Montenegro

Limiting the impact of economic crisis in the Northern Montenegro

Mojkovac, 24 November 2009

With the purpose to mitigate the negative impact of the economic crisis in the north of Montenegro, the representatives of the UNDP office Montenegro signed a Memorandum of Understanding with representatives of the northern municipalities: Mojkovac, Pljevlja, Plužine, Šavnik and Žabljak on cooperation and partnership in the area of improving the economic environment in the north through the program “Limiting the impact of economic crisis”.

One of the main goals of the program will be contributing to development of sustainable and prosperous communities in the north, where individuals can create and take up employment and business opportunities with an emphasis on “green sustainable development of entrepreneurship”. The aim is to strengthen commitment of local governments in the provision of social benefits through efficient and sustainable management of natural resources, as well as improving the capacity of local communities and support to their sustainable future.

The agreement on the program “Limiting the impact of economic crisis” should also help in building economic partnerships among communities and local governments, from training to employment including flexible education and training services prior to employment, monitoring the development of business and technical support in the business, improving skills and knowledge, opportunities for employment in other industries.

The agreement was signed by UN Resident Coordinator and UNDP Resident Representative to Montenegro Mr. Alexander Avanessov, Mayor of Mojkovac Mr. Miladin Brko Mitrović, Mayor of Pljevlja Dr. Filip Vuković, Administrator of the Municipality Plužine Mr. Vladimir Knezević and Deputy Mayor of Žabljak Mr. Vasilije Jakšić.

“What I can say right now is that UNDP already started with the grant program ‘From idea to the successful business’ within our $300,000 worth Anti-crisis project. All currently unemployed citizens from the five municipalities are eligible to apply with innovative business ideas. The best proposed business plans will get our technical, as well as financial support. So far we have had over 40 applications with existing new business ideas and opportunities,” said Mr. Avanessov, UN Resident Coordinator and UNDP Resident Representative to Montenegro. “Development of small, medium and micro enterprises is the solution for increasing jobs and incomes, retaining the capable and intelligent young workforce, improving the overall national economic picture, and exploring immense potential for renewable energy, tourism, agriculture and a number of other areas where Montenegro as a country has been endowed with great potential. In close cooperation with the Government Directorate for SMEs and Business Center Bar, today we launch the program that will demonstrate how we all can work together to help growth of new small, medium and micro enterprises that will achieve just these goals - create new jobs, stimulate national product - all in face of the continuing crisis. We hope that through supporting the communities in the north to more effectively and sustainably engage in activities that they have been doing for many years - fisheries, food production, wood works, sustainable/carbon-neutral accommodation development - we will jointly bring the north of Montenegro to the forefront of sustainable economic development, prosperity and high quality of life,” Mr. Avanessov pointed out.

Representatives of the five municipalities presented briefly the economic and other issues in their areas and expressed gratitude for the initiative launched by UNDP for reducing overall poverty.

Mayor of Mojkovac, Mr. Miladin Mitrović hopes that the agreement will help in raising the level of interest of citizens in five municipalities for the development of small and medium business and handicrafts, in the period of two years of the program.

Mr. Filip Vuković, Mayor of the Municipality Pljevlja has supported the efforts of UNDP and stressed that the north of Montenegro had become synonymous with backwardness, poverty and neglect. “An impetus for small and medium enterprises should be providing of a market for their products,” Mayor Vuković underlined, and he stressed that agriculture is a development opportunity for the north, particularly in the Pljevlja Municipality with its forestry, mineral and other resources. “Even when such natural resources exist, the unemployment is around 15 percent - which makes it 50 percent higher than the average in the country. The inhabitants of Pljevlja have experience and knowledge, and the question is why is the picture so bleak,” Mayor Vuković said.

Deputy Mayor of Žabljak Mr. Vasilije Jakšić said that tourism is the dominant industry in that mountainous municipality, and the biggest help will be the road Risan - Žabljak. That motorway will represent a ‘window to the world’ for the Durmitor region,” said Deputy Mayor Jakšić.

“Every project that creates a job in Plužine, or makes a family stay, is welcome,” said Administrator of the Municipality Plužine Mr. Vladimir Knežević.

*      *      *

Small and medium enterprises have the biggest chance to survive the economic crisis because they are more flexible comparing to big systems and they are not dependent on big capital. Therefore, SMEs are a backbone of the economic system in so far that in the worst of times they have been found to be the most reliable and resilient in terms of outputs and jobs.

According to national statistics, in the five municipalities on the North (Šavnik, Žabljak, Plužine, Mojkovac and Pljevlja) there are around 800 SMEs which employ more than 5,000 people, and they contribute significantly to the local economic development. In Montenegro, the total number of SMEs goes over 40,000. However, more than 50% of these companies are in trade area, and much smaller percentage produce something. 

While there is more than 500 thousand hectares of land ready for cultivation, Montenegro spends around 300,000 EUR on food imports. 

Montenegro, especially in the times of crisis, would need to turn to utilizing its natural potentials for clean energy production, continuation of development of high end tourism especially in and around protected areas, and natural and organic food production where there is great potential that ought to be streamlined toward national production that results in national jobs, incomes and taxes as well as a smaller national carbon footprint as less goods are imported. If we put this in a global context, large number of agriculture products: fresh fruits and vegetables, eggs and animals origin products will be consumed locally. That means that these products cannot be transported on long distances and those products can be offered fresh on table, which is essentially the requirement of consumers. There lays the chance of Montenegrin tourism and agriculture. Situation globally is being changed more and more, so the small agricultural systems have their own chance, not only in satisfying the local consumers and tourist through the tourism industry but also exporting those.

The best supporting indicator of this is the product which price increased significantly globally – milk and milk products/derivates. This is the chance for domestic production. Trade and tourism are more focused now toward domestic production, especially because of promotion but also because of tourist demand – the best and the most in demand product is locally produced product. Out of total milk production in Montenegro only 20% is bought by the milk processing factories, because of insufficient infrastructure connection of katuns and villages. Additionally, global economic crises widened the problems with which population is struggling on daily basis.

Partners in the program  “Limiting the impact of economic crisis” recognized that increasing the capacity of communities and organizations to effectively engage in local partnerships and sustainable management of natural resources is integral to the success of this Memorandum of Understanding, including through:

• Strengthening community governance and organizations;
• Enhancing the participation of the Parties and partners; and
• Contributing to effective regional planning and its application.

This initiative is the beginning - a beginning through which UNDP hopes to see new entrepreneurs established and from which we hope to learn lessons that will be applied in future programs that UNDP will launch with our partner municipalities from the north. Hopefully the the second round of ‘From idea to successful business’ SME support program will be launched during the middle of next year. In addition, UNDP will launch a grant scheme worth over $200,000 for supporting the growth of Climate-Resilient Communities and SMEs around areas where small hydro power plants will be constructed. Finally, UNDP will launch a grant scheme for supporting biodiversity-friendly and ‘green’ SMEs in and around protected areas - in the first round of this program that is worth over $200,000, we will focus on the Komovi region. In 2008, international tourist arrivals globally grew by 2% to reach 922 million, while 16 billion arrivals are projected for 2020. This activity generated over €642 billion. The highest paying tourists demand clean air and water and unique natural beauty coupled with distinct local experience through food, tradition and artifacts - Montenegro is ideally placed to capture a substantive part of this €642 billion a year market. 

*      *      *
About the program “Limiting the impact of economic crisis”

In order to achieve positive socio-economic results in these communities, the program will be realized through a strong partnership between the United Nations Development Programme and 5 municipalities in the North: Mojkovac, Pljevlja, Plužine, Šavnik and Žabljak, on a local or regional basis in:

• Enhancing related economic activities through supported pathways from technical assistance and expertise to employment and enterprise development; and
• Contributing to positive socio-economic outcomes in these communities through mutual activities:
• UNDP’s commitment to addressing economic development through the Limiting Economic Crisis Impact Programme, aimed at mitigating the negative impacts of the crisis through focus on ‘green,’ sustainable enterprise development;
• the Local Government’s commitment to ensuring societal benefit through the effective and sustainable management of natural resources; and
• a shared UNDP’s and Local Governments’ commitment to work with local communities and organizations to enhance community capacity and support a sustainable future.

 

Scope

Through stronger engagement by the partners, this program will build sustainable partnerships between communities, local governments and economy in general in one or both of the following:

• Employment:
  – pathways from training to employment;
  – flexible provision of pre-employment education and training services, mentoring and retention support;
  – career development; and
  – employment opportunities in other industries.
• Enterprise Development:
  – identifying business opportunities and building business capacity in various industires, related services and their respective supply chains;
  – building business capacity in government service delivery; and
  – partnering to support business development.