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7th European Regional Meeting To survive means to succeed

After the democratic changes in October 2000, the Serbian economy opened up to the world. As a consequence, many local companies were unable to compete with foreign companies and had to close down. In 2001, the ILO started a local economic development project in South West Serbia followed by a new, more comprehensive one in 2004 covering South East Serbia. Such local economic development initiatives in Europe and Central Asia were also discussed at the recent European Regional Meeting of the ILO in Budapest, on 14-18 February. Serbian journalist Andreja Tomasevic reports.

Article | 15 March 2005

LESCOVAC, SERBIA – Zoran Stamenkovic's story is typical for Serbia at the beginning of a new era.

Mr. Stamenkovic was once one of the 5,000 employees of a big textile factory in the southern Serbian city of Leskovac. When the Former Yugoslavia broke apart in the early 1990's most production stopped, as the traditional markets had disappeared. Some years later, when the UN embargo for Serbia became effective the whole production stalled. Thousands of people lost their jobs in those days.

"At that time I decided to start something on my own, as I did not want to depend any longer on other people", says Mr. Stamenkovic in the hall of his newly painted factory. "I invested my little savings in the production and packaging of catheters. An old friend of mine from Niš was able to make a good living out of this, so I thought I could do the same. I created the company ‘Opal'. But everything was unfamiliar to me and my family. We had a good product but we knew almost nothing about the relations with banks and buyers, including hospitals."

However, the real challenge was yet to come for the Stamenkovics. Many of the local companies were not competitive when the country opened up in 2000/2001. "To be concrete, catheters were imported at a 10 times lower price than we could produce them here. Our firm couldn't keep up with that. The competition from Europe was too strong for us. Even if Opal would get an order, we would have been unable to fulfill it since huge quantities were demanded and we did not have the resources to invest in raw materials, electricity, labour, etc."

At that time, "Opal" only existed on paper. When Mr. Stamenkovic heard a radio advertisement of REEDA, he tried his luck and asked them for support.

Linking ideas with business

The Regional Economic and Entrepreneurship Development Agency of Jablanica District (REEDA) was created in the framework of the ILO project "Support to Reconciliation and Local Economic Development by Small Business support in South East Serbia". Financed by the ILO and the Dutch government, the project focuses on "supporting and strengthening local small and medium enterprises in the districts of Pcinjski (Vranje) and Jablanica (Leskovac) in the Republic of Serbia", explains Geert van Boekel, Chief Technical Advisor of the project.

"As South Serbia is an ex-conflict area we are trying to bring in the best of ILO experience with regard to entrepreneurship development and social dialogue at the local level. Previous ILO experiences in Bulgaria and Croatia have shown that the promotion of local economic development (LED) initiatives can revive the local economy and strengthen social cohesion by providing income and employment, while taking into account the social and environmental characteristics in the region".

Since 2001, the ILO has been involved in the creation of three so-called Local Economic Development Agencies in Southern Serbia. All of them are providing services to the local private and public sector on a commercial basis.

According to Mr. Miodrag Bogdanovic, general manager of REEDA in Leskovac, the ILO and the Dutch Embassy came just at the right time. They filled a clear need to do something about the absolute lack of business support services for the small entrepreneurs in the region. "There are several financial mechanisms in the district targeting SME, but most business people are not able to access them as they have no decent business plans. Apart from that most small entrepreneurs have no knowledge of the world outside their district, we very often have to guide them through a number of bureaucratic and administrative issues", says Mr. Bogdanovic in his office in the center of Leskovac.

"Due to the symbioses between REEDA, the Regional Guarantee Fund and the Municipal Development Fund, all based on the same floor in Leskovac, many SMEs have already received support and advice", he explains. "Now, banks have a completely different attitude towards the clients who come there with business plans and guarantees given by us. In only a few months time REEDA made it possible for more than 20 entrepreneurs to obtain credit".

An exceptional patent, a chance for export

One of credit's beneficiaries is the firm "Opal" of Zoran Stamenkovic. "Thanks to the support of the agency, we have started to refocus, we received a credit for expanding the production and most importantly we have been able to file a patent for a new product", says Mr. Stamenkovic proudly showing us the patent papers.

Zoran Stamenkovic used the years during which he was unable to produce to develop a new technology for the production of catheters which are used by patients who have to undergo colon surgery. With the registration of these so-called "colostomy system vircol" (produced so far only in Germany and Denmark), "Opal" has become a serious player on the market. With the new machine "Opal" purchased with the new credit, they estimate to be able to distribute between 50,000 and 60,000 catheters, covering about 25 per cent of the Serbian market. He is also going to employ two additional workers.

Mr. Stamenkovic now already looks forward to expanding his business beyond the borders, to Bosnia and Macedonia where he sees good opportunities. "I do not know if I would ever have gone that far without REEDA. We are lucky that the ILO gave us back hope and implemented this project in our region".

Note 1 - See Report of the Director-General to the Seventh European Regional Meeting, vol. 1, ILO activities 2001-2004, Cooperation in a changing environment.