ACDI/VOCA Spurs Private Sector Development in Serbia

A recent survey examining the success of its USAID-funded Community Revitalization through Democratic Action (CRDA) project in Serbia found significant impact, with business owners indicating satisfaction with what they have achieved and optimism about further business success. CRDA’s grant project, which focused on developing private sector enterprises, targeted marginal groups who traditionally hold unfavorable positions in the labor market—women, refugees, long-term unemployed persons and those unemployed older than 35—in order to help these vulnerable groups develop enterprises. Along with reducing unemployment, the project aimed to transfer businesses from the gray economy to legal operations. Registered private sector development in Serbia has been hampered in recent years by the country’s recovery from political instability and turmoil. Unemployment is one of the most important problems faced by Serbia, with 28 percent of its population unemployed as of November 2006.

In the survey, ACDI/VOCA asked 469 CRDA-grantee business owners to evaluate the program, their own business, changes in their financial status and possibilities for entrepreneurship development. The CRDA self-employment grants covered 12 central Serbian municipalities: Kragujevac, Kraljevo, Čačak, Jagodina, Smederevo, Smederevska Palanka, Svilajnac, Aranđelovac, Rača, Lapovo, Batočina and Knić. The survey’s results revealed a high level of perception of success in the CRDA’s implementation and effects: the owners were satisfied with what they had achieved at the time of the survey and were very optimistic regarding their business success. The survey shows that 80 percent of grantees plan to expand capacities and 75 percent plan to employ more people. Overall, more than 90 percent of business owners who started up their businesses and still run them through the CRDA program were satisfied with what they have achieved.

In spite of some limiting project factors, including unfavorable regulatory conditions for small enterprise development and a short evaluation timeframe, the survey showed that CRDA’s efforts have had a significant impact in developing private sector enterprise. The program had 976 beneficiaries who received grants averaging $2,800 to start private businesses, which have to date employed 1,520 workers. This includes vulnerable target groups—women, refugees, displaced persons and long-term unemployed—who were most exposed to the risks of poverty. The opening of these vulnerable groups’ businesses has been significant in terms of improving the quality of life for themselves and their families. The survey results (subjective assessment of economic status, level of satisfying needs, etc.) show that the economic status and quality of life of business owners and their families has significantly improved in the period after the grant award. Comparison of the average earnings and incomes of the participants to other Serbians shows that most of them have a higher income than average. This confirms the assumption that self-employment and start-up of private business positively influence the quality of life of entrepreneurs and their family.

ACDI/VOCA’s CRDA program was a five-year $40 million initiative to develop democratic mechanisms that promote community involvement in identifying and addressing economic and social needs in central Serbia. ACDI/VOCA and its partners created and strengthened community boards to design and implement local development projects. CRDA projects encouraged and facilitated effective citizen participation in decision making while strengthening linkages across communities and promoting reconciliation among different ethnic and religious groups. To date, CRDA has completed almost 900 projects, disbursed $54 million in community grants and raised $12 million in community contributions. The program operated in all of central Serbia’s 22 municipalities through 77 community boards and involved the design, implementation and monitoring of projects that revitalize essential infrastructure, create income-generating opportunities and address critical environmental and social problems. Over 350 women and 49 refugees were part of the 900 directly elected board members who are active in project identification, design and selection. There were 1,300 working groups staffed by over 7,000 volunteers.