USAID Serbia Cooperation for Growth Project Quarterly Progress Report: Quarter 4, FY 2019

The project has two primary objectives: reducing the time and costs required for SMEs to comply with business regulations, and stimulating SME growth by expanding access to a greater variety of financial instruments. To achieve these objectives, the project promotes greater interaction and cooperation among stakeholders, including the government, business, and civil society. The project supports SME growth by assisting business environment reforms that increase SMEs' competitiveness and stimulating the creation and use of financial products that meet SMEs' needs for finance to grow. Many of the project's activities align with the Government of Serbia's digitalization agenda, which aims to increase e-government solutions and digital transformation of the private sector. The project works with various government ministries, including the Ministry of Trade, Tourism, and Telecommunications, the Ministry of Agriculture, and the Ministry of Finance, to draft and implement laws and regulations that support the digital economy. During the fourth quarter of FY 2019, the CFG team completed several important tasks, including the release of the eighth annual Survey of 1,000 businesses. The survey results showed that 74% of businesses believe that the public administration is more efficient than a year ago, and 58% of companies stated that the burden of laws and regulations was reduced. The team also finalized the comprehensive Baseline Study on e-commerce in Serbia, including regulatory framework analysis, best practice analysis, and recommendations. The project has made significant progress in supporting SME growth and improving the business enabling environment in Serbia. The team has worked with the Ministry of Finance to draft and implement key tax regulatory reforms, including the adoption of the Alternative Investment Funds Law. The project has also assisted investment-ready SMEs to promote their business plans to private equity funds, leading to €7 million of additional financing. Furthermore, the project has helped participating SMEs to go through the bank loan application process, resulting in €10.5 million of new debt disbursed to the first of four groups of companies. The project's activities have been well-received by the government and the private sector, with notable survey results indicating that 64% of companies agree that the possibility of impacting the regulations and reforms has risen. The project's work with the Ministry of Trade, Tourism, and Telecommunications has led to the adoption of the new Law on Trade and Amendments to the Law on Electronic Trade. The project has also proposed and agreed with agricultural inspections a self-inspection based policy for the retail sector to be linked to the E-inspector system. Overall, the USAID Serbia Cooperation for Growth Project has made significant progress in improving the business enabling environment and supporting SME growth in Serbia. The project's activities have been well-received by the government and the private sector, and its impact is expected to be sustained in the coming years.