SUSTAINABLE LOCAL DEVELOPMENT PROJECT IN SERBIA FINAL REPORT SEPTEMBER 21, 2016 This publication was produced for review by the United States Agency for International Development by Chemonics International Inc. SUSTAINABLELOCALDEVELOPMENTPROJECT FINALREPORT CONTENTS 1.INTRODUCTION........................................................................................................................................1 2.ABOUTTHEPROJECT................................................................................................................................2 2.1TheOriginalApproach.................................................................................................................2 2.2Change..........................................................................................................................................3 2.3NewPlansandPrinciples.............................................................................................................5 3.PROJECTACTIVITIES.................................................................................................................................8 3.1INTERͲMUNICIPALCOOPERATIONSUPPORT..............................................................................8 3.2SECTORSUPPORTFORSMALLANDMEDIUMͲSIZEDENTERPRISEDEVELOPMENT.................15 3.2.1Textile–DenimProduction................................................................................................15 3.2.2FootwearSector..................................................................................................................17 3.2.3Wood/FurnitureSector.......................................................................................................19 3.2.4MetalProcessingSector......................................................................................................23 3.3AGRICULTUREENHANCEMENT..................................................................................................24 3.3.1HorticultureIncubatorProgram.........................................................................................24 3.3.2ProducttestinglaboratoryservicesintheRegionalCenterforAgriculturalDevelopment (RCAD)inSjenica..........................................................................................................................25 3.3.3CenterforCollectionandProcessingofNonͲTimberForestProducts(NTFP)inTutin....26 3.3.4FoodͲtestingequipmentforSuboticaLaboratorytoenableincreasedexport...............27 3.3.5SomborAgricultureEducationCenter................................................................................27 3.3.6The‘MountainBreakfast’brand.........................................................................................29 3.4INNOVATION..............................................................................................................................30 3.4.1ICTAcademies.....................................................................................................................30 3.4.23DImPulsCenterinKraljevo..............................................................................................31 3.4.3TechnologyandFoodͲProcessingParkinLeskovac...........................................................32 3.5FOREIGNDIRECTINVESTMENT(FDI)ATTRACTIONACTIVITIES................................................35 3.6STRENGTHENINGPUBLICADMINISTRATIONTOENABLEINTERͲMUNICIPALBUSINESS GROWTHANDINVESTMENTS..........................................................................................................38 3.7INTEGRATINGYOUTHEQUITABLYINTOLOCALECONOMIES...................................................43 4.LESSONSANDCONCLUSIONS………………………………………………………………………………………………………………….46 AnnexA: EightIMCAreasͲNewCriteriaPrograms50 AnnexB: FinancialReport66 AnnexC: PerformanceMonitoringReport67 AnnexD: IndexofReportsandProducts94 AnnexE: TableofCooperatingNGOs96 SUSTAINABLELOCALDEVELOPMENTPROJECT FINALREPORT SUSTAINABLELOCALDEVELOPMENTPROJECT FINALREPORT ACRONYMS AYES AssociationofYoungEntrepreneursofSerbia B2B Businesstobusiness BEE Businessenablingenvironment BFC BusinessFriendlyCertification CB Capacitybuilding CIP CapitalInvestmentPlanning CMS CustomerManagementSoftware CSO Civilsocietyorganization EU EuropeanUnion EUPROGRES EuropeanPartnershipwithMunicipalities FDI Foreigndirectinvestment FTP FoodTechnologyParkinLeskovac GDS GlobalDestinationforShoesandAccessoriesTradeFair GIZ DeutscheGesellschaftfürInternationaleZusammenarbeit GoS GovernmentofSerbia Ha Hectares IMC InterͲmunicipalcooperation IMCA InterͲmunicipalcooperationarea IZ IndustrialZone LED Localeconomicdevelopment LG LocalGovernment(appliestoacityoramunicipality) MAPs MedicinalandAromaticPlants MoU MemorandumofUnderstanding NALED NationalAllianceforLocalEconomicDevelopment NAPOR NationalAssociationofYouthWorkers NARD NationalAgencyforRegionalDevelopment NiCAT NisClusterofAdvancedTechnologies NCP NewCriteriaProgram NES NationalEmploymentService NFE NonͲformaleducation NGO NonͲgovernmentalOrganization NTFP NonͲtimberforestproducts PGI ProtectedGeographicalIndication PMP Performancemonitoringplan PPP PublicͲprivatepartnership Project USAIDSustainableLocalDevelopmentProject PUC PublicUtilityCompany RCAD RegionalCenterforAgriculturalDevelopmentinSjenica RDA RegionalDevelopmentAgency SCC SerbianChamberofCommerce SCTM StandingConferenceofTownsandMunicipalities SDA/RAS SerbianDevelopmentAgency SEDA SandzakEconomicDevelopmentAgency SIEPA SerbianInvestmentandExportPromotionAgency SK SmartKolektiv SLAP SystemofLongͲlistedAdvancedInfrastructureProjects SME SmallͲandmediumͲsizedenterprise STTA ShortͲtermtechnicalassistance TA Technicalassistance VET Vocationaleducationandtraining WG WorkingGroup WP Workplan SUSTAINABLELOCALDEVELOPMENTPROJECT FINALREPORT 1. INTRODUCTION ChemonicsInternationalInc.isproudtopresentthisFinalReportonUSAID'sSustainableLocal DevelopmentProject(SLDP),whichChemonicsimplementedfromDecember22,2010toAugust21, 2016.SLDPwasaprojectrichininnovationandlearning.Asdescribedbelow,theproject,a beneficiaryofUSAID'spatience,flexibility,andcreativity,changeditsmanagementmethodologyand approachinitsthirdyeartorealizeitsoriginalgoalsofcreatingeconomicgrowthinlocalregions.In thisway,SLDPwasanunusualproject,fortunateintheallowanceitwasgiventolearnlessonsand adoptnewsolutionsasitevolved.AtrueproductofUSAID/implementercollaborationand partnership,SLDPbeganasaprojectemphasizinggovernanceandprocessandendedasaproject focusedonprivatesectordevelopmentandconcreteeconomicimpact.Alongtheway,italways soughttoharmonizegovernanceprioritieswitheconomicimperativesandresults,andascanbe seeninthesummaryboxthatfollows,itssuccessfulactivitiesaremanifold. SummaryofAccomplishments: x SLDPexpertsworkedwith69individualcompaniesandninesectorclusters/associations ofproducers,assistingthemtoimprovetheirproduction,expandtheirproductofferings, modernizepromotionalactivitiesandmaterials,andestablishcontactwithpotential buyersabroad. x WithSLDPassistance,6,958newjobswerecreatedinpartnerinterͲmunicipal Cooperation(IMC)areas. x 657youthswhoparticipatedintheSLDPͲsponsoredactivitiesfoundnewemployment. x From2013Ͳ2015,businessrevenuesofSLDPpartnercompaniesincreasedby$25million, adding529newjobs. x Atotalof782youthsparticipatedSLDP'seducationalprograms,andtheprojectorganized 452internships,enabling657youthstofindemployment. x Foreigndirectinvestmentattractioncoaching,businessretentionandexpansiontraining, brownfieldredevelopmentandassetmanagementguidancehelpedpartnerIMCareasto attract$211.8millionininvestmentfrom2013to2016. x 2,877locallyelectedandappointedofficials,membersofCSOs,media,andbusiness peopleparticipatedinprojectͲsponsoredtrainingandexperiencedsystemimprovement throughSLDPtechnicalassistance. x 70eventsandinitiativesorganizedthatpromoteddialoguebetweentheprivate,public andcivilsectors. x 9municipalandinterͲmunicipalinfrastructuredevelopmentprojectssupportedin differentstagesofdevelopment. x 7publicͲprivatepartnershipssupported. SLDPFINALREPORT Page|1 SUSTAINABLELOCALDEVELOPMENTPROJECT FINALREPORT 2. ABOUTTHEPROJECT 2.1TheOriginalApproach SLDPbeganasaprojectmeanttoimprovelocaleconomicdevelopmentbyemployingasetoftools, includinginterͲmunicipalcooperation("IMC"),tostrengthenrelevanteconomicͲorientedlocal administrativeprocessesandencouragepublicandyouthparticipationindecidinglocaleconomic issues.SLDPwasexpectedtoidentifyeightIMCareas,consistingofthreeormorecitiesortowns, and,ineachIMCarea,tomanagethecreationofajointworkingplatformoflocalgovernment, business,andcivilsocietyfromeachmemberͲcommunity.ThisplatformofInterͲmunicipal cooperationwoulddecideon,andimplement,mutuallybeneficialeconomicdevelopmentprojects fortheentireIMCarea,andeachcommunitywouldcontributeresourcestothateffort.The objectivesofSLDP,asdraftedbyUSAID,wereasfollows: ...toassisttheGovernmentofSerbiaandrelevantministriestoenhancethecapacitiesofits localgovernmentstoprovideservicesandfacilitateeconomicdevelopmentinatransparent andparticipatorymannertoreduceopportunitiesforcorruptionwithinthepublicsector. ThelongͲtermobjectiveoftheProjectistocreateasustainablelocalenvironmentfor businesstogrowandprosperthroughimprovedlocalgovernmentcapacities,business advocacyandincreasedpublicparticipationintheareaͲbasedeconomicdevelopment. Initsfirsttwoyears,SLDPconcentratedonthethreetoolsfordevelopmentthatwereoutlinedinits StatementofWork:i.e.,IMCprogramming,publicadministrationreform,andyouthdevelopment andparticipatorymechanism.Ofthesedevelopmenttools,IMCprogrammingpresentedthemost difficultmanagementchallengebecauseitwascompletelynewtoSerbia.BoththeIMCconceptand