THE CHALLENGE

Over the past several years Macedonia has introduced a number of economic reforms that have improved the country’s standing in global economic rankings. However, these reforms have not improved key economic indicators such as growth, jobs, and income, due to the frequency of the changes and the lack of consultative processes. Prior to the Eurozone financial crisis, GDP growth in Macedonia was half of its Balkan neighbors. In 2016, weak economic policy and political crisis contributed to a GDP growth rate of 2.4 percent, weak domestic consumption remains weak as incomes stagnate. While the unemployment rate fell to 23.1 percent, most new jobs are created with government subsidies. Entrepreneurship and workforce skills are not keeping pace with the evolving market which further inhibits growth. Although Macedonia is attracting foreign investments to its Technological and Industrial Development Zones, the overall investment level outside these zones remains low and private sector lending is not meeting demand.

PROJECT AREAS

Microenterprise and Private Sector
In Macedonia, USAID focuses on improving the competitiveness of micro, small, and medium-sized enterprises that have the potential for growth and job creation. Activities in this area include:

• Providing tailored solutions (business training, technical assistance and networking opportunities) to up to 360 small enterprises that best address specific needs and enhance their probability for success.
• Supporting creation of new start-ups through acceleration programs, provision of co-working space, and access to funding from business angels.
• Establishment of a Micro Investment Fund that provides mezzanine investments for micro and small enterprises with growth potential.
• Supporting micro and small businesses throughout Macedonia to improve their compliance with legal requirements.
• Working with business organizations to engage in a constructive dialogue on streamlining regulation.

Development Credit and Access to Finance

Three Development Credit Authority (DCA) facilities provide access to working and investment capital to companies that want to expand their operations and/or market opportunities. These are loan portfolio guarantee programs through which USAID provides a 50 percent guarantee of the loan amount, thus sharing the risk with partner banks. One of these loan guarantee facilities supports microenterprises, another focuses on agriculture development, and the third supports the capitalization of SME investment funds that target high growth and the job creation sectors of local economies.

The Microfinance Inclusion and Innovation Project is increasing access to finance and is tailored to the needs of low income households, entrepreneurs, and micro and small enterprises. Providing easier access to finance to these groups will provide an opportunity for creation of new jobs, which will lead to economic growth and poverty reduction.

Economic Policy

USAID also focuses on improving the business policy and investment climate by strengthening the capacity of key economic ministries and agencies within the Government of Macedonia (GOM) to develop and implement economic development policies and programs.

USAID is partnering with local civil society organizations to conduct a broad consultative process for revamping the Public Procurement Law. Specific recommendations are based on EU requirements, experiences from neighboring countries; and input from the contracting authorities, microenterprises, business chambers, and public procurement exports.

USAID is modernizing the Inspection Authorities to introduce a modern, business friendly, and predictable inspection system that will seek to enhance efficiency, and voluntary compliance by implementing best practices and principles into the inspection process.

Energy Efficiency and Clean Technology

USAID supports the GOM’s effort to increase investment in renewable sources and reduce Macedonia’s overall energy consumption and greenhouse gas emissions.