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(REAWG) on Economic Diversification Through Rural Tourism (ED-RT) First Interim Meeting

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(REAWG) on Economic Diversification Through Rural Tourism (ED-RT) First Interim Meeting Regional Expert Advisory Working Group (REAWG) on Economic Diversification through Rural Tourism (ED-RT) First Interim Meeting 18 – 20 June 2019 Pogradec, Albania Kosovo Report Hajrulla Ceku Development Solutions LLC Contents Introduction Rural space of Kosovo – geographical context Rural areas of Kosovo – socio-economic context Rural economy of Kosovo – importance of diversification Rural tourism definitions and scopes Rural tourism and its place in rural economy of Kosovo Legal and institutional context for rural tourism Legal framework (including spatial plans and cross-cutting issues) Institutional set-up for managing/supporting tourism (and rural tourism) Rural tourism development and policy Important rural tourism destinations and FAS Strategic framework and programmes Financial support Interviews Historical overview Rural tourism in Kosovo started after the 70s and developed and mountain tourism (tourist resorts for winder holiday). Political situation of 90s caused decline of the sector and decrease in the number of tourists. After 1999 war country ended up with a greatly damaged infrastructure. Due to the post-conflict context, Kosovo has been perceived an unsafe place to visit. These images continued to be perceived especially for the rural areas due to the poor living conditions and opportunities for economic growth. During the last years, tourism related investments mainly concentrated in urban centers, private sector investments in accommodation facilities and services. INTRODUCTION Rural space of Kosovo – geographical context Rural Area – an area characterized with a low level of construction, population density and technical, public and social infrastructure, and of employment through development of agriculture, rural tourism, healing centers and of manufacturing that doesn’t pollute the surrounding environment. (Law on Spatial Planning) Kosovo has cca. 11 thousand km2 and a population density of 164 inhabitants per km2. Kosovo has seven regions, 38 municipalities, 1469 settlements (geographical units) including cities and villages. Urban / rural population ratio is cca. 40 / 60 The agricultural surface is 512,000 ha (with a total of 130,662 agricultural holdings). Around 53% of the land in Kosovo is agricultural (88% is privatized land, 12% is social land, within agricultural enterprises and cooperatives) Rural areas of Kosovo – socio-economic context 1/2 Kosovo has 1.9 million inhabitants with a population density of 164 inhabitants per km2 Population age structure (The average age in 2011 was 30,2 years) 0-14 years: 25.01% 15-24 years: 17.22% 25-54 years: 42.57% 55-64 years: 7.92% 65 years and over: 7.28% About 30% of the population below the poverty line. The average annual per capita income in Kosovo is just €3,000, while the average annual income in the public sector is almost €4,000. Unemployment is a significant problem that encourages outward migration and a significant informal, unreported economy. Kosovo’s unemployment rate between 2001 and 2015 averaged 43%. The unemployment rate is projected to trend around 27.5% in 2020. Rural areas of Kosovo – socio-economic context 2/2 Employment in 2017 was 357,095 persons / Employment rate 29.8%. Unemployment in 2017 was 156,583 people / Unemployment rate 30,5% The average life expectancy in Kosovo in 2011 is estimated to be 76.7 years, for men 74.1 years, and for females 79.4 years The number of employees in the public sector in 2017 was 81,466 persons. The average net wage in the public sector in 2017 was € 452. The number of local and foreign visitors in 2017 was 34.569 local visitors and 86.032 foreign visitors. The overnight stays in 2017 were 192.847 nights. Rural economy of Kosovo – importance of diversification 1/3 54% of Kosovo’s total area is agricultural land, 60% of the population live in rural parts of the country, the majority of which depends on agricultural The contribution of the agricultural to GDP is 10%, while Kosovo’s trade balance shows an extraordinary deficit (imports around 10% of exports) most of the agricultural supply chains were broken down during 1990s and were never re-activated land fragmentation – 80% of farms are between 0.5 and 2.0 ha in size. farmers are usually not organized, operate with little technical expertise, poor use of modern inputs and limited access to finance. lack of processing capacities. low productivity, weak supply of agricultural products, high dependence on food imports Rural economy of Kosovo – importance of diversification 2/3 Economic activity growing steadily since 2015, but constrained by a narrow production base and significant underutilization of labour. In recent years, the economy has been driven by public investment in infrastructure and private consumption (the latter financed by large remittances Economic diversification is proceeding slowly, especially in the rural areas of the country Services exports continued to grow, mainly linked to tourism spending by the diaspora. Rural economy of Kosovo – importance of diversification 3/3 Kosovo Government Programme 2017-2021 and Kosovo Private Sector Development Strategy 2018-2022 The main pillars of the Kosovo tourism product are: cultural tourism mountain and alpine tourism rural tourism, ecological tourism, agro-tourism active, adventurous and alternative tourism cross-border travelling business and conference tourism. Rural tourism is considered to be one of the priorities for development of Government as stated also in the Government Program 2017-2021. Tourism segments with potential in Kosovo (MTI) Types of tourism Current Potential At the early stage Transit Nature Water springs Health Winter Cultural-Historic Rural Hunting & Fishing Alpine Spelean Adventure Scientific Tourism resources available in Kosovo (USAID/Sweden for MTI) Primary tourism resources Secondary tourism resources Niche tourism products Mountains, Adventure, Rural, Eco, Winter Nature sports, Caves, Waterfalls, Lakes, Medical tourism, Culinary, Rivers Camping, Cycling, Wineries, Cities, Nightlife, Bars, Other Agro-tourism, MICE, Urban Niche Restaurants tourism Excursions, Transit Festivals, products History, Religious resources tourism, Wellness, Events, Monuments, Cross-border Religious Cultural Archaeology, tourism activities Heritage Architecture, Artifacts, Museums, Folklore, Unesco sites Rural tourism definitions and scopes Rural Development Program 2019 Measure 302 "Diversification of Farm and Business Development" aims to support specific subsectors such as beekeeping, processing of fruits, vegetables, dairy, traditional craft activities, development and promotion of activities, rural tourism services, aquaculture / fish cultivation and the growth of poultry and meat poultry. Rural tourism activities in Kosovo: Eco-tourism Adventure travel Mountain tourism Culinary trips Cultural and Heritage Tourism Rural tourism and its place in rural economy of Kosovo A basic challenge for the tourism development in Kosovo is the lack of statistical data for the sector National statistics agency does not collect data on arrivals, visitors spending, visitor’s centers, attractions, tourism employees, TO/TAs, etc. Also no tourism comprehensive statistical data available in Kosovo with regard to its economic impact on the national GDP The only available data set on domestic and international visitors (KAS) From 2015 - 2017 there is a considerable decline in domestic market International visitors have increased in number with the highest increase from 2015 – 2017 (nights spent also increased around 13% YOY) Registered businesses in rural areas (Business Registry, MTI database, MAFRD List of Beneficiaries of Rural Tourism Grants Scheme) LEGAL AND INSTITUTIONAL CONTEXT Legal framework 1/2 New Law on Tourism (draft legislation) Policy Concept Document options: Option 1: Status quo option (no change) Option 2: Changing the existing policy Option 3: Change the existing implementation approach Option 2 The establishment of the National Tourism Agency Classification of tourism accommodation establishments Licencing of TO/TA Tour guides licencing/certifying Determination of tourist areas Market surveillance Tourist tax for accommodation Additional sources for financing tourism activities Legal framework 2/2 National Laws Law on Tourism, Law on Agriculture and Rural Development, Law on Cultural Heritage, Law on Nature Protection, Law on Environmental Impact Assessment, Law on Strategic Environmental Assessment, Law on Waters of Kosovo, Law on Forests in Kosovo, Law on Spatial Planning, Law on Fishery and Aquaculture, Law on Food, Law on Consumer Protection, Law on Strategic Investments, Law on Market Inspectorate and Inspective Supervision, Law on Accommodation Tax in Hotels and Tourist Facilities Sub-legal acts Administrative instructions Regulations Manuals Institutional set-up Central government Ministry of Trade and Industry, Department of Tourism (policy development, standards) Ministry of Agriculture, Forestry and Rural Development (rural tourism, food safety) Ministry of Culture, Youth and Sports (cultural and heritage tourism, heritage sites) Ministry of Environment and Spatial Planning (planning, nature conservation, national parks) Ministry of Education (vocational education), Ministry of Finance (fiscal policy), Ministry of Infrastructure (physical infrastructure), Ministry of Health (health management) National Tourism Council National Tourism Agency (in the process of establishment)
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