Entrepreneurship Ecosystem in North Macedonia
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ENTREPRENEURSHIP ECOSYSTEM IN NORTH MACEDONIA MARKET ASSESSMENT ENTREPRENEURSHIP ECOSYSTEM IN NORTH MACEDONIA MARKET ASSESSMENT ENTREPRENEURSHIP ECOSYSTEM IN NORTH MACEDONIA MARKET ASSESSMENT Author: Makedonka Dimitrova SKOPJE, 2020 This publication was developed within the framework of the project Strengthening Social Dialogue, funded by the European Union and implemented by the International Labour Organization. This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of the author and do not necessarily reflect the views of the European Union and the International Labour Organization. ENTREPRENEURSHIP ECOSYSTEM IN NORTH MACEDONIA MARKET ASSESSMENT Contents List of Abbreviations ............................................................................................................. 4 1. REPORT OUTLINE AND METHODOLOGY ........................................................................ 5 2. OVERALL ECONOMIC ENVIRONMENT ........................................................................... 7 2.1 Policies for MSME Development ................................................................................ 8 2.2 Entrepreneurial Ecosystem .....................................................................................11 2.3 BSPs Target Market ...................................................................................................15 2.4 Donor Support to Entrepreneurship and Business Services ..................................17 3.ENTREPRENEURIAL SERVICES SUPPORT ......................................................................20 3.1 List of BSPs ...............................................................................................................24 4.ENTREPRENEURIAL ATTITUDE TOWARDS BUSINESS SERVICES ................................30 4.1 Demographics of the Sample ...................................................................................30 4.2 Startup Data ..............................................................................................................31 4.3 Entrepreneurial Culture ...........................................................................................34 4.4 Entrepreneurial intentions and attitude towards non-formal education ............35 4.5 Aspirant Entrepreneurs ...........................................................................................42 5. CONCLUSIONS AND KEY MESSAGES ............................................................................43 REFERENCES .......................................................................................................................45 Table of Figures ...................................................................................................................46 List of Tables .......................................................................................................................46 3 List of abbreviations BDS - Business Development Services ESC - Economic and Social Council EGP - Economic Growth Plan EFC - Entrepreneurial Framework Conditions ECTS - European Credit Transfer and Accumulation System EBRD - European Bank for Reconstruction and Development EU - European Union FITD - Fund for Innovation and Technology Development GEM - Global Entrepreneurship Monitor GUESSS - Global University Entrepreneurial Spirit Student Survey GDP - Gross Domestic Product IPO - Initial Public Offering IFC - International Finance Corporation ILO - International Labour Organization JICA - Japan International Cooperation Agency MSME - Micro Small and Medium Enterprises NGO - Non-governmental Organisation NATO - North Atlantic Treaty Organization OECD - Organisation for Economic Co-operation and Development SIDA - Swedish International Development Cooperation Agency UNDP - United Nations Development Program USAID - United States Agency for International Development WB - World Bank 4 ENTREPRENEURSHIP ECOSYSTEM IN NORTH MACEDONIA MARKET ASSESSMENT 1. REPORT OUTLINE AND METHODOLOGY The main objective of this report is to perform a market assessment of the Entrepreneurship Ecosystem in North Macedonia and on such a basis suggest the adaptation and introduction of Business Development Services (BDS) to match the needs of start-ups and future entrepreneurs in the country. The Report builds upon the findings of the Updated report on the key constraints to the business environment1 prepared in 2019 and the chapter related to the entrepreneurial culture. It concludes that despite efforts to promote entrepreneurship through education and to provide support to self-employment and youth entrepreneurs, the levels of entrepreneurial activity in the country have been stagnating in the past few years and most new entrepreneurs have been motivated by necessity rather than by identified business opportunities. Also, the gender gap in economic activity including entrepreneurship has not significantly improved. On the parallel, the secondary and tertiary educational system still does not provide the knowledge and skills relevant to the country’s economy and the business sector. It further indicates that efforts have been undertaken to increase the support for MSMEs and startups. To reflect on these findings and provide in depth analysis of the entrepreneurial ecosystem, this report will address the current economic situation, its relevant constituents, Governmental policies as well as recommendations to further stimulate and support entrepreneurship promotion. Finally, this Report is intended for the Economic and Social Council (ESC), a tripartite body facilitating social dialogue and socio-economic stability at Governmental level, and shall provide suggestions for future structuring of business development services in accordance with the present situation and the local entrepreneurs’ needs. The entrepreneurial culture in the Republic of North Macedonia started developing in the last decade of 20th century triggered by the emerging privatization process in the newly established country. It took over twenty years of local stakeholders’ effort and tremendous donor support to push the topic of entrepreneurship higher on the economic development agenda along with supporting mechanisms and activities. Entrepreneurial culture and MSMEs’ growth have been traditionally supported at policy level via the formal and non- formal education policies, small business development policy, industrial policy as well as employment policies. Yet, there is much more to be achieved, given the recent spread of Covid-19 and its impact on the business and the previously established economic development goals. The already fragile startup community will have to be additionally supported in the years to come especially in times of uncertainty regarding the possible future outbreaks of Covid-19. This report is structured in four sections. In particular, Section I provides an overview of the economic environment, including an overview of relevant MSME policies, the entrepreneurial ecosystem, entrepreneurial activity and the donor support to entrepreneurship growth in North Macedonia. Section II develops on the findings about the business service providers and provides detailed information about the type of service providers, their target groups and scope of operations. Section III focuses on the entrepreneurial culture and the research results related to the aspirant entrepreneurs’ and entrepreneurs’ attitude towards gaining knowledge and skill for starting a business or growing a business. The final section of this report provides key messages for matching the needs of the entrepreneurial community with the business services and further supporting the economic growth. 1 Update of the report on the key constraints on the business environment, 2019, ILO 5 The research targeting the business service providers, aspirant entrepreneurs as well as the startup community was conducted in the period of March – May 2020, in which period North Macedonia underwent a national state of emergency2 along with curfew measure due to the Covid-19 spread. The situation affected the initially planned research techniques provided that the interviews and meetings were implemented by using digital communication tools and technology. The methodology used in this research includes multiple tools. In particular, the following approaches were applied: a. The Report (Section III) is based on original research data collected via online administered questionnaire that was developed to reflect the current Business Service Providers (BSP) practices and be able to match the supply and demand for business services that build up entrepreneurial skills. Moreover, the question- naire was divided in four sections, demographic data and three constructs. The demographic section consisted of 6 items, the first construct focused on start- up data where applicable (6 items), the second construct explored the attitude and past practices related to BSPs (3 items), the third construct focused on the attitude and planned behaviour for using BSPs and related preferences to the character of non-formal education of their future choice (12 items). Some of the items of the questionnaire were direct questions while some were set as affirma- tive statements and the responses were measured against a 5 level Likert scale where 1-strongly disagree and 5- strongly agree or alternative choices were used for specific items. Below, in Section III, the results for each item are elaborated in detail. The target population was