand productive domestic industries. Kosovohas one of the lowest export/import ratesin the Balkan region. In 2008, Kosovo import-ed €1.8 billion in goods and services and exportedonly €186 million, resulting in a tradedeficit of approximately 45% of Kosovo’s GDP.This deficit is largely financed through foreignassistance and remittances from Kosovo’sDiaspora. Kosovo’s leading industries aremining, energy, and telecommunications.None of these industries have any significantfacilities located in the Region South.However, over the past several years the industrialsector of the regional economy showsmoderate progress. A number of new companieshave been established and started operatingin a variety of sectors including food processing,metal processing and plastic (PVC)products. New industrial companies are basedon local initiative or a foreign investment.One such company, the Zinkunie Company,established by the Dutch is a prime exampleof a joint venturing between a Diaspora entrepreneurand a foreign investor. Zinkunie is acompany specialised in processing of zinc,copper and lead. This company is also in a processof setting up an industrial park on theoutskirts of Prizren for foreign investors. Municipalplans in creating other municipal/regionalindustrial/business parks are largelybehind the schedule.Other examples include:• Abi & Elif 19 - a Prizren based company, alsoknown by its brand name Progress. Abi &Elif 19 is a processor of fruits and vegetableproducts i.e. marmalade, jams and jellies,ketchup, peppers, cucumbers, green beansand other products.• Sillosi Company in Xrëxë – Rahovec/OrahovacMunicipality produces baking flour andpasta. It has one of the biggest productionlines in Kosovo.• Companies Clirimi and Pista-Ekoplast havea wide-range of PVC products. The plasticprocessing industry is located in Rahovec/Orahovac MunicipalityAgricultureSouthern Region is the main producer of highquality agricultural products in Kosovo. Vegetablesgrown in this part of the country are alsowell known and exported to surrounding countries,i.e. peppers from Krusha area, tomatoesfrom Mamusha/Mamuša etc. Other vegetables,like cabbage, cucumbers and carrots arecultivated successfully in this region as well.Krusha area is also known for growing watermelons.Dragash/Dragaš region is rich with18

REGIONAL PROFILEEconomy: Production and Service Sectors22.4TABLE 6: Area of land by typePrizrenDragash/DragašSuhareka/SuvarekaRahovec/OrahovacMalisheva/MališevoMamusha/MamušaTotal (Ha)Natural partsUncultivated land 4,177 264 12,024 673 200 17,338Forests 24,977 7,326 2,923 9,236 16,392 60,854Total 29,154 7,590 14,947 9,909 16,592 78,192Agricultural landArable land 20,684 8,793 9,449 15,460 11,249 811 66,446Pastures 14,128 27,142 11,703 5,941 2,745 283 61,942Total 34,812 35,935 21,152 21,401 13,994 1,094 128,388medicinal and aromatic herbs, as well asknown for a variety of berries. More than 90 %of herbs are exported to western countries.Typical for this region is viticulture and itdeserves a separate mention. It is dominantin Rahovec/Orahovac, but also widespread inMunicipalities of Suhareka/Suvareka andPrizren. Good soils combined with favourableclimate conditions create significant potentialfor further development of the grape andwine production. Development of the sectorshould be linked with vineyard renovationand improvement as well as better linkagesbetween grape producers and winemakers orretail markets.The agricultural land represents approximately61% of the total area of the SouthernRegion and offers a great potential for furtherdevelopment. Over 65% of the working populationresident within Kosovo is employedwithin the agricultural sector. There is significantpotential for developing higher valueproducts as well as these that are grown in anorganic manner. Efforts to create properly developeddistribution chains (from farmersthrough collection facilities to the markets)need to be undertaken as one of the priorities.Many of the regional agricultural productshave a significant export potential. Formerlya net exporter of foodstuffs, Kosovo as a wholenow has a negative trade balance in this sector.This points out to the opportunities forsignificant import substitution based on thisregions production.Service SectorService sector (trade, hotel, cafes and restaurants,transport and telecommunication andother services) represent 81% of the total numberof registered enterprises. For the last 5years, this sector continues to be the mostpreferred, when starting a new business.While dominant from the point of view ofsheer size, number of businesses as well asjobs, this sector is relatively fragmented andtypically associated with lower than averageprofitability. The service sector of the regionaleconomy is not technology-based. It is dominatedby such low-tech areas as retail andwholesale trade, car service workshops, tireshops, petrol stations and numerous little coffeeshops or food establishments. The opportunitiesfor further development are associatedwith technology-based services (compatiblewith the young workforce of the region) andwith the tourism industry.The Economic Region South is still has severelyunderutilized potential in tourism-relatedservices. This relates not only to theMunicipality of Prizren, but also various waysto all other municipalities of the Region. Inspite of abundant natural resources attractivefor tourism purposes as well as rich culturaland historical heritage, the tourism industrystill has to become a major development driver.The development of the sector until nowhas been addressed in a fragmentary fashionand has not increased in a major way the incomesof a very large population segment involvedin tourism related service provision.Tourism needs to be developed in a complexmanner where the issues related to tourismbase (including human resource development);the tourism product development(such as family winter sport packages, winetours, bird watching etc.) and marketing/information/communicationare seen as a systemor interrelationships.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH19

22.5REGIONAL PROFILESummary conclusions2.5 Summary conclusionsREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHIn general, the conclusion should be thatthe region still has untapped reserves ineconomic development. The number ofsuccessful and profitable companies is stillrelatively small. Many smaller start-upslack the expertise on how to develop theirbusiness in a proper manner, to match theirentrepreneurial drive. Skilled resources andsupport delivery systems for the start-ups arestill largely missing and consequently executetheir ideas without conducting prior marketstudies, evaluations or putting together solidbusiness plans, without securing adequatefunding and without proper training. Thenumber of business support institutions isvery small and consequently there is a lack oftraining and business education centres,business incubators and consultancy companiesto provide support to businesses. Withoutthis type of infrastructure, the businesspotential of the region cannot be fulfilled.The future construction of the cross-Balkanhighway running through the Region Southwill create numerous opportunities for the regionin medium term horizon. The strategyshould therefore focus on the issue of employmentby developing a variety of initiatives toencourage people to be more proactive (supportingSME start-ups) and more businessoriented,building an appropriate entrepreneurialand business infrastructure as well asall other types of infrastructure. At the sametime, all the business opportunities in the areasof industry, agriculture and tourismshould be developed in a responsible way –with the goal of improving the quality of environmentand preserving the bio-diversity.Regarding industry, the focus should beplaced on completing the privatization oflarger enterprises, improving competitivenessof privately owned companies and generalbusiness climate as well as giving supportfor strengthening the SME sector. Thesewould become some of the main drivers ofsuccess for all industrial activity in the region.Encouraging the citizens of Kosovo, theDiaspora members and foreign investors to investin these sectors, improving the localknowledge on how to run businesses andbuilding appropriate institutions (infrastructure)that will support entrepreneurs to startnew businesses and enhance the technologicalcapacity of existing ones are some of theways to improve the entire economy of the region.Proper support should also be developedto meet the entrepreneurial aspirations of theyouth as well as significantly improving businessopportunities for the women.Development of tourism could become a significantsource of wellbeing for a growingpart of the region’s population. The regionhas a vast tourism potential which still remainsrelatively untapped. Suitable regionalgeographic position and rich natural basis,numerous cultural and historic buildings, aswell as folklore are main basis for developmentof tourism in Southern Region. There ispotential for sustainable development of transit,mountain and winter tourism and campingfor weekends. Within Sharri Mountainsreaching the height of up to 2750 m there are16 pristine mountain lakes. Major part of thiszone belongs to the National park and the areais under the protection for the purposes oftourism development. Sharri Mountains havehundreds of meters of skiing areas which arenot properly developed, but they present bigpotential for development of winter tourism.Mountains of Koritnik and Pashtrik in Dragash/DragašMunicipality also present poten-20

REGIONAL PROFILESummary conclusions22.5tial for development of mountain tourism,such is hiking and hunting. Numerous riversin the region offer possibility of developmentof water sports and fishing.The natural resources related to tourism stillneed to be developed into specific products.The development should also address the issuesof the tourism base (both in terms of hotels,restaurants etc. as well as qualified humanresources). Taking full advantage of thatpotential, however, will not be possible withoutimprovements in quality of the environment.Issues related to the provision of improvedpublic services (sewage, solid wasteetc.) combined with environment protectionimprovements (environmental awareness, recyclingetc.) constitute a crosscutting theme,which in the long run influences the sustainabilityof all development efforts.With a very good climate with Mediterraneaninfluence, which characterizes southernregion, with 61% of agriculture land, fromwhich 52% is good quality arable land, especiallyin Prizren, Rahovec/Orahovac and Suhareka/Suvareka,with good irrigation systemin place, this region offers a greatopportunity for agricultural production andprocessing of agricultural and horticulturalproducts. Many agricultural products (includingwine) can be certified as organic, becauseof the use of natural technology and lack of industrialpollution. Considerable areas of pasturesin Dragash/Dragaš and Malisheva/Mališevo also are important assets for developmentof livestock industry for the region,with a good infrastructure and road networkof the region, offering possibilities of enteringthe local products into regional and broadermarkets.Agriculture and food processing industryshould advance by boosting agricultural production,optimizing the use of land, improvingthe quality of agricultural productionthrough the use of agro-technology as well astraditional and ecological values. This, in combinationof improved access to agro-markets,could be a foundation for balanced economicdevelopment of the rural areas and agro-tourism.Kosovo, and in particular the EconomicRegion South, has been known in the pre-conflictperiod as a significant net exporter of agriculturalproducts. Current balance of trade infoodstuffs is just the opposite. Supportingcomprehensive development of agriculture byaddressing its present shortcomings and understandingall the interrelationships has apotential of reversing the current trend and reestablishingagriculture as a major economicdevelopment driver of the region.The overall conclusion applicable to each ofthe sectors of regional economy of the EconomicRegion South is that they have not developedin any systematic, consistent or integratedway. While the region has all potentialelements needed for future success, there isvast space for improvement that a RegionalEconomic Development Strategy with a sounddelivery plan and a resulting implementationof programs can fill.The preliminary analysis of the region leadsto a conclusion that Southern Economic Regionshares many problem areas with the restof Kosovo. In particular, this relates to highlevels of current unemployment, growingpressures on the job market related to demographics(young population), developmentlevel disparities between the urban and ruralareas, scattered local initiatives with lowerthan expected overall development impact,unsatisfactory level of social services (healthcare,education etc.) offered to the population.Region South also has a number ofunique characteristics which include high potentialfor developing of tourism linked to numerousattractive resources related to tourism;high potential for development ofdiversified, modern and efficient agricultureand food processing industry, particularlylinked to vineyards as well as quality fruit andvegetable crops; and finally unutilized potentialrelated to SME and industrial development(both in production and in services). Aspointed out earlier, these three areas are seenas major drivers for the region’s development.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH21

22.6REGIONAL PROFILEStakeholder views2.6 Stakeholder viewsREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHWide-spread ConsultationDuring the preliminary efforts to organize aregional partnership of stakeholders for thedevelopment process, RDA South carried out aseries of stakeholder interviews to obtainviews about the health of the regional economyand how changes could or should be madeto industry development to improve the economicperformance; and, to identify developmentopportunities and initiatives whichcould stimulate growth and development ofthe Economic Region South’s economy in thefuture. The stakeholder consultation has beenundertaken in parallel streams with all mainstakeholder groups.Local Governments have been consulted togain their views on the future direction of theregional economy, with particular emphasison publicly owned assets and their development.Face-to-face interviews and discussionshave been conducted with a range of keybusiness, media and NGO stakeholders.Members of the CPWG are confident thatthose leaders consulted are representative andtheir views authoritative. This process of consultationhas identified any issues whichstand in the way of development and willbuild consensus in addressing them.Views on Development OpportunitiesThere is a strong desire by production sector intervieweesand service sector interviewees fromEconomic Region South to see “Investment instart-up projects”. All groups mentioned this asa development opportunity during the initialstakeholder consultation. There is also a commonbelief amongst interviewees from the productionand the service sectors that ER Southhas a strong competitive advantage with its resourcesrelated to tourism and agriculture. Intervieweesindicated that “Horticultural productionand processing” and “Tourism” are theareas with the most development potential inthe South Economic Region.Views on Development IssuesManagement Issues, including: “Lack of collaboration/coordination”,“Lack of leadership/poor leadership” and “insufficient support onthe part of local governments”, are according tosome stakeholder communities the main issuesfacing the economic sectors in the RegionSouth. These are followed by Labour Force Issues,including “Lack of skilled labour”, “Employment/labourissues” and “Education needsunmet”. Infrastructure, including “Electricity”and “Transport”, is also seen as an impedimentto development both by production and servicesectors. Labour and general Infrastructure issueswere seen, however, as challenges to bedealt with in a more of a longer term perspectiveas opposed to the need to urgently deployquicker-impact sector oriented measures.ImplicationsThere is a strong desire by business and servicesector interviewees to invest in the RegionSouth. They recognised that management andlabour force issues are standing in the way ofsignificant investment and hence economic developmentof the region and they need to bedealt with by the strategy. At the same time,consultation revealed that many businessesand economic oriented stakeholders wereaware of realistic development opportunitiesfor the Southern Region’s economy. Many weretaking independent initiatives to realise theseopportunities and were positive as to the strategicdevelopment role that REDS might have infuture. Interestingly, a significant number ofstakeholders have also expressed the need forincreased leadership and coordination in economicdevelopment at the regional scale.Influence on Strategy FormulationThe views of the stakeholders informed theRDA Team conducting the preliminary analysisof growth prospects and potential of thesouthern regional economy. They also informedthe CPWG members in its formulationof the Strategy goals, objectives and implementationinitiatives.22

REGIONAL SWOT ANALYSIS 33. RegionalSWOT AnalysisAn in-depth SWOT analysis is a preferredanalytical and strategicplanning tool often used withinthe EU in a participatory planningapproach. However, SWOT is onlya tool in a planning process and it has to bebased on inputs and knowledge of the presentsituation provided by the partners (CPWGmembers). The outputs of a SWOT analysisare well organized basic information, a commonunderstanding of reality and a set ofcommon strategic options.The two main components of the SWOT are:of the internal situationdescribed by existing strengths1.aspectsand weaknesses:• a strength (S) is defined as any internal assetof know-how, technology, motivation andentrepreneurial spirit, finance, businesslinks, etc... which can help to exploit opportunitiesand to fight off threats,• a weakness (W) is an internal condition orany internal deficit which endangers thecompetitive position of a region or hampersthe exploitation of opportunities,of the externalenvironment described by2.aspectsexisting threats and unexploredopportunities:• an opportunity (O) is any external circumstanceor characteristic which favours theregion or where the region is enjoying acompetitive advantage,• a threat (T) is a challenge of an unfavourabletrend or of an external circumstance whichwill unfavourably influence the position ofthe region.The table on the following pages provides therefined inventory of SWOT arrived at as a resultof discussions of the CPWG and TWGsmembers.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH23

3REGIONAL SWOT ANALYSISStrengthsWeaknessesREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHS1. Favourable position of the south region (traffic,geographic location at the crossroads ofhighway Prishtina – Durres which is becomingincreasingly important).S2. Resources related to natural environment,agricultural arable land, abundant watersupplies, forest wealth.S3. Relatively educated workforce by competitiveratesS4. Rich historical and cultural heritage monumentsregistered and protected.S5. Possibilities for further development of tourism(winter, cultural, mountain, eco tourism, agrotourism)S6. Industrial and craftsmanship traditionS7. Local production, particularly agriculture,lends itself to import substitution and exportdevelopmentS8. Favourable agro-climate conditions and highpotential for few sectors of agriculture(Horticulture, viticulture, dairy)S9. Appropriate regional infrastructure all over theregionS10. Significant and growing role of SMEsS11. Hospitality of local peopleS12. Good transport accessibility with importanttransport routesS13. Agriculture products using natural resourcesthat can be certifiedS14. Availability of inexpensive labour forceS15. Good opportunities to develop local wine brandsS16. Development of traditional crafts for tourismpurposesW1. Long - term unemployment, significantimbalance of economic structure and inabilityto transfer labour force among sectors,W2. Lack of consistent and balanced developmentstrategy,W3. Institutions of local government inadequatelyprepared for supporting entrepreneurialactivitiesW4. Railway system non-functionalW5. Insufficient coordination between educationalinstitutions and the regional developmentneeds, and inadequate education with marketrequirementsW6. Farmland inadequately used (mostly smallplots owned by each individual)W7. Inadequate treatment and disposal of wastewaters and solid wasteW8. Low level of production of agriculturalcommodities and underdeveloped foodprocessingW9. Lack of strategy for the exploitation ofagricultural resourcesW10. Privatization of agricultural land has not yetbeen completedW11. Inadequate ties of small and medium- sizedbusinesses with larger business systems, andretail chains with local productionW12.Unevenly developed and insufficientlycoordinated economic sectorsW13.High percentage of industries of lowtechnological levelW14.Underdeveloped rural infrastructureW15.Lack of strategy and incentives to drawinvestmentsW16.Low level of skills in tourism related servicesW17.No regional promotional strategy and activitiesW18.Lack of tradition and good experience withinter-municipal cooperationW19.Lack of experience in public – privatedevelopmentW20.Difficult access to credits24

REGIONAL SWOT ANALYSIS 3OpportunitiesThreatsO1. Strategic geographic position; good roadconnections, highway to Albania and sea ports,highway in Kosovo going through the RegionSouthO2. Young population with good level of educationO3. Availability of Grant Schemes from EuropeanCommission and other international donorsO4 Possibility to use renewable sources of energyO5. Irrigation system in most of the regional fieldsappropriate for high quality productionO6. Diverse cultural heritage as an advantage fordevelopment of tourismO7. Attractive sites for construction of newrecreational and sport facilitiesO8. Entrepreneurial spirit of local businessmenO9. Existence of Diaspora with resources to investin the regionO10. Climate conditions very favourable forcultivation of high quality cropsO11. Development of new initiatives within thecross-border cooperationO12. High potential for development of ski centresin Sharri mountain with ski slopes appropriatefor development of winter sportsO13. Development of Private Universities andestablishment of Public University in Prizren,to support development activitiesO14. Natural park, reservations and protected zonesO15. Good conditions for livestock development andbreeding (cattle and sheep)O16. Good market opportunities and exportpossibilities taking into account free tradeunder the CEFTA agreementT1. Irregular supply with electric power, inadequatetechnical condition of power infrastructureT2. Environmental degradationT3. Air pollution, pollution of riversT4. Lack of development fundsT5. Non-efficiency of courts and law enforcementbodiesT6. Lack of financial supportT7. Ineffective fiscal collectionT9. Unfair competition – uncontrolled importsT10. Underdeveloped physical infrastructureT11. Inadequate availability of funding for agricultureT12. Lack of censusT13. Uncontrolled migrations from rural to urbanareasT14. Lack of implementation of spatial planningT15. Enormous increase of the number of vehiclesT16. Global crisis affecting exports and remittancesT17. Youth leaving abroadThe SWOT analysis clearly showed a widerange of weaknesses in the economic structureof the region and particularly in thebusiness support structure. But it was genuinelydifficult to identify any one factor orset of factors as being more important than others.However when considering strengths and opportunitiesit was widely agreed that two sectors in particularhave both existing assets and the potential to be developedfurther: these are agriculture/food-processingand tourism.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH25

4DEVELOPMENT STRATEGY4.DevelopmentStrategyREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHBefore embarking on the process offormulating the strategy, the regionaldevelopment partners agreed on aset of principles and values that setthe overall context for the strategy.The fundamental principles that are expressedin the REDS of the Economic RegionSouth are:• Keep the number of priority areas limited tothree to enable for a better focus of the strategicefforts on the issues that are drivers ofthe development of the region.• Concentrate on economic development issuesand regional competitiveness ratherthan addressing a wider range of social issues.• Treat key social issues as cross-cutting issuesthat influence the sustainability of developmentand pervade the business environment.These include the principle ofequal opportunities for disadvantagedgroups (youth, women, ethnic minoritiesand handicapped) as well as improved educationfor workforce skill base.• Environmental issues are also of cross-cuttingcharacter. They have been consideredwithin the business environment area butas a rule, they are taken into account acrossthe entire programming cycle.• Creation of wealth. Strategic efforts areconcentrated on jumpstarting the economyof the region or, in other words, on the responsiblecreation of wealth and prosperity.The primarily focus of the strategy, particularlyin early stages, is not on wealth redistribution.Stakeholders in the development process ofthe region perceive the regional vision to be astatement of common interest and a commitmentto co-operate toward common, agreedstrategic priorities that are identified in thestrategy document. After working throughthe regional profile, the socio-economic needsanalysis and the SWOT, the following clear visionstatement has emerged:Economic Region South is an area wherethe strategically planned sustainabledevelopment, cooperation and successfulpartnerships have led to increasedcompetitiveness of the economy basedon the region’s strengths, created a favourableenvironment for investing andprovided for the well-being of the citizen.As a result of preliminary analysis and inline with the adopted strategy principles, theregional development partners selected threePriorities that the Regional Economic DevelopmentStrategy is addressing. These prioritiesare seen as having the best potential forleading the change in the region. They havebeen identified as:1. Development of the Business Environment;2. Development of agriculture and foodprocessing industry; and3. Development of tourism.The last two priorities are of vertical or sectoralnature. While there is inevitably someoverlap between all three, they still have thebenefit of being easily identifiable which contributesto the recognition of associated objectivesmeasures.26

DEVELOPMENT STRATEGYPriority 14PRIORITY 1: Developmentof the Business EnvironmentThe overall goal of this Priority is tocreate better business environmentin the region through improvedhard and soft business infrastructureand so increase: the competitivenessof regional enterprises; the quality ofthe workforce; and the environment.MEASURE 1.1:Support for improving conditions forstarting and conducting business inthe region.Expected Result: Economic Region South has6 municipal Business Support Centres whichare networked, specialized and offer highquality services as well as at least two fully developedand managed industrial/economiczones with adequate infrastructure.Rationale: This measure has been identifiedprimarily through a combination of twoSWOT/SENA elements: the lack of proper infrastructurefor business development andthe readiness of local government to supportestablishing of business support centres andindustrial/economic zones as well as invest intheir development.MEASURE 1.2:Increasing the competitiveness ofregional enterprises.Expected Result: Region’s enterprises becomemore competitive in domestic and internationalmarkets through innovation, developmentand support of regional brands, developmentof value chains and improvement ofdistribution systems (domestic and internationaltrade).Rationale: This measure has been identifiedprimarily through a combination of SWOT/SENA elements: the low number of well developedregional brands, inadequate developmentof value chain approach, insufficientaccess and lack of good relationships with exportmarkets, as well as some strengths likepresence in the region of high quality professionalsin the areas of technology, advanceddesign and marketing.MEASURE 1.3:Developing a competitive workforcewith skills that match current andfuture market needs througheducation, training and re-trainingExpected Result: Region’s job availabilitygrows as the workforce becomes more competitive,better trained through improved deliverysystems (including training offeredthrough unemployment centres and new curriculain secondary and tertiary education).Rationale: This measure has been primarilyidentified through a combination of SWOT/SENA elements: lack of qualified work forcewith appropriate skills as required by the labourmarket, lack of proper curricula for vocationaleducation and training, low level of opportunitiesfor women, handicapped and youth.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH27

4DEVELOPMENT STRATEGYPriority 2PRIORITY 2: Development of Agricultureand Food ProcessingThe overall goal of this priority is to usethe region’s agricultural resources toincrease the employment level andstandard of living of the populationinvolved in agriculture in the region,particularly in the non-urban areas.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHMEASURE 2.1:Increasing production of and storageand processing capacities for fruits,vegetables and berriesExpected Result: Increased production of vegetableand fruit as well as increased output ofprocessed fruit and vegetables, in particular,increased outputs of viticulture and of winesas well as growth and improvement of livestock.Rationale: This Measure is identified througha combination of the following SWOT/SENAelements: current lack of proper land management,but availability of the land withproper agro-climate conditions, the willingnessof the rural population to be engaged inmodern agribusiness, good experience in vegetableproduction, viniculture and livestock.MEASURE 2.2:Improvement of production qualityof regional agro-businesses in themedium term.Expected Result: Quality of produced fruit,vegetables as well as wines and processedfoods increased through application of highquality inputs, modern technologies andadoption of international standards (ISO andHACCP) as well as certifying eco-products.Rationale: This Measure is identified primarilythrough a combination of the followingSWOT/SENA elements: lack of internationalstandards in regional agribusinesses (weakness)and existence of certified local consultantsfor development and implementation ofmodern technologies and standards combinedwith relatively low level of skills of peopleinvolved in agriculture, but on the otherhand there is a continued presence of internationalorganizations and programmes providingtechnical assistance related to agriculture.MEASURE 2.3:Securing profitable markets forregional agriculture products.Expected Result: Marketing tools are developedand offered to producers, capacities forconducting market research are developedand available, packaging and distributionchannels (domestic and international) are developed.Rationale: This Measure has been identifiedthrough a combination of the following SWOT/SENA elements: current lack of marketing toolsin regional agribusinesses, no research of newmarket opportunities, need for establishmentof advanced marketing agencies or cooperativeswith marketing capabilities.28

PRIORITY 3: Development of tourismDEVELOPMENT STRATEGYPriority 34PHOTO: ARBEN LLAPASHTICAOverall Goal is the development ofthe region’s tourism sector throughthe use of tourism opportunities,natural endowments, historicaland cultural monuments that thisregion has, protected environment and biodiversity,always in function of economic developmentand well-being of the residents.MEASURE 3.1:Improving the existing tourism base(hard: hotels, restaurants, ski areas,hiking paths etc. as well as soft:capacity building of human resourcesinvolved in tourism through trainingand education).Expected result: Capacities of tourism-relatedbusinesses (tourist agencies, transport organisations)are increased and improvement ofhotel and restaurant services has taken place,the tourism base (hotels, restaurants and otherfacilities) has increased and is standardizedaccording to EU criteria.Rationale: This Measure has been identifiedprimarily through a combination of the followingSWOT/SENA elements: low level oftraining opportunities, growing demand increasesthe employment and job opportuni-ties in tourism sector, as well as potential foryear-round tourism and recreation linked toskiing, hunting, mountaineering, hiking,fishing, agro tourism etc.MEASURE 3.2:Highly enriching and diversifying theexisting tourism offer (productdevelopment for tourism).Expected result: Development of innovativetourism products for individual and grouptourism has taken place, recreational activitiesrelated to skiing and mountain tourismare being offered. Tourism offer includes wineroutes combined with tasting, seasonal grapeharvesting. Traditional sport events (classicwrestling contests, horse racing) are re-establishedad developed.Rationale: The Measure has been identifiedthrough a combination of the followingSWOT/SENA elements: inadequate currenttourism infrastructure as a weakness, and accessto donor assistance for tourism developmentas an opportunity, plus lack of incentivesfor tourism investments as a weakness,and opportunity to increase level of tourismentrepreneurship in order to create moreSMEs.Old hamamin Prizren.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH29

4DEVELOPMENT STRATEGYPriority 3MEASURE 3.3:Providing improved informationand promotion of tourism offer ofthe region (product marketing,communication).Expected result: Data on tourism base andproducts collected and processed in the formof publications, marketing tools for the promotionof tourism potential developed andused, information (in the form of signposting,producing and distributing publicationsetc.) provided.Rationale: This measure has been primarilyidentified through a combination of the followingSWOT/SENA elements: poor image ofKosovo worldwide as a weakness in the regionalSWOT analysis, and rich historical,cultural resources and hospitality of local peopleas a strength, plus lack of tourist informationin the municipalities as a threat as wellas potential to access donor assistance fortourism development as an opportunity.AS A GENERAL COMMENT:all of the above Measures taken together constitute a comprehensive set that the developmentpartners of the Economic Region South regard as necessary to move the region forwardin terms of sustainable economic development. They regard this set of measures as anintegrated blueprint for development of this region over at least the next 3 years and, mostlikely, beyond.REGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH30

Contributorsto the StrategyMehmet Bytyqi, DEF - Prizren Municipality; Muhamet Spahiu, DEF - Suhareka Municipality;Ahmet Bahtijari, DEF - Dragash Municipality; Vesel Krasniqi, DEF - Malisheva Municipality;Hamez Rama, DEF - Rahovec Municipality; Yayha Mazreku, DEF - Mamusha Municipality;Safet Dorambari, ABC Plast - Prizren; Raif Morina, Rizam Holding - Mamusha;Halim Haxhijaha, Haxhijaha - Rahovec; Ilir Piraj, Meka - Dragash; Shefqet Kuqi, Solid - Suhareka;Brahim Kryeziu, Maticom - Malisheva; Valon Hoti, Zinkunie - Prizren; Sadik Shporta, PTK;Vehbi Sofiu, KEK; Zenel Zenelaj, Hidroregjioni Jugor; Shaban Veseli, Ecoregjioni;Daut Krasniqi, Business Association - Malisheva ; Faik Miftari, Craftsmen Association - Prizren ;Necat Morina, Farmers Association - Mamusha ; Fehim Rexhepi, Anadrini Association - Rahovec ;Fadil Sylka, Craftsmen Association - Rahovec; Vesel Kryeziu, Graufi Association - Malisheva;Halit Elshani, Business Support Centre - Suhareka; Naser Bresa, EKO - 99 Prizren ;Mirat Morina, Youth Association - Mamusha ; Fitim Spahiu, Social Research Centre - Dragash;Nderim Bytyqi, Youth Centre - Rahovec ; Mejtim Bytyqi, Felbach House - Suhareka;Feride Hoxha, Handikos - Malisheva; Linda Kabashi, Vajzat Sot - Suhareka;Rexhep Kuqi, Handikos - Regional Office ; Mifail Bytyqi, RTV Prizreni; Qazim Thaqi, TV Besa - Prizren;Edona Vuciterna, Radio Start - Rahovec; Beqir Beqaj, Radio Sharri - Dragash;Refki Reshitaj, Radio Theranda - Suhareke ; Ramce Kasi, Radio Omega - Prizren; Jakute Siceca, Prizren.I Thematic Working Group for Business EnvironmentFaik Miftari, Craftsmen Association - Prizren; Shefqet Kuqi, Solid - Suhareka;Fadil Sylka, Craftsman Association - Rahovec; Sedat Mazreku, Betoni - Mamusha;Ilir Piraj, Meka - Dragash; Sadik Shporta, PTK; Safet Dorambari, ABC Plast - Prizren;Sadik Paqarizi, Directorate of Urbanism - Prizren; Refki Reshitaj, Radio Theranda - Suhareka;Nazli Tyfekqiu, Handikos - PrizrenII Thematic Working Group for TourismMehmet Butuc, DEF - Prizren; Hamez Rama, DEF - Rahovec; Ahmet Bahtijari, DEF - Dragash;Muhamet Spahiu, DEF - Suhareka; Naser Bresa, ECO - 99 Prizren; Mifail Bytyqi, RTV Prizreni;Feride Hoxha, Handikos - Malisheva; Mirat Morina, Youth Association - Mamusha;Bajram Basha, Municipal Official - PrizrenIII Thematic Working Group for AgricultureHalit Elshani, BSC - Suhareka; Necat Morina, Farmers Association; Shaban Veseli, Ecoregjioni;Fehim Rexhepi, Association Anadrini - Rahovec; Vesel Kryeziu, Association Graufi - Malisheva;Bedri Berisha, Directorate of Agriculture - Suhareka; Shaqir Kryeziu, Municipal Official - Suhareka;Jakup Kastrati, Municipal Official - PrizrenREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTH31

22.2REGIONAL PROFILEPopulation, human resources and the labor marketREGIONAL DEVELOPMENT STRATEGY FOR THE ECONOMIC REGION SOUTHAn EU funded project managed by theEuropean Commission Liaison Office32