National report on Social Economy in Montenegro

National ReportMontenegro

Anto JankovicSarajevo

June 2014

General remarks

•Challenges during research• no official data on size and structure of social economy sector

•Expected/unexpected results• no framework for development of social economy (SE)• legislation not particularly supportive for development of SE• legislation not limiting on the other side

•Expectations from the meeting and feedback for improvement of the report

• future steps for SE advocacy in the region

Content of the presentation

•Current situation within the sector •Institutional and legal framework•Financial incentives and support mechanisms•Conclusions and recommendations

Current situation within the sector

• concept not well known• no official data• no of registered CSOs and cooperatives significant, but

SE sector underdeveloped• lack of framework - no law on professional associations,

private charity foundations or humanitarian organizations, no law on cooperatives and social enterprises

• preconditions: human capital and Employment Agency programs

Current situation within the sector

• 140 cooperatives registered (FRY 1996)• Cooperatives Alliance of Montenegro - 100 cooperatives,

primarily agriculture, 7 employees, over 1,000 members and over 5,000 subcontractors with total of around 500 employees (0.3% of total employees in the country), 2 million EUR Alliance budget (0.06% of GDP).

Current situation within the sector

• 3,096 CSOs: 2,908 non-governmental associations, 95 foundations and 93 representative offices of foreign CSOs.

• Financial sustainability remains open question. Poor communication and cooperation.

• 410 registered CSOs for business activity, but no research about their activity.

• 213 CSOs in Montenegro – 5 million EUR i.e. 0.26% of GDP (“Annual financial Reports of CSOs in Montenegro - 2010”); 149 generated income up to 10,000 EUR, only 18 CSOs over 100,000 EUR

Current situation within the sector

• rare examples of social enterprises – NGO “New chance in Herceg Novi” - “Our ID card” project; Roma women Craft cooperative “Rukatnice” established by SOS Niksic…

• luck of trainings, consultancy and mentorship to develop their managerial, financial and marketing skills.

• 2 business incubators: IT Business Incubator “Inventivnost” from Podgorica and BSC Bar.

• “Inventivnost” established in 2008 by the Directorate for Development of SME and the Capital City of Podgorica, with support by the University of Montenegro, GIZ, TAM/BAS and a Dutch CSO SPARK.

• BSC Bar established in 2010 by the Municipality of Bar, through support of SPARK. Total area of 1,100 m2, utilities for a period of 3-5 years, provides different trainings, advisory services, micro-loans…

Current situation within the sector

• “Business development incentives program” (Government of Montenegro, Dec 2011) - tax and administrative benefits for development of business zones in Berane, Kolasin, Podgorica, Bar, Cetinje, Bijelo Polje and Niksic, and potential business zones in Zabljak, Mojkovac, Tivat and Danilovgrad.

• IPA project ''Third sector and social enterprises development in Montenegro'' - Montenegro Chamber of Skilled Crafts and Entrepreneurship (ZanaPredaK) and COSPE from Italy. 6 CSOs to receive grants of 7,500€ each for their business start-ups.

• “Belgrade declaration on the development of social entrepreneurship”

Institutional and legal framework

• A number of laws, strategies and policies adopted in the field of labour market

• Lack of legislation in the area of SE (types of organization, procedure of foundation, registration, operation and funding)

• The Constitution, the Agenda of Economic Reforms, the Poverty Reduction Strategy, the Regional Development Strategy, the Sustainable Development Strategy, the Agriculture and Rural Development Strategy outline the goals and priorities that are closely related to the development of social economy.

Institutional and legal framework

• Law on Non-governmental Organizations: non-governmental associations and non-governmental foundations; economic activities for up to 4,000 euro or 20% of the total annual revenue in the previous calendar year (obliged to register with the Central Registry of the Commercial Court in Podgorica)

• Law on the state administration - transfer of certain services to CSOs through the provision of "transfer i.e. delegation of state administration services."

• Law on business organizations defines following forms of organization pursuing economic activities: 1) the individual entrepreneur; 2) the general partnership (GP); 3) the limited partnership (LP); 4) the joint stock company (JSC), 5) the limited liability company (LLC); 6) the foreign company branch.

Institutional and legal framework

• “The concept of social entrepreneurship, which has not yet taken hold in Montenegro, can contribute to the opening of alternative jobs, especially for those who are members of vulnerable groups of the population (p. 31)”. The National Strategy for Employment and Human Resources (2012-2015)

• Work Programme of the Government of Montenegro for 2013 - MLSW to prepare a draft of the Law on Social Entrepreneurship (November 2012), the Strategy for Social Entrepreneurship 2013-2016 and the Action Plan for 2013; Ministry of Agriculture and Rural Development – draft Law on agriculture cooperatives (2012)

Institutional and legal framework

• Draft Law on social entrepreneurship, Mr. Dragan Golubovic, key issues: 1) Why do we need specific law on social economy organizations; 2) How is it related to the Law on business organizations and 3) What would be sources of funding

• Working group for the preparation of the Strategy of Development NGOs 2014-2016, (Ministry of Interior) - social entrepreneurship as 4th measure

• The Law on professional rehabilitation and employment of persons with disabilities, (2008)

• The National Strategy for Employment and Human Resources Development, 2012-2015: 1) increase of employment and reduction of unemployment rate; 2) improvement of knowledge, skills and competences in view of increasing employment opportunities and increasing of competitiveness through formal and informal education and training and 3) promotion of social inclusion and reduction of poverty.

Financial incentives and support mechanisms

• New Law on NGOs (Aug 2011) vs. Fund for Minorities and the Commission for the allocation of revenue from gambling.

• Lack of transparency, limited number of areas of public interest, lack of a systematic approach to monitoring the implementation of projects and control of spending

• Lack of understanding that funds are allocated for solving social issues in the communities, not just a „spending”.

  2010 2011 2012 2013

Total giving for CSOs (national level) in EUR 4,721,991 3,078,028 2,338,164 1,546,886

% Current Budget in EUR 0.73 0.49 0.39 0.26

Financial incentives and support mechanisms

• International donors losing interest in Montenegro • Political issues such as corruption and birocracy, together

with environmental issues still dominate. • Local funders (primarily corporate ones) are focused on

specific activities linked to their CSR strategies.• Individual philanthropy and Corporate Social

Responsibility are at a low level

Financial incentives and support mechanisms

The Law on professional rehabilitation and employment of persons with disabilities: 1) Grants for adapting the workplace and working conditions for employment of persons with disabilities; 2) Credit funds on favourable terms for the purchase of machinery, equipment and tools required for employment persons with disabilities; 3) Participation in financing the cost of personal assistants of persons with disabilities; 4) Subsidies to earnings of persons with disabilities: a) 75% of gross earnings paid for the entire period of employment, for employer who hires a person with at least 50% disability; b) for employers who hire a person with less than 50% of disability, the subsidy is in the first year is 75%, in the second year 60%, in the third and each subsequent year, 50% of the gross earnings.

Financial incentives and support mechanisms

• The Employment Agency: measures of active employment policies such as financing or co-financing of job creation, inclusion of unemployed and co public works program, loans for investments in employment on the basis of new production and other capabilities, co-seasonal employment (in tourism, construction, hospitality, agriculture, etc.), assistance in the training of newly hired employees, development of employment programs for certain categories of unemployed persons (disabled persons and persons who are waiting longer to employment), co-adapting premises and technical equipment for the disabled, etc.

Financial incentives and support mechanisms

• Regulation on subsidies for hiring certain categories of unemployed (2012) – subsidies for several categories of unemployed people:

• people with at least 40 years of age; • Roma, Ashkali and Egyptians; • people who are unemployed for more than 5 years; • people who are employed in the execution of public works; • people who are employed after completion of the training or the

internship; • people whose work is no longer necessary (due to techno-economic

surpluses); • people who are employed to perform seasonal jobs and • unemployed people with over 25 years of experience.

Financial incentives and support mechanisms

• Coo-financing and loans under favourable conditions - Ministry of Agriculture and rural development and the Investment and Development Fund of Montenegro (IDF)

• Supporting mechanisms for development of SMEs - Directorate for development of small and medium sized enterprises and Ministry of Economy.

• Montenegro Chamber of Commerce and business associations (Montenegro Employers Federation and Montenegro Business Alliance) who have cooperatives among their members provide different types of technical support to their members and it is expected that they will take part in development of cooperatives in Montenegro.

Conclusions and recommendations

• Elimination of regional disparities• Encourage employment of the groups that are not

competitive on the open market• Activation of potential economic resources (arable land,

pastures, forests, rivers, industrial facilities that are not operational)

• Development of the institutional and legal framework for SE• Financial and non-financial (know-how) support mechanisms • Increase of awareness and understanding of social economy

and social entrepreneurship

Conclusions and recommendations

• Social inclusion, reduction of poverty, deinstitutionalization in the field of social care, rural development, employment of vulnerable group are not areas with high profitability

• Increase efficiency of existing social funds • No need for large budgetary allocations and changes in the system,

but more on introduction of new mechanisms in order to match supply and demand on the market.

• Has to be integral part of the strategy for overall development of Montenegro.

• Upgrade of data collection system • Capacity building (trainings, mentorship, consultancy…) for SE

organizations• Mutual programs and exchange of experience

Thank you!

Contact informationE-mail: [email protected]; antoj

@t-com.mehttp://about.me/anto.jankovic