Quarterly Report #2: USAID Kosovo Compete Activity

The purpose of the Activity is to promote resilient, self-sustaining market systems and facilitate the private sector's improved competitiveness in local, regional, and global markets. The Activity utilizes a market system approach aligned with USAID's Private Sector Engagement Policy and focuses on three key export-oriented sectors: Information and Communications Technologies (ICT), Wood Processing, and Food Processing. The Activity aims to strengthen market systems to increase sector competitiveness and make market actors within those systems more productive and competitive. Successful implementation of a market system development (MSD) approach requires a thorough initial understanding of how the sector functions, its underlying power structures and incentives, and ongoing situational awareness and adaptation to adjust to changes in the marketplace. The engagement of private sector stakeholders, particularly firms who are leaders for their respective products and services, is also critical. During the second quarter, the Compete team focused on tasks and activities following the initial workplan of the Activity. After the approval of the Market Systems and Constraints Analyses, the team started developing sector action plans by identifying areas of interventions based on pre-identified constraints. These interventions were formulated with the market systems and development approach, and the sector action planning process was done in close cooperation and discussions with external partners on the feasibility of key interventions. The team also worked on updating sector assessments by collecting additional data. On November 20, 2020, Compete participated and supported the two-day event "Diaspora Flet" organized by GERMIN, where the Compete Chief of Party and Sector Leads led a panel session on the topic of "Local Investments and Market Linkages." The Sector Action Plans laid the foundation for developing comprehensive assessments of the market system of each of the Activity's focus sectors. Specifically, during the period September – December 2020, the team identified system-level constraints in the market systems of the wood processing, ICT, and food processing sectors. The results of the analysis were captured in the Market System Constraints Analysis (MSCA) assessment submitted in November 2020 and subsequently finalized in December 2020. The common constraints identified across the three sectors include Limited Market Access, Limited Diversified Finance, Limited Business Sophistication, and Limited Skills Development. These constraints affect all three market systems and hinder their growth. The Activity aims to address these constraints through various interventions, including the development of sector action plans, updating sector assessments, and engaging private sector stakeholders. The Activity's focus on addressing common constraints across the three sectors is critical to achieving its goals of strengthening market systems and making market actors more productive and competitive. By working to alleviate these constraints, the Activity aims to stimulate private sector engagement and promote systemic change in the market systems of the three focus sectors.