“Leaving Kosovo – When all the ‘good people’ have left, then what?”

The last week was full of media reports on the massive exodus of people from Kosovo. The Telegraph, a British newspaper, reported that up to 20.000 are leaving the Balkan country of 1.8 million every month. The Associated Press reported that since September 2014, a total of 25.000 Kosovars have crossed illegally into Hungary and the EU. According to the media the drive to leave Kosovo is caused by unemployment, corruption and political instability. The Usual Suspects in order words.

Yes, the fact that people are leaving Kosovo cannot come as a surprise to anybody. People have been leaving for quite some time. Highly educated Kosovars are closing shop and moving out finding useful employment in their professions in far away countries like Sweden and Canada. Others are making full use of their double citizenships and moving ‘home’. Others are waiting in line for Schengen visas. Others, as we have seen in recent months, are walking through wintery woods into the EU, illegally crossing the border into Hungary.

The hope of a better future in Kosovo appears to be fading for a large portion of the Kosovo population, and when everything else fails, people are now voting with their feet. Who can blame them?

Kosovo, in the winter months of 2015 seems to be suffering from a societal multiple sclerosis caused by widespread corruption, democratic deficit, no real private sector and donor agency fatigue.

Corruption is not only about the unlawful distribution of public money to a small but powerful elite. More importantly it is the selfish practices of people that destroys the system from within through dishonesty and favoritism. This process of gutting out and distorting the essential components of a functioning societal system capable of delivering well-being to people (transparency, dignity, commitment, hard work) is made even worse in Kosovo’s case where the destruction is taking place at the same time as the system is supposedly being built anew.

Corruption is everywhere in people’s daily lives in Kosovo, as it is in most other Balkan countries. But this is not the cultural oil that makes the machines of society run smoothly, rather corruption is a million little wooden sticks pushed into ordinary citizens’ wheels of aspirations for a better life. For example, corruption is about bending the rules for entering university education creating an excessive pool of hopeful university graduates, and pushing them into markets that do not exist. Or as the cynical joke goes: “Why the coffee in Pristina is the best in the world? Because it’s made by Master’s degree graduates!”.

So, why the chronically high unemployment rates in Kosovo? Well, it’s rather quite simple. The quick fix solution, when state institutions and administration (the public sector) employ more people is not financially sustainable. There is simply not enough money in the public budget to further expand the public administration, let alone increase their salaries. As in the rest of the world, Kosovo must instead rely on the private sector, on its own entrepreneurs and companies, to generate the jobs. Unfortunately, the private sector in Kosovo today is very small (According to Kosovo Tax Administration there are only 46,000 active companies, out of which 95% have less than 10 employees), fragile and incapable of generating the necessary number of jobs to make even the smallest dent in the unemployment data. Why not?

Again it is quite simple. In order to employ more people Kosovo companies must first sell more products/services and generate more income. In other words, we need growing companies to reduce unemployment. Most Kosovo companies are trading companies (mom and pap shops) operating on a saturated, small local market, and as a result they don’t sell very much. They survive at best. So in line with other small countries around the world, for companies to grow they must pursue international markets. That’s the simple market logic, and there is no way around it. Sell more, expand production to satisfy growing demand, and employ more people. However, export is not an option for trading companies but for the manufacturing industries, which at the moment make up a mere 10% of all companies in Kosovo. Also, export means higher volumes. In many cases, Kosovo manufacturers are simply too small to be of interest to international buyers.

At the moment, Kosovo companies are not producing goods and services that the Kosovo population is willing to pay for, let alone customers on international markets. Kosovo made products cannot compete with international products on price, quality, design, packaging, quantities, terms of payment – you name it. If they could, the shelves at Viva Fresh, Albi, Meridian, ETC, and other supermarkets would be full of Kosovo made products, not imported goods, and Kosovo would not suffer a 2 billion plus annual trade deficit. Crystal clear and for everybody to see every time we go shopping!

So how to change course and defeat unemployment in Kosovo? Easy! Think jobs first and only! Think in which international supply chains a large number of jobs can be generated relatively quickly. One example – Think apparel (the sewing of clothing)! Currently it is estimated that the textile industry in Kosovo employs a mere 3.000 persons. This is not in line with other countries in the region. The apparel sector in Macedonia employs more than 50.000 persons, while in Albania and Bulgaria as many as 100.000 people are employed in the textile sector. Can you think of any other sector with that kind of real employment potential? I can not.

Yet, the donor agencies in Kosovo continue to beat around the bush. Rounds upon rounds of institution-building and capacity-building projects have been implemented, yet there appear to be no real traction for change and no real socio-economic improvements. People can sense this lack of progress, and that’s another reason they are leaving. The old development models and methods are simply not delivering the expected development impact in Kosovo. Donor funded projects are winning the battles, according to their own reporting at least, yet Kosovo appears to be losing the war against unemployment and poverty. Unemployment remains very high, over 30% and even higher among youth and people living in rural areas. The number of people living in poverty and even extreme poverty is not declining. After 15 years of almost unlimited financial and technical support to Kosovo and its infant institutions, donor fatigue appears to be kicking in. At the same time, the competition on the international donor funded development market is intensifying, pulling the geopolitical priorities of the EU and the USA towards Ukraine, the Eastern Neighbourhood and the Middle East/North Africa, and away from the Balkans.

Finally, and perhaps as a consequence of the three other factors contributing to the exodus of Kosovo citizens, Kosovo is now experiencing a period of political instability, characterized by a polarization of society, extreme inequality, a sense of uncertainty and public demonstrations. People are clearly losing hope. The inability of the political elite to deliver on their election promises of more jobs and a better life in Kosovo, will only confirm the citizens’ decision to leave the country as the only viable option. And when all the good people are gone, what kind of society will they leave behind?

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About Jakob Modéer

22 years of corporate and international investor experience as well as private sector development project management, consultancy in private sector policy and business advisory services, and direct consultancy to companies in South East Europe (and now a blogger on socio-economic issues)
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