Report Mission Kosovo Canzanelli-May 2013 · Dragash municipality’s resources for the...

1 G. Canzanelli-‐ Mission Report– May 2013

Mission Report of Giancarlo Canzanelli in Kosovo 9-10 May 2013

Background

A proposal for a contract with the South RDA for the establishment of a RDA unit in Dragash and provide follow up to the Program findings en terms of LED was provided, according to the results of the previous mission on 8-10 April 2013.

Objectives

1. To realize a meeting with the South RDA and verify the feasibility of the agreement related to the establishment of a RDA unit in Dragash

2. To discuss further issues related to the Program plans and the ILS LEDA actuation

Agenda

02.05 Arrival to Prizren

Meeting with Program Staff: Maria Helena, Besnik Cecelia, Kristina, Tom

03.05 Meeting with RDA Debriefing with Maria Elena and Besnik Cecelia Meeting with Besnik Cecelia for preparing follow up Departure

Achieved Results 1. Feasibility of the agreement with South RDA for the establishment of the

Dragash unit shared with the RDA director. Conditions agreed with him. 2. A draft plan for realizing complementary activities to the ILS LEDA agreement

related to residual budget of the program for 2013 shared with Maria Elena and the program Staff

3. Simplification of the former proposed strategic development plan for Dragash LED shared and drafted

4. A specific plan of action of Besnik Cecelia prepared Activities 1. Agreement with South RDA.

During the meeting with RDA the following main issues were discussed: a) Highlighting the regional framework where the Dragash unit will be working,

as well as the regional role of RDA b) The importance of maintaining the unit in Dragash, because of proximity in

services and the weak economy of the area c) Specifying better (and may be changing the name) of the “Steering

Committee” mentioned in the UNDP proposal, according to the need of respecting the RDA statutory rules and regulations, and the need of a participation of Dragash associations (also the informal ones) to the work of the unit, on consultative bases.


d) Specify better (through precise TOR’s the task, the activities, and contractual obligations of the person enrolled for the operations of the unit.

e) The importance for RDA of a partnership with UNDP f) The need of efforts for future self-sustainability of the RDA Dragash unit.

and the specific actions to be planned. g) The need for RDA of following the internal procedures for the approbation of

the agreement.

2. Draft plan for realizing complementary activities

A residual budget remains to be spent by the Program in 2013. Ideas for activities related to this budget were discussed, mainly for realizing synergies with the overall planning and in particular with the ILS LEDA commitments.

Some guidelines were shared:

I. To realize quick impact, visible initiatives at benefit of producers in the municipality, according to the ILS LEDA findings, and a preliminary review realized by Kristina (textile women) and Besnik (yellow plums, and dairy)

II. To avoid grant to businesses, for providing a rupture in the disseminated culture of “assisted, not profitable, condemned to failure” businesses if anytime granted.

III. To look for business initiatives, i.e. supported by a feasible business plan, that could and should financed through a mixt mechanism including • Microcredit • A small grant for start up (not more than 15% of the overall investment) • Technical assistance • Capacity building

3. Simplified Strategic Development Plan for Dragash LED

Tom solicited a simplified version of the former strategic development plan for Dragah LED; since the one proposed by ILS LEDA look too complex to the Municipal authorities.

A draft proposal of this new version was prepared (see annex 3), and it will be worked with Besnik Cecelia for the final draft.

4. Specific plan of action of Besnik Cecelia

A meeting was held with Bensik Cecelia, and discussion finalized to: a) Follow up with the assistance to the ILS LEDA missions b) Preparation of business plans for the initiatives related to the complementary

2013 budget, with particular reference to yellow plum, fruit and vegetable, dairy, beekeeping products, also in coordination with Di Stefano.

c) Verification of the conditions of the UNDP micro-grant initiative for looking to possible synergies for the Program

d) Verification of possible new donors for follow up in 2014

Recommendations 1. Follow up on the SOUTH RDA agreement

Follow up RDA and solicit them to send the official comments on the proposal, as agreed during the meeting.

An exchange of documents will follow until achieving the final agreed document, before the signature.


ILS LEDA will be consulted and provide its inputs.

2. Complementary budget for 2013

Look at two options:

1 option (agreement with the micro-guarantee scheme): best option

• 20,000 USD for constituting a Dragash sub-account for special businesses (at least 5 business a year)

• 5,000 USD for micro-grant for start-up • 5,000 USD for technical assistance to business plan

The technical support and capacity building will be also provided by: • The RDA unit in Dragash • Bensik • ILS LEDA

2 Option (no agreement with the micro guarantee scheme)

• 10,000 USD Training for entrepreneurship • 5,000 support for business plans • 15,000 Grant of equipment for representative associations of famers (it

means association with a large number of members), on the base of a project in which the association increases the incomes of the sales of the members and they pay fees for the services provided due to the granted equipment.

In any case wait at least for the end of the Panettieri Mission and have inputs from him about equipment and possible businesses for beekeepers .


ANNEX 1:

TERMS OF REFERENCE for establishing a Dragash Unit of the South RDA

1. Background

Taking into consideration the Project “Conservation of Biodiversity and Sustainable Land Use management in Dragash / Dragaš – Kosovo (thereby named as the Project)” defined:

I. A strategy for territorial economic development defined in consultation with the local actors, through the utilization of action-research for the bees, forest products, herbs, milk-meat value chains has been established.

II. The preliminary design of a comprehensive service system to entrepreneurs, producers, population, civil society organizations, and public institutions, in been designed, through three different options, including financial and not financial assets (see annex 2)

III. Both elements include the need for a multi-level governance, related to networks at government level (among the municipal departments of economy, agriculture, education etc.), at local civil society level (through associations), at local level (among civil society and public institutions), at inter-municipal level (among neighbor municipalities), at vertical level (coordination with the national government), also in consideration of the high risk of using only Dragash municipality’s resources for the sustainable, competitive long term development, due to the lack of qualitative and quantitative performance;

It is proposed that the RDA shall carry out following activities from June to December 2013:

a) Establish a Decentralized RDA Unit in Dragash for carrying out activities related to the economic development of this municipalities.

b) This Unit shall work under the fully responsibility of RDA.

c) This Unit will be steered by a Local Steering Committee, formed at least by:

• The RDA director or his/her representative • The Municipal Administration of Dragash • A representative of the milk and meat value chain as appointed by the

correspondent farmers and entrepreneurs • A representative of the fruit and vegetable and forest value chain as

appointed by the correspondent farmers and entrepreneurs • A representative of beekeeping value chain as appointed by the

correspondent farmers and entrepreneurs.

d) The role of the Steering Committee is to give guidance to the Unit and RDA as far as the plan of activity to be carried out, in accordance to the municipal development plan.


e) The activities to be carried out shall be correspondent to the output of the Economic Surveys as produced by the Program (see http://www.ilsleda.org/activities/national-level-details.php?id=361)

f) The Unit will be coordinated by a responsible, selected through a public concourse and a committee constituted by the Program, the Municipality, ILS LEDA, and RDA, and appointed through TORs agreed by the Program and RDA.

g) The Unit will carry out during the period of the contract the following priority activities:

I. Promote and support the establishment and/or the initial operation of at least 4 farmers associations for the milk and meat, fruit and vegetables, forest, and beekeeping value chains

II. Provide a strategy for marketing the local products, also in connection with the surrounding municipalities (with priority to Prizren)

III. Promote mechanisms for facilitating access to finance

IV. Provide chances for access to project financing, looking for project opportunities, national and international partnership, calls for proposals, etc.

h) RDA will implement its current and foreseen activities and projects including the Dragash component (through the above mentioned UNIT)

The project will:

a) Provide technical support and accompaniment to the Unit responsible and Steering Committee for the implementation of their correspondent tasks, through a dedicated full time expert in Dragash

b) Provide technical support to RDA , through the ILS LEDA program of EURADA

c) Facilitate the relationship between RDA and Eurada.

d) Facilitate any other possible RDA international relationships

RDA, the Program, and ILS LEDA will work together for finding out mechanisms for assuring the technical, institutional, and financial sustainability of the UNIT after this contract will be expired.

2. Final Products

The final products of the activities will be:

1. The RDA UNIT in Dragash established, including the Steering Committee, and the responsible.

2. At least 4 value chain association supported in their establishment and/or initial operations.

3. The territorial marketing strategy for the Dragash products, possibly linked with regional products, and including territorial brand, preliminary designed.


4. An assessment about available chances for accessing to finance by the small producers, and a document indicating complementary proposals, appropriate to the demand and the contextual framework of Dragash.

5. A plan for future technical, institutional, and financial sustainability put at work.

3. Budget

Item Cost (USD)

Actions carried out in accordance with the above mentioned ToR, by the UNIT responsible

12000

Transportation costs 2000

Administrative costs 1000

Total 15000


Annex 2

DESIGN PROPOSAL FOR A TERRITORIAL COMPREHENSIVE SERVICE SYSTEM (CSS) IN THE

DRAGASH AREA Justification

According to the ILS LEDA TESSYA (Territorial Service System Analysis) based on a participatory exercise with the value chain focus groups, the needs and the demand of the services for economic development were assessed, with particular reference to the objective the local producer identified for their future.

This can be resumed as to consolidate and eventually to expand current market positioning trough increasing production and quality, and diversifying production and sales in foreign markets.

In the Municipality of Dragash development potential exist and it is given by the production of honey, forest fruits, herbs, milk and meat, textile, tourism, and culture system. In the municipality of Dragash no strong service institutions are present, with the exception of the LAG, which however is still a weak structure, with many problems of survival. On the other side people, especially the most disadvantaged ones, have great difficulties to access to the economic circuit and regular market, business services and credit. All this justifies the establishment of a system, if not one institution, able to guarantee delivery of a multitude of needed services in a comprehensive way. The ILS LEDA TESSYA has shown the most needed services are the following ones: A) Territorial animation

B) Business support

C) Project development and financing

D) Services for employment

1. Objective The objective of the initiative is to organize and efficient, effective, and self-sustainable mechanism or system for providing services to producers, population, local government, and other local institutions, than can support a long term economic development.


2. The organization According to the outcomes of the ILS LEDA TESSY Analysis regarding the needed services, an optional organization, which with start the design could be as the following one in the picture 1. In order to implement this system the following considerations shall be done:

I. The system shall be self-sustainable in the long term. All the experiences that led to establish subsided organisms, terminated with the failure of the system after a number of years.

II. The previous consideration carries on another two ones: The first is the question “What the income of the system, if not public or international cooperation subsidies?”. It depends very much on the local context and in particular on the amount of money available from the local institutions (members or promoters of the system), and the availability of the “customers” to pay for the services.

These last two conditions seem to not exist in Dragash. Other way shall be then explored, as further pointed out.

III. The question is :”is the Dragash municipal dimension sufficient for

assuring a minimum volume of demand?” The Dragash population, NGO, other public institutions, and producers do not seem to achieve the minimum. level of demand, as shown in the Canzanelli paper “How to define the optimum administrative and geographic boundaries for a Local Economic Development Agency” (in http://www.ilsleda.org/usr_files/papers/7_how_to_define_040926.pdf) .

TERRITORIAL SERVICE SYSTEM FOR ECONOMIC DEVELOPMENT (TESSED)

TERRITORIAL ECONOMIC PROMOTION ECONOMIC

DEVELOPMENT (TESSED)

BUSINESS SUPPORT

PROJECT DEVELOPMENT

SERVICE FOR EMPLOYEMNT

Economic Animation

Information System Support to access

to finance

Project Elaboration

Support to access to project finance

Labour Demand Supply Matching

Technical Business Assistance


IV. n order to assure the self-sustainability a public-private partnership shall be established At this purpose various alternatives can be studied: A] A mechanisms which coordinates different existing entities of neighbor municipalities (Dragash, Prizren, etc.) B] A new organization with an inter-municipal focus, an unique direction and municipal branches, which involves already existing service delivery organizations, but also the creation of new services. C] An initial effort made by Dragash with the intent of involve other neighbor municipalities in its start up. This option has two different outlook: using an existing institution (as the LAG), creating a new organization. The mechanism or organization shall be customer oriented as far as services, and externally oriented as far as finance.

The orientation to the customer is achieved building a strategy, that combines typology of the services with the typology of customers, and associate specific tolls for each combination.

In the case of Dragash the matrix is the following Table 1: Table1: matrix Service-Customers-Tools

PRIVATE SECTOR PUBLIC SECTOR

Territorial Animation Population Producers & Entrepreneurs

TOOLS • Sensitization-Awareness on local identity, contest, products

• Basic training • Family-School program • Promotion associations

Information Population Producers & Entrepreneurs

Municipalities

TOOLS • Community Mobile Info-program

Building Info-Centers

Business Support Population Producers & Entrepreneurs

TOOLS • Business plan model • Field visit program • Credit schemes

Project Development Local NGOs and Associations Municipalities and other public institutions

TOOLS Spread capacities in developing variated tyoes of projects

Spread capacities in developing variated tyoes of projects

Service for employment Population (unemployed) Enterprises

Public sector

TOOLS Labor Observatory Labor Observatory


3. The different options

3.1 ption 1: An inter-municipal coordinated mechanism

This should be the result of an agreement, first of all, between the municipalities willing to work together for assuring the necessary support to themselves, to the population, and to the producers and making them in the position of being competitive and sustainable in the long term, as well as the municipalities capable of better performing in planning actions. The agreement shall be established among neighbor municipalities, which have commonalities, same willingness and interests, and can gather at least 200,000 residents. According to this agreement the municipal government’s shall involve the service delivery entities (public and private), and make them coordinated for articulating basic services, and produce synergic learning process. The coordination could be focused along two main issues: • Coordination by specialization: it means that there are entities which provides

services other ones do not provide-they are specialized-. If the entity 1 is specialised in the service A, and the entity 2 is specialized in the service B, they will provide their specific services in all the municipalities. The coordination consists in the relationships with the clients, that often require both services.

• Coordination by territory: If the entities A and B provide the same service, but in different territories, then they will keep doing so. The coordination consists in put in common knowledge and methodologies, and improve effectiveness by doing so

• Coordination by outsourcing: if an already organized effective entity exist and is able to provide multiple services in one municipality and not on the other ones, this one should generate a new branch in the other municipalities.

3.2 Option 2: A new organization with an inter-municipal focus

If the existing service providers are weak or none of them wants to assume the responsibility of coordinating the overall system, a new structure shall be taken into consideration. The inter-municipal focus shall remain for the previous assessment, and the inter-municipal task force or group should carry on the initiative. This group could be initially composed by the public authorities and then extended to the private and civil society sectors. The new structure could assume the legal form of a no profit mixed public-private association, whose members are: The municipalities, with the right of participating always to the management board, through one or more of their representatives; The representatives of the producers, through their associations The representative of the local NGOs


The representative of civil society, through their associations (communitarian, sectoral, women, young people, etc.) Representative of university(ies) and the education sector A Promoting Group of this Comprehensive Service System (CSS) shall be constituted, and it (possibly with the support of the UNDP) shall: a) Promote membership

b) Prepare the statute

c) Define the organization

d) Elaborate the business plan or at least the financial plan for the first 5 years

e) Approve the financial plan and commit to it

f) Legalise the structure and constitute it formally with the full organisms and technical direction, according to the following picture 2

PICTURE 2 ORGANIGRAM OF A NEW LEGAL STRUCTURE FOR CSS

3.3 Option 3: Initial effort made by Dragash In the case of difficulties of encountering an agreement among various neighbor municipalities for achieving scale economies, and only after having tried it, a transitory solution could be pursued. Create the mechanism in Dragash, possibly with limited number of services (because of the sustainability), and then extend it with the involvement of

General Assemby

Management Board

Technical Direction

Advisory Board


other municipalities and to other services, through an effective plan of action. At the beginning the prioritized services could be o Economic Animation o Project Development

Again the mechanism could be established through two alternatives A] using an existing structure, that in this case is the Local Action Group B] creating a new structure In the first case it is a complete renovation of the LAG, as fas as: ↗ The legal form, that shall be a mixed association between the Municipality

and the other groups of the private sector and civil society

↗ the organization, that shall include a management board a technical direction

↗ the technical direction that shall include a full time employed director, with th task of carrying on also the project development task, and other full time expert in economic animation

↗ the sustainability, that shall not depend only on the municipality.

4. Advantage and disadvantage of the 3 alternative options

The advantage and disadvantages of the 3 solutions are compared according to 3 criteria 1. Feasibility 2. Sustainability 3. Effectiveness

The results of the comparative assessment are illustrated in the following table 2: Feasibility Advantage Disadvantage

Option 1 To realize a inter-municipal system for services, that is more efficient and effective.

Easier method for realizing inter institutional agreements

To be a non formal organization, and then dependent on the willingness of other management structures. When management change there is a risk of stop to the activities

Option 2 To realize a inter-municipal system for services, that is more efficient and effective

To be a formal organization and not dependent on other ones

It is more complex and time spending realizing inter institutional agreements.

Option3 It is a quick way to provide responses to the need of the Dragash population

Difficulty to establish a local system for the weakness of the existing one (LAG), and the lack of capacities (long time for forming them)


Effectiveness Advantage Disadvantage

Option 1 Covering an inter municipal area two elements of effectiveness are provided: a) number of customers that justify any service; b) possibility of membership fees contributing to the income, and c) more negotiation power with national and international institutions

Difficulties of coordination and collaboration between different structures

Complex articulation of the delivery between the central office and the peripheral customers (possible the presence of municipal branches is required, and this influences the budget)

Option 2 To realize a inter-municipal system for services, that is more efficient and effective

To be a formal organization and not dependent on other ones

It is more complex and time spending realizing inter institutional agreements.

Complex articulation of the delivery between the central office and the peripheral customers (possible the presence of municipal branches is required, and this influences the budget)

Option3 It is a quick way to provide responses to the need of the Dragash population

Difficulty to establish a local system for the weakness of the existing one (LAG), and the lack of capacities (long time for forming them)

Sustainability Advantage Disadvantage

Option 1 It is the simplest system and then the more sustainable because It needs less budget

Since the weakness in the institutional framework and governance, the financial sustainability could be not sufficient for assuring long life to the system

Option 2 It is the most sustainable structure by the point of view of institutional and social sustainability.

Once resolved the income problems it assures long life

It is the more complex solution and the more expensive.

Option3 It does not need much investment and budget

It is institutionally sustainable, but because of the limited territorial dimension and of the customers, the structure has the risk of not growing, and responding to all the demand of services.

5. Financial Plans

The financial plan is a tool for defining: a) The investment needed for the establishment of the system

b) The possibility of financial self-sustainability, through the balance between income and costs for at least the first 3 years of life.


6.1 : the investment plan The following table 3 shows the comparison for the three options:

Table 3: Investment for establishing CSS in the Dragash area (USD)

Item Option 1 Option 2 Option 3 Design 6000 6000 6000 Training and tools 10000 10000 10000 Legalization 3000 3000 3000 2 years running costs 33600 105000 64000 Car 20000 20000 20000 Tutoring the start up 20000 30000 10000 Total 92600 174000 113000

Notice that: 1) The running costs are referred to:

Table CSS Running Costs (USD)

2) A financial mechanism shall put in place, because it generally is a tremendous toll for generating income. At this purpose different alternatives, as illustrated in the annex 1, could be implemented. In any case this mechanism should generate from 8,000 USD a year for the service system 1 option), to 12,000 for the other ones.

6.2 The financial plan The 5 years financial plan for the first 5 years of the life are illustrated in the following table 5, 6 , and 7 for each one of the options, and they include annual running costs and typology of incomes, as it results from the ILS LEDA experience, an could come from: a) Investment fund, that is the initial external capital put at disposal,

possibly (strongly recommended) through a contract, better than a simple grant

b) Income from financial mechanism, that is what gained through agreement with financial institutions and/or beneficiaries, as illustrated in the annex 1 for various alternative schemes

Item 1

Option 2

Option 3

Option General Director 12000 12000 12000 Experts 19200 9600 Secretary 4800 4800 Running costs 9000 5400 Total 16800 45000 27000


c) Membership, that is the voluntary or statutory annual contribution of the members of the service organisation

d) Project Financing, that is the income generated by the management of projects the service organization implements

e) Service sale, that is the income generated by selling services to institutions, international cooperation, national government, local authorities (i.e. professional management of public services, fairs, international events, etc.)

Table 5: 5 years Financial Plan for the 1st options

Table 6: 5 years Financial Plan for the 2nd option (USD)

Financial Plan for the Option 1: Informal Inter-municipal System Item 1 year 2 year 3 year 4 year 5 year

Income Investment fund 16800 16800 Income from financial mechanism 9000 9000 9000 9000 Membership 0 0 0 Project Financing 0 8000 8000 Service sale 0 0 0 Utility from previous year 0 0 9000 1200 1400 Total 16800 25800 18000 18200 18400

Cost 16800 16800 16800 16800 16800 Balance 0 9000 1200 1400 1600

Financial Plan for the Option 2: Formal organized inter-municipal structure

Item 1 year 2 year 3 year 4 year 5 year Income 1 2 3 4 5 Investment fund 45000 45000 15000 Income from financial mechanism 12000 12000 12000 12000 Membership 0 10000 10000 10000 10000 Project Financing 0 10000 10000 10000 Service sale 0 0 0 4000 2400 Utility from previous year 0 22000 24000 15000 Total 45000 67000 69000 60000 49400 Cost 45000 45000 45000 45000 45000 Balance 0 22000 24000 15000 4400


Table 7: 5 years Financial Plan for the 3rd option (USD)

Financial Plan for the Option 3: Formal organized municipal structure Item 1 year 2 year 3 year 4 year 5 year Investment fund 27000 27000 10000 Income from financial mechanism 12000 12000 12000 12000 Membership

Project Financing 0 6000 6000 10000 Service sale 0 0 0 Utility from previous year 0 12000 13000 4000 Total 27000 39000 40000 31000 26000 Cost 27000 27000 27000 27000 27000 Balance 0 12000 13000 4000 -1000

6. Conclusions

A comprehensive service system or Service HUB for supporting local Economic Development (SHED) in the Dragash area is needed: 1st) because the producers, the population, and the local institutions need to be supported in carrying on their activities, being effective, efficient, and competitive 2nd) because in absence of this system the support is requested and dependent on external resources, either at national or international level, and it is the contrary of a sustainable long term. The efficiency (customers/resource ratio), effectiveness (impact on socio economic development), and sustainability (income-cost ratio) are higher if the territorial dimension is higher. The municipal area of Dragash alone is far from assuring these conditions. In the current situation three options are alternative response for the implementation of the system: A] An informal inter-municipal organization, coordinating different service providers (public and private) and amalgamating them. B] A formal organized structure for providing services at multi-municipal level C] A formal Municipal structure, as first step of a larger inter-municipal organization In order to implement these options an investment is needed between 92,600 USD to 174,000 USD, that include items as

• Design • Training and tools • Legalization • 2 years running costs • Car • Tutoring the start up


This investment can come from the international cooperation, European Union, or even National Government, or a combination of all: For being really self-sustainable, that is one of the condition for the possibility of being permanent (as similar experiences show in Pnud –through the ART program-, and outside, as shown in www.ilsleda.org), it is important the balance of income-costs in the first 5 years. Two assets are crucial: 1) A 2 year contract which assure the start-up sustainability, while the structure

become capable to run alone

2) A financial mechanism for facilitating access to credit or capitalization of enterprises supported by the service system, such as Guarantee Fund or other ones (see annex 1), which assure income to the SHED not dependent on public or international resources..

The countable exercise shows the sustainability is possible, provided the previous two conditions are respected, and in addition the system can count on: a) Capacity of project development and financing (in all the cases)

b) Capacity collecting membership fees, and selling services to customers in the case of the formal inter-municipal structure.


ANNEX A TOOLS FOR GENERATING INCOME FOR THE SERVICE SYSTEM AS LINKED

TO THE ACCESS OF POPULATION TO BUSINESSS CREDIT Four possible credit schemes can be identified in the case of Dragash:

1. USING CURRENT GOVERNMENT GRANT SCHEME 2. USING CURRENT REGULAR CREDIT SCHEME, THROUGH SHARING INTEREST 3. USNG CURRENT CREDIT SCHEME, TROUGH ADDITIONAL CREDIT FOR

SERVICES 4. GRANT FOR REVOLVING/COMMUNITARIAN FUND

1. USING CURRENT GOVERNMENT GRANT SCHEME

The ministry of agriculture has launched a guarantee fund scheme for facilitating access to credit for the agriculture sector, and removing the obstacles for farmers and small entrepreneurs (interest rate, collaterals).

It is an interesting initiative, although so far we don’t know the specific rules.

Anyway, the ILSLEDA experience in this topic teaches

a) The agreement with the bank shall be very clear, for avoiding risks of mismanagement

b) The small farmers and entrepreneurs shall be assisted into the access process, mainly for the definition of the business plan, the assurance of the business feasibility, and the follow up to the entrepreneurs after the loan has been disbursed.

The problem is the need of assuring technical support, while assuring also the sustainability of this support, provided the “customers” are not able to pay for the service.

Furthermore the technical service shall include promotion and information, identification of the most competitive opportunities, building networks and associations, support marketing. Without these cross-cutting activities the attention to the small farmers and entrepreneurs risk to remain without great impact at territorial level, and in the long range.

In order to address the problem, various alternatives could be implemented, as the following ones:

I. The Ministry of Agriculture provides the technical assistance, through qualified personnel settled at least at regional level (two/three technicians per region), in charge on the public budget

II. The Ministry of Agriculture establishes a Fund for contracts with intermediaries for providing the above mentioned services, and assigns them through a bid or through a qualification process.

III. In this last case a Service Hub for Economic development in the Dragash area could be established and provide the needed services.

IV. An agreement with the Ministry of Agriculture could be established for sharing the interests accumulated by the Guarantee Fund capital deposited in the Bank, for compensating the services provided for its implementation.

The problem is that such an HUB does not exist in Dragash and in the neighbor municipalities, and its establishment could follow the recommendations provided in this same document.


2. USING CURRENT REGULAR CREDIT SCHEME, THROUGH SHARING INTEREST

An agreement could be established between the Municipality of Dragash (and possibly other municipalities) with an existing financial institution (including banks) with the double aim of enlarging the client market (farmers and small producers) for the bank, and assuring feasibility to the business plan and capacities of the business management of the correspondent investment.

This agreement shall include the possibility of sharing the interest rate paid by the customer with the service provider, which assures the good result of the scheme.

Larger the number of potential clients, larger it is the interest of the bank. It means the joint effort of neighbor municipalities for realizing scale economies.

3. USING CURRENT CREDIT SCHEME, TROUGH ADDITIONAL CREDIT FOR SERVICES

In this case two different agreements shall be established

i) Service provider (the Dragash Hub)-Bank ii) Service provider- customer

In the first case the bank shall accept a business plan, which includes a component of technical assistance pre and post the loan disbursement, as structural element of the business feasibility.

In the second case the customer shall accept to pay the services provided, this cost be part of the business plan and of the investment, and the correspondent amount go directly to the Service Provider, and repaid through the credit.

This feature could also be applied to the Guarantee Fund scheme, providing added value to the sustainability of the services.

4. GRANT FOR REVOLVING COMMUNITARIAN FUND

A grant could be given to a community association/s (or alternative similar organization/s) representing common interests at territorial or sectoral level, with the aim of facilitating loans to the people involved in it, and repaying the services needed for supporting the borrowers (business plans, feasibility, etc.)

The community organisation decides how to provide the loans and whom to on a revolving criteria base. It could be done through an agreement with a financial institutions (strongly recommended) or via internal signed regulations.

One of the most important rules is the customer shall return an amount which includes:

a) The received loan plus b) The depreciation estimation plus c) The payment of the services provided to the borrower plus d) A risk assurance

These rules assure the long life sustainability of the businesses and of the scheme.

The problem is the absence of such type of reliable organisations in Dragash.

In this case a strong effort should be provided for implementing it or them.


ANEX 3 United Nations Development Programme Conservation of Biodiversity and Sustainable Land Use Management in Dragash/Dragaš

Municipal Development Plan for the Municipality of Dragash/Dragaš 2012 -‐ 2022

FINAL VERSION

Working document, for internal use only

Local Economic Development strategy

EURADA-‐ILS LEDA Maria Elena Zuniga Barrientos -‐ Project Manager

Dragash / Dragaš, Kosovo December 2012


General goals Improve the economic performance of the municipal system, mainly in terms of employment and income for the population, through the valorization of the local resources, their organization on value chains, and upgrade of capacities of being competitive while maintaining a long term sustainable environment, social d gender equity. Objectives

1. Establish solid links between producers and municipality, among the municipal departments (economy, agriculture, education etc.), and between Dragash and neighbor municipalities, and possible cooperation with the national government.

2. Improve the economic performance and competitiveness of endogenous products, with specific reference to the ones with high impact potential on long term development, such as bees, milk, meat, herbs, forest products, forest fruits and mushrooms, and the cultural and tourist system.

3. Establish a mechanism for providing services to entrepreneurs, producers, population, civil society organizations, and public institutions, for assuring a sustainable long term socio-‐economic development.

4. Realise design, implementation, and financial raising for priority infrastructure projects.

5. Realise and implement an effective territorial marketing either for promoting the territorial image at national and international level, and for attracting external resources to be used coherently with shared strategic guidelines.

6. Improve capacities on economic development planning.

Actions

A) Establish links for the economic system A1) Support existing associations of producers and promote new associations in the

economic sectors (beekeepers, breeders, dairies, etc.) A2) Promote Forums of value chains participated by the Associations of producers and

traders with the main functions of • continuously updating the strategic guidelines, • maintaining cohesion and coherence among the producers in the implemention of the strategic plan

A3) Establish a MUNICIPAL FORUM for economic development and planning, including municipality, representatives of the Value Chain Forums, experts, with the task of sharing priorities for the annual and multi-‐annual strategies and plans regarding economic development, and monitoring the implementation.

A4) Establish inter-‐municipal cooperation agreements with neighbor municipalities.

B) Improve the economic performance and competitiveness B1) Improving the performance of the Bees, Forest, Herbs, Meat, Milk value chains

through: B11) improving their productivity, also through introduction of innovations and

new production techniques. B12) exploiting all the local economic potential, through introducing new

businesses for diversifying the products


B13) improving marketing strategies for increasing sales at local, national, and at least regional (Balkans) level.

B2) For the Textile and Clothes value chain:

B21) stimulate creation of enterprises for valorizing the current know how and its competitive potential, also through reinforcing and disseminating capacities B22) elaborate detailed strategic guidelines.

B3) Improve the economic and social impact of the tourist resources of Dragash through the institution of a Local Tourist System, based on the valorization of main attractors, such as environment, bio-‐diversity, hospitality, services, local productions, and culture. .

C) Establish a mechanism for providing services for Local Economic Development C1) Establish a mechanism for the delivery of comprehensive services for economic

development, with priority to economic animation (stimulation of local actors towards the valorization of the local resources, stimulation and support of local networks and associations, provision of information; access to finance (for capitalizing the local businesses, without penalty for the local people); technical assistance (assistance to the preparation of business plans for accessing to bank and finance, for improving productivity and competitiveness, commercialization, animal sanitation, quality control), vocational training, project Development; Support to innovation (improving capacities for identifying and supporting the transfer of technologies, as well as innovative practices available in Kosovo or internationally and favoring transfer/adaptation).

C2) This system shall be self-‐sustainable, and include existing services and new needed ones. It shall also include a partnership management board (with representatives of the local partners), and a skilled technical structure.

C3) Assure a sustainable start-‐up period to the system, through financing the first two years operations, and the elaboration of the five years financial plan.

C4) Establish a financial mechanism, as a Guarantee Fund, for facilitating access to finance for entrepreneurs, population, and producers with difficulty of being covered by bank credits

C5) Improve capacities of the management board and technical structure

D) Realise design, implementation, and financial raising for priority infrastructure projects The following projects have the priority:

D1) Fair and special event space D2) Waste management D3) Laboratories for quality control D4) Tourism info center D5) Capacity building or forming skills needed by value chain development

E) Realise and implement an effective territorial marketing E1) Define the municipal socio-‐economic personality, through identifying and

synthetizing the main characteristics as far as the tangible and intangible territorial parts, i.e. geographic position and morphological character, social and


relational capital level, productive sector and market’s characteristics, intensity of economic and cultural external exchanges, cultural heritage, spirit of the place, social and civic values system, services system, infrastructure, and level of knowledge for social economic development

E2) Define the image the local actor want to provide within and outside of the territory, possibly sharing it with the neighbor municipalities, and establish the correspondent icon-‐logos

E3) Define the communication instruments for better disseminating the profile and the image of the territory, either for promoting the territory, marketing its product-‐resources, attracting external resources, starting from the Balkan region and Europe.

E4) Improve skills in communication and information technology, through an university agreement for an educational program on the issue

F) Improve capacities on economic development planning F1) Realise a university diplomat or specialized 180 hours course on Local Economic

Development Strategies and Planning, with the aim of disseminating capacities of civil servants and civil society. The first course is for training trainers at university and governmental level, with the participation of representatives of the civil society, with the aim of experimenting a course, that could be replicated. It will have modules, articulated as it follows:

• Module 1: Territorial Economic Development (TED) and Globalization (10 hours)

• Module 2: Territorial development strategies: tools for analysis, mapping, and strategic framework (45 hours)

• Module 3: Governance for Territorial Economic Development (25 hours) • Module 4: Local economic development planning (30 hours days) • Module 5: Services for economic development (40 hours) • Module 6. Territorial Marketing (30 hours)

Further Planning

• Governance: Next year development plan, through the established MUNICIPAL FORUM, and establishment of the evaluation and monitoring system

• Competitiveness: -‐ Plan of the implementation of the Strategic Guidelines (by value chain), -‐ Plan of the action-‐research, in order to continuously update the Survey of the Resources and consequently update the Strategic Guidelines of I and further levels (integrated strategies)

-‐ Provide Quality (ISO), Food safety (HACCP), Organicity and Halal certification • Services: Strengthen the support to territorial international trade and innovation • Territorial Marketing: Establishment of a territorial brand, and international

positioning at least at regional and European level.

Responsibility / Institutional Framework

• Municipality of Dragash have the institutional task and responsibility of endorsing


the plan, and coordinating it, in harmony with the institutions which constitute the Forum, and the national government. The municipality should also facilitate the establishment of a comprehensive system of support services, possibly in collaboration with neighbor municipalities.

• The Dragash Economic Development Forum (DEDeF), constituted by the Municipality and the representatives of the productive sector and civil society, with the task of identifying the objectives and priority of development, and monitoring

• The value chains forums, with the task of facilitating common actions among the actors, who participate, and represent them in the DEDeF

• The National Government (Ministries of Agriculture, Forest, Tourism, Economy), with the responsibility of coordinating actions with the municipalities

• The private sector as major driving force of the economy, as it is represented through the sectoral associations

Justification The municipality of Dragash can be typified, according to the Euroepan Union Leader approach, as an area with biodiversity, which has some differentiation, potential of cultural natural tourism attraction, as well as a border area, but with problems in maintaining and valorizing its human and natural heritage, problems of productivity and competitiveness, unemployment, poverty, and emigration. In general the available strategic options for different types of areas are as it follows: • complementary strategies in territories that already have good level of competitiveness; • integration and critical mass strategies, in very fragmented territories, with no tradition or culture of collaboration, weakened by the absence of coordination instruments;

• diversification and consolidation strategies in areas with negative trend in competitiveness (mature sectors with comparative factors rather than competitive advantage);

• recovery and re-‐valorization strategies in areas where resources and traditional skills are going to disappear but with competitive potential;

• rebalancing strategies in areas where development is concentrated in one part of the area, while in other parts there is a situation of decline;

• backup and spread and animation strategies in areas suffering from intense rural exodus or isolation, where there is a strong trend in abandoning the agriculture and/or closing the remaining businesses, and a need for utilizing creativeness strategies.

In the case of Dragash the optimal strategy is a combination of the integration strategy with the animation strategy, through the realization of economies of scale and purpose (value chains), creation of links between the actors and institutions at municipal level and also with other municipalities, and promoting collective action and an intense animation and technical assistance. The aim is to introduce new dynamism, through the restoration of confidence of local


populations in the value of resources and in their capacity for action, innovation, and creativeness. The spread animation designates large territorial actions aimed at to enhance ideas and innovative projects, and provide a recognizable and effective image of Dragash and Kosovo territories, to reduce dependence on external changes and introduce strong elements of competitiveness, in terms of expertise in niche markets, diversification and production differentiation, increased productivity and quality. This strategy has to be backed by complementary approaches to succeed in the long run, and they combine: • the participatory approach, through the involvement in the decision making process of the public and social actors

• the focus on human development and the MDGs: it assumes that "the basic objective of development is to enhance human freedoms in a process that can expand personal skills, all while expanding the options available for people to live a full and creative life.In particular the Millennium Development Goals is referred to live a long and healthy life, education, access to resources needed for a decent standard of living and to participate in social, economic and political life of the community.

• the reduction of inequality and exclusion that aims to a better allocation of resources, taking into account in particular the situation of social exclusion of different populations.

• the reduction of the gender inequality: it involves breaking the gaps between women and men, showing the different effects of conflict on different sectors of the population, and the denial of choices and freedoms of women as subjects of rights and citizenship, and ensuring affirmative action by women (for their interests and needs) as well as other vulnerable populations.

• the protection of the environment, biodiversity, and cultural heritage, that are necessary to ensure the welfare of current and future population and resources development assets.

Available resources and competitive advantages The municipal potential for competitive and sustainable economic development consists in various resources, once adequately valorized and networked, such as bees, herbs, forest products, livestock (milk and meat), textile, culture, and tourism. In general their competitive advantage consist in intrinsic environmental sustainability, the good chances of high production through farming, due to their intrinsic characteristics of the local germplasms; in the good chances of obtaining varieties of product, due to the existence of many extended and not degraded gathering/farming areas belonging to several different ecosystem; the recognizable prestige of the products, because the Šar region is generally recognized as an area characterized by a significant level of biodiversity; the high level of healthiness and quality of many local products; the geographical position in the boarder of two countries. Specific added value for each value chains are also present.


Services for supporting economic development are very scarce, with some exception in the municipal agriculture and tourism department. A LAG (Local Action Group) exists , but it is really not functioning. It consists of only one person doing some projects on voluntary base. On the paper it is constituted by 25 members, but they are individuals and not representatives of civil society organisations. It is depending on the municipality, although the municipal department is not really supporting it. It has elaborated and realized some small projects, but its task is far from supporting the economic and rural development Obstacles The main obstacles consist in Ø the small production scale, due to the little number of residents, entrepreneurs, and producers, and to the productive possible production volumes; and the difficulty of organizing appropriate services

Ø the scarce knowledge of the ecosystems Ø the lack of adequate technical skills Ø the lack of adequate equipment Ø the low quality of territorial relational capital Ø the lack of enterprise organization Ø the bad quality of the internal relationships Ø the lack of external relationships (whit other value chains) Ø the lack of market knowledge Ø the low level of certification (ISO, HACCP, Organicity, Halal) of the products Ø the lack of an integrated Waste Management System Ø the lack of an integrated Water Management System Ø the lack of services for improving the local economic performance.

The above mentioned economic development strategy is aimed to reduce the obstacles to the full valorization of the local endogenous resources, as mean for achieving the economic development objectives of improving employment and income for the population, and upgrading the capacities of being competitive while maintaining a long term sustainable environment, social and gender equity. The strategic 4 steps for achieving these objectives are illustrated In the following picture and guide the presented strategic plan of actions.

① Improve capacities of local producers and their organizations

④

Position the local products in the proper niche markets, also through territorial

brand

② Link the local producers with correspondent ones in neighbor municipalities

④

Position the local products in the proper niche markets, also through territorial

brand ③ Establish a mechanism for providing effective and efficient services for economic development in a proper scale

① Improve capacities of local producers and their organizations

Report Mission Kosovo Canzanelli-May 2013 · Dragash municipality’s resources for the...

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