PPSE: Promoting Private Sector Employment

Project description / objective

The facilitation of market system changes in the Food and Natural Ingredients (FNI) and Tourism sectors in Kosovo with focus on private sector development and inclusive job creation among youth, women and non-majority communities. 

Phase 1: 2013 - 2017, Phase 2: 2017 - 2021, Phase 3: 2021 - 2025

Market systems focus

Food and Natural Ingredients (FNI)

The Food and Natural Ingredients (FNI) sector has a significant potential for growth and employment (employment rate of 50,000 FTE jobs_¹ as well as significant export opportunities to the European Union).

Lack of access to good quality inputs (seeds, seedlings) because of the dominance of traditional practices in seed usage has impacted the yield and productivity of SMEs (processors and collection centres). Poor business management, marketing skills, quality of branding and packaging were also identified. The programme is focused on transitioning towards commercially produced hybrid seeds as the basis for improving the availability of good quality raw material. 

_{¹Recura Financials “Scoping Study of the Agribusiness Sector in Kosovo”, 2014}

Tourism    

Kosovo had no developed tourism product offer, limited supporting infrastructure, and struggled to compete for interest and attention amongst the much more developed product offers of its regional neighbours in the Western Balkans. To compound the problem, Kosovo had a significant image problem defined by negative perceptions amongst prospective visitors of a country burdened with ethnic conflict, political crises and organised crime.

Key assets have been identified leveraging both Kosovo’s cultural heritage and significant natural resource - in particular mountain ranges, such as the Sharr Mountains in the south and the Accursed Mountains in the west, both with high potential for summer and winter tourism. These will be developed for a niche tourism market focused on adventure tourism and a unique experience.

Programme interventions

Food and Natural Ingredients (FNI)

• Work with local service providers to facilitate models of affordable support services and investments tailored to the needs of the FNI sector SMEs, including:
  - product development coaching and mentoring services (introducing knowledge-exchange platforms on private label, franchising, and food technology training)
  - digital marketing (one-on-one digital marketing training for local SMEs)
  - co-financing machinery
  - branding
   
• Work with processors, collection centres, seedling (nurseries), and the Ministry of Agriculture to further strengthen the contract farming model by: establishing buyer-supplier links; promoting good agricultural practices; co-financing machinery; promoting adequate quality inputs; and establishing modern seedling nurseries to enable access to high-quality seedlings.
   
• Facilitate cooperation between Organika Association and Albinspekt (certification body) to enable access to organic certification services (through a financial support scheme) for SMEs in Medicinal and Aromatic Plants (MAPs) and Non-Wood Forest Products (NWFPs) to foster access to export markets. 

Tourism   

• Facilitate consolidation of services for tourism product development through public-private partnerships to:
  - increase product safety (drafting the Administrative Instruction on Tourism Products Safety)
  - strengthen tourism statistics (initiating exit surveys, supply-side surveys, and integrating data into Kosovo Agency of Statistic’s database)
  - develop regional promotion (regional tourism platform between Kosovo and Albania)
  - institutionalise knowledge (anchoring knowledge-sharing services for municipalities within the Kosovo Association of Municipalities)
   
• Partner with local institutions to promote participation of SMEs - in international fairs; Kosovo International Tourism Fair; familiarisation tours; and B2Bs - to consolidate roles within the structure of local institutions to enable international tourism promotion. 
   
• Support the training and international certification of cultural and mountain guides to improve guide-related services by working with the Kosovo Guides Association and Kosovo Mountaineering and Alpinists Federation to address the lack of effective coordination and institutional ownership.
   
• Help develop a pilot sustainability certification programme for hotels and share knowledge with tourism stakeholders through the Kosovo Tourism Union to ensure effective planning and adherence to international sustainability standards in tourism.

Notable results (systemic change, poverty impact)

Systemic change

Tourism sector
The tourism sector is showing signs of progressing towards sector growth and long-term systemic change, albeit starting from a very low base. 

The number of international tourists (measured in hotel stays) has grown from 50K in 2013 to almost 370K in 2023. Estimated revenue in the sector has increased from almost USD $158M in 2017 to USD $437M in 2023, and the sector has rebounded impressively, and in a short period of time, from the disruption and shock caused by COVID-19, suggesting increased resilience in the sector.

The number of guesthouses and Airbnb accommodation units have grown from a dozen in 2014 to more than 1,000 in early 2024. This has been accompanied by rapid growth in hotels; the emergence of multiple transportation companies; and the number of cultural tourism guides increasing to 70 (measured by membership to the association).

The sector has been formalising rapidly with better implementation of regulations; licensing procedures; and quality standards for accommodation, tour operators and other tourism-related businesses. The recent Tourism Sector Strategy and passage of the Tourism Law represent a watershed moment in terms of political commitment to the sector, creating the long-term conditions for more sustained growth.

Food and Natural Ingredients (FNI) sector
The FNI sector has undergone a significant transformation, shifting from a market dominated by imports to one where locally produced goods are increasingly gaining market share, reaching around 30 per cent in the retail industry. Improvements in quality control, increased knowledge and investments have enhanced competitiveness of domestically produced food and beverages. Food product exports have surged from USD $50M in 2017 to USD $117M in the first ten months of 2023, making the FNI sector a crucial contributor to Kosovo’s economy with further growth expected.

Processors have witnessed notable shifts, with local product presence (dairy, egg and honey) increasing from 12 per cent to 30 per cent, and the number of registered SMEs nearly doubling (from 53 to 89). Compliance with standards, especially organic certification, has made significant progress, with the overall NWFP and MAP sector exports growing from USD $6.3M to USD $16.86M in 2022, including increased investments in technology by SMEs.

Collaborative efforts between PPSE and SMEs, supporting value added services in food technology, resulted in the launch of 319 new products, showcasing industry creativity. Customer trust in local products has exceeded 90 per cent in certain categories, according to a consumer perception survey with 1,067 respondents on the quality of domestic products.

There has been a significant shift in Kosovo's agricultural scene for producers and input suppliers. Contracted vegetable production has grown almost tenfold to 3,300 hectares, or around 30 per cent of overall vegetable production area. The cultivation of medicinal and aromatic plants (MAPs) also saw a tenfold rise to over 1,200 hectares. 

Impact on poverty

Project progress in Phase 2, 2017 – 2021:

• Interventions have generated 1,292 additional full-time jobs.
• 4,156 women and men have been gainfully employed (benefit outreach). Of them, 36 per cent are women and 6 per cent are members of non-majority communities.
• 4,156 women and men have generated USD $7M in income.
• 641 new farmers are involved in contracted farming, using over 1,220 additional hectares of land.
• 272 SMEs have benefitted by increasing net income by USD $3.2M. The SMEs have invested USD $6.5M.
• Combining the Food and Natural Ingredients and Tourism sectors, the number of resulting new products and services available has reached 272.

PPSE results in Phase 3, 2021-2025 (June semester report):

• Interventions have generated 1,362 additional full-time jobs.
• 3,644 women and men have been gainfully employed (benefit outreach). Of them, 36 per cent are women and 6 per cent are members of non-majority communities.
• Change in average yearly net income (salary/wage) of individuals, adjusted for inflation, USD $5.16M in salary/wage cumulative.
• SMEs have made additional investment value for new products and services: USD $5.5M).
• SMEs will introduce new and improved products and services: expected 210 new/improved products and services.

[updated December 2025]