Kosovo is a lower-middle-income country which has experienced solid economic growth over the last decade. Kosovo is one of only four countries in Europe to experience growth in every year since the onset of the global financial crisis in 2008.
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This interest rate differential vis-à-vis any benchmark country—be it Germany or Montenegro—reflects the additional “risk premium” that banks perceive and charge on loans. It comprises essentially thr... Show More +ee types of perceived extra risk, viz., (i) the business climate (collaterals, contract enforcement, or property rights); (ii) business conduct (high degree of informality, lack of financial transparency, or the lack of viable business plans); and (iii) the Damocles’ sword faced by foreign-owned banks in Kosovo of being merged by their respective headquarters into the group of troubled banks elsewhere in Eastern Europe and confronted with corporate strategies to deleverage out of (perceived) high-risk markets. Faced with this particular set of constraints, the banking sector in Kosovo has, in fact, adapted well to the existent environment, focusing its activities on remaining healthy, liquid, profitable, deposit-based, and with portfolios that contain but manageable risks.It is apparent why banks in Kosovo have been conservative in their lending decisions; and these have served the sector and the economy well in recent years, especially if compared to the experiences made in neighbouring countries. At the same time, demands on the banking sector, by the public and polity alike, have been increasing to contribute (even) more to the country’s development. For financial institutions to be in a position to do support the “macroeconomic” development objective, the “microeconomic” aspects (of an underlying business case) have to be in place as well—thereby begging the overarching question as to whether, for banks, there is an optimal degree of risk-taking.The inherent costs of a banking sector that is too willing to take risks are well-understood and, given the recent financial history, well documented. The opposite case, when banks are too risk-averse, has similarly clear macroeconomic consequences, posing the risk of asphyxiating an economy’s innovation and growth potential. The corresponding “vicious cycle” starting with (i) weak businesses and unknown start-ups; (ii) leading to considerable hesitation among banks to lend; (iii) as manifested in banks’ requiring for loans with (overly?) short-term maturity, if granted at all, high collaterals and high interest rates; (iv) which leaves the private sector with reduced rates of returns on its investments; (v) cementing their financial vulnerability; and (vi/i) leaving them still weak and unattractive to the banking sector. In this context, banks would need to ask themselves whether extending loan maturities would not effectively reduce default risks, as loan repayment profiles become more closely aligned with investments’ (expected) revenue and amortisation profiles.There are considerable options to assess the extent, to which banks’ risk exposures could be reduced further so as to allow for a tangible reduction in the real cost of credits. One could add a whole array of other potential changes to the banks’ conduct, all sound from a business perspective and desired from an economic policy-making point-of-view, but let me just mention one: the delayed modernisation of the insurance sector could be accelerated by linking it explicitly to mortgage lending, offering to insure borrowers against incapacitation, unemployment, and death. This would not only protect the interests of both contracting parties but also open doors for the diversification of insurance products.Evidently, demands to the banking sector for lower interest rates and more favourable conditions to the private sector must not come at the expense of increased vulnerability and fragility to the financial sector—the macroeconomic costs alone would be far too high and detrimental to the development objective motivating said requests. But a debate of this nature, in the context of the Finance Fair, does warrant the question of whether it would not also be in the financial sector’s interest to move towards the edge of, or go beyond, the current comfort zone. It is true for all market participants in the financial and private sectors: unrealised opportunities (if viable) are very costly to the country and its citizens’ socio-economic welfare. Show Less -
Under the World-Bank supported project, cadastre offices around Kosovo are being renovated and equipped to provide more efficient services to the public.Some of the updated tools include a new positio... Show More +ning system that receives satellite signals and provides data for GPS equipment able to immediately verify registered land measurements remotely.As part of the project, a number of staff have received training in better management, planning, legal, technical, and administrative skills.Avni Olluri directs a cadastre office responsible for 60,000 residents in Kosovo’s municipality of Lipjan. He says that as a result of the project’s training and new equipment, he and his staff are now able to register prosperity in a matter of hours, instead of days:“Our services are divided into two sectors, geodesy and cadastre. We register the ownership here and provide other services which are crucial to the citizens,” Olluri says.72-year-old Lipjan resident Veselinka Mirkovic was able to quickly register her property and get the ownership documents necessary to apply for a bank loan. “Service is a thousand times better than it used to be, they provide fast service and they direct you,” she says. Show Less -
WASHINGTON, Sept. 23—Land ownership has a number of crucial benefits for women and their families, both economic and social. Increased security allows women to access credit to buy key agricultural in... Show More +puts, or make other investments to increase food production. Access to land can also lift a woman's status and enhance her bargaining power in families and communities, boosting well-being at the household level. Some research even shows that women who own land are less likely to suffer from domestic violence.Although women’s land rights are enshrined in national law and a growing number of international agreements, women's land ownership often involves a complex web of statutory, customary, and religious laws—along with social norms that prioritize men and boys.Thirty-seven of 143 countries surveyed in the World Bank Group's Women, Business, and the Law 2014, still have discriminatory land laws in place, while even in countries with gender-equal laws on the books, powerful norms and customs can dictate that men alone hold title to land and other assets.Data analyzed by the World Bank (WB) and UN Food and Agriculture Organization (FAO), under a new initiative funded by the World Bank Group’s Umbrella Facility for Gender Equality (UFGE) and the FAO, suggests that men in many regions fail to register their wives on property deeds. This means widows can lose rights to the land they farm after a husband dies, and sons often take priority in inheriting the land.In the Western Balkans, country reform teams established by this initiative cited lack of awareness and interest among key stakeholders—such as government officials, notaries, and land agency staff—as major obstacles to reform. Lack of data broken down by gender poses an additional challenge. A 2013 initiative offered technical assistance to mine existing databases to measure women’s land ownership in the region and establish benchmarks. The initiative gathered existing relevant data from Albania, the Federation of Bosnia and Herzegovina and Republika Srpska, Kosovo, FYR Macedonia, Montenegro, and Serbia—at the national, provincial, and local levels.Data was analyzed by studying property titles. “When we presented the data, the government was surprised to find that female property ownership can be as low as 3 percent in the region, particularly in rural areas,” World Bank Senior Land Administration Specialist Kathrine Kelm said. This helped galvanize follow-up work with government partners to improve women’s property rights.WB and FAO teams worked with national partners to devise 11-month pilot work plans for their countries to boost female land ownership—alongside senior officials, land agency staff, and notaries.In Kosovo, with national levels of female ownership at around 15 percent, efforts have targeted associations of notaries, to request that they always inform clients who register land and property about the importance of co-registering wives or female heirs.In one town, Shtime, registering property in one name cost 20 Euros, while registering property jointly cost 40 Euros. In early 2014, the mayor temporarily waived the registration fee as an incentive for couples to register jointly, prompting a 20 percent jump in property registrations for women. The town now has a flat registration fee.The Kosovo team hopes to continue its work on the gender action plan, and deploy mobile gender units during their next round of property registration, and use a randomized control trial to demonstrate the cost benefits of such teams.In FYR Macedonia, where female land ownership was found to hover around 16 percent, one community, Aerodrom, launched outreach efforts highlighting the positive impact of property ownership and connecting residents with notaries.Ongoing negotiations on targets to succeed the anti-poverty Millennium Development Goals after 2015 have identified as a priority the need for women and girls to have equal access to financial services, as well as equal rights to own land and other assets. Most people living in extreme poverty worldwide are female.About the UFGEThe UFGE is a multi-donor trust fund dedicated to strengthening awareness, knowledge, and capacity for policy-making that advance gender equality.It invests in priority areas critical to closing gaps between what we know and what we do to advance gender equality. The UFGE currently supports over 70 activities in 54 countries.Since its launch in 2012, the UFGE has received contributions from Australia, Canada, Denmark, Finland, Germany, Iceland, Norway, Spain, Sweden, Switzerland, United Kingdom, and the United States. Show Less -
Once Kosovo manages to form a new Government and re-focus its attention from procedural tactics to socio-economic development strategies, the overarching challenge will consist of defining—and impleme... Show More +nting—a set of policies that would help to accelerate economic growth, ensure its sustainability over a prolonged period of time, and lift an increasingly growing proportion of the population out of poverty, unemployment, and a lack of professional perspectives. This is a very complex task, but one that is possible to achieve—one that has been realized by other countries before.In the 2008 Growth Report, in which a most distinguished group of economists, policymakers, and development leaders analyzed common features of the world’s most dynamic economies, the authors highlighted one particularly important feature of commonality among them.“Growth of 7 percent a year, sustained over 25 years, was unheard of before the latter half of the 20th century. It is possible only because the world economy is now more open and integrated. This allows fast-growing economies to import ideas, technologies, and know-how from the rest of the world. One conduit for this knowledge is foreign direct investment, which several high-growth economies actively courted. … Sustainable, high growth is catch-up growth. And the global economy is the essential resource.”I have started with these observations to highlight that Kosovo faces, ultimately, two distinct challenges, viz., to (i) stimulate a domestic debate on the inherent benefits (and risks) from a closer integration with the rest of the world; and (ii) deepen the ongoing reform agenda to ensure that the country becomes a destination for economic activities, that is attractive for domestic and foreign businesses alike.For products and services “made in Kosovo” to be competitive on the local market, in the region, and in Europe and the rest of the world, the new Government will have to continue and deepen its reform agenda aimed at improving economic governance, strengthen the business and investment climate, and instil confidence into the private sector that this country has a dynamic, integrated economy with the legal, institutional, and physical infrastructure needed to convince potential investors that there is a better business case to establish a production site in Kosovo than anywhere else in the region and the worldIn this challenge, the World Bank Group has been supporting Kosovo to improve the business climate and make it easier for both foreign and domestic investors to do business in Kosovo. Not least the results in the annual Doing Business survey that Minister Nikaj mentioned, but also hard data on the number of registered, tax-paying businesses point to the fact that Kosovo has been moving in the right direction. Among many other things, the World Bank Group has been—and will be—working with governments on the central and municipal levels to (i) clarify and make transparent all administrative procedures, permits, and licenses that businesses need to receive in order to operate in Kosovo; (ii) simplify the procedures for issuing work permits for foreign employees; (iii) strengthen the investment promotion department of the Kosovo Investment and Enterprise Support Agency to conduct an Investor Perception Survey, the results of which can be very helpful to guide policy-making; and (iv) support the Business Registration Agency in facilitating the process of registering a business.After the dust of the current post-electoral process will have settled, it is important for Kosovo’s authorities to re-assemble and collaborate on a coherent vision for development objectives and the types of private-sector investment sought to be attracted. On that basis, it becomes easier to design and implement policy responses to help achieve those objectives. On that note, with special thanks to my colleagues from IFC, we hope that the Investment Reform Map will provide a useful framework to develop this vision and implement important reforms that will facilitate more investment in Kosovo. Show Less -