Challenge

Following the 1999 NATO intervention in Kosovo, the immediate challenge was to address the humanitarian needs of the hundreds of thousands of Kosovars displaced during the conflict and then build the institutional and human capacity needed to create a modern and fully functional state.  Kosovo declared its independence in February 2008; followed by four years of internationally “supervised independence” which ended in September 2012.  The current challenge for Europe’s newest country is to build the capacity of its governing institutions, enabling it to integrate into Western European and Trans-Atlantic structures, while at the same time ensuring the protection and integration of minorities, particularly Kosovo Serbs.

Effective and transparent governance firmly rooted in the principle of the rule of law and supportive of a robust private sector is key to addressing pressing problems of the next decade: economic growth to create jobs for a burgeoning youth population facing an estimated 45% unemployment rate; a citizenry becoming confident in the fairness and responsiveness of its institutions despite current perceptions of ineffectiveness and corruption; and full participation in the economic, political and social life of Kosovo by all its citizenry despite reluctance by minorities, particularly Kosovo Serbs, to engage with Kosovo institutions.

Response

USAID has been working in partnership with Kosovars since 1999. The first years of the partnership included addressing immediate post-conflict humanitarian needs and emphasized the construction and rehabilitation of basic infrastructure, including roads, schools, community health centers, and water and sanitation systems.  On the institutional side, USAID initially embedded technical staff at every level of key Kosovo institutions building organizational and human capacity from the ground up.

Over the 14 years of USAID’s development assistance in Kosovo, the programs have shifted and matured to address the changing needs of a growing country.  While the major work to establish key governance institutions has successfully concluded, USAID continues to provide technical advice in a few key areas including in financial policy, judicial strengthening, and energy.  A major focus continues on programs aimed at increasing economic opportunities and decreasing the impediments to private sector development, as well as programs that promote reconciliation and participation among all ethnicities in Kosovo.

Results

Kosovo is now an independent country working towards European integration. New government institutions and the foundations of a judicial system have been crafted with major assistance from USAID and other donors. Now USAID has transitioned from starting up economic ministries and independent agencies to enhancing the ability of these public organizations to manage the overall economy.

To date, USAID been instrumental in establishing core functions of the Ministry of Finance and Economy; installing modern budget and treasury processes; establishing a tax administration that has collected over €1 billion in taxes to date; creating a core legal framework for a functioning market economy; helping to establish a Central Bank and a rapidly growing banking sector with 6 licensed banks; assisting in the privatization of 90% of socially-owned enterprises; and implementing a Property Tax which contributes to about 30% of municipal own-source revenues.

Since 1999, USAID has worked to develop the private sector with the aim of increasing sales and employment for the long-term growth of local enterprises; reducing reliance on imports; and developing an improved business operating environment.

Over the last four years, USAID’s initiatives contributed to 6,676 new full-time jobs, increases in the value of sales of €141 million, capital investment of €41 million, and financing of €22 million. USAID continues to be involved in private sector development activities in selected sectors for which there is growth potential. Efforts are underway to assist enterprises to enter new markets, develop new products and processes, and advance labor skills and productivity.

USAID is proud of its contribution to Kosovo’s accomplishments over the past 14 years. Kosovo is becoming increasingly stable as the Kosovo Government reaches out, with USAID support, to minorities to build their confidence in a prosperous and secure future in Kosovo.