WE REMAIN COMMITTED TO SERBIA’S PROGRESS

We spoke with Mike De La Rosa, USAID Mission Director, ahead of the finalization of the new USAID five-year strategy for Serbia. We also took the opportunity provided by this interview to briefly discuss USAID’s accomplishments over the course of almost two decades.

USAID has been in Serbia since 2001. How much assistance has USAID provided and what has changed during that time? - You’re right, and next year we’ll actually be celebrating 20 years of our successful partnership with Serbia. So far, the U.S. has provided over $1 billion in assistance during this period, with nearly $840 million provided directly by USAID. Our focus has, from the start, been centered on supporting good governance and creating the right conditions for economic

MIKE DE LA ROSA USAID MISSION DIRECTOR

We’re confident that the new Serbian government will remain committed to our shared priorities: Serbia’s EU accession and stimulating the economy. We’ll continue assisting government institutions to meet the public’s demand for improved accountability and responsiveness, as well as making Serbia a more attractive place to do business

growth, but we’ve also provided emergency assistance over the years, to help Serbia with crises such as flooding and, more recently, COVID-19.

One of our biggest initial priorities was to help people to more directly participate in decision making and governance at the local level. We brought people together to discuss pressing needs and to decide which ones they wanted to partner on. Through just one of our programs, for example, we undertook more than 5,000 separate activities ranging from renovating health centers to supporting small businesses. Having garnered trust at the local level, we then began working with forward-looking partners at the national level, to help drive needed reforms. Most people who run for government, and work in government, really do want to be more responsive to the needs of citizens and businesses, but they often lack the right tools to do so. We provide those tools.

On the economic growth side, we’ve always approached the obstacles to doing business from both the supply and demand

sides. This means helping the Government to reform policies tries where we work, and hopefully our partnership with Serand regulations to bolster legitimate private sector develop- bia will evolve similarly. ment, while working with entrepreneurs on the demand side The pandemic has actually served to illustrate how much to help them better compete on the local, regional, and inter- progress Serbia has made on its Journey to Self-Reliance. As national markets. Wherever we work, we consult with our gov- with most countries, the Serbian health system endured signifernment and non-government counterparts to understand the icant strain, and the economy suffered a big hit – but, overall, challenges and to see how best to drive transformation and Serbia has displayed tremendous resilience. This isn’t a parsustainable change. We then figure out what is doable with ticularly easy time for any country, but the hard work of evthe resources we have, roll up our sleeves, and get to work. eryone here – from doctors to street cleaners – has been payWhat will be your priorities for cooperation with the new Ser- many of which are our partners, delivering food for the elderbian government that’s currently being formed? ly or making masks for health workers. With winter coming, - We’re not expecting major changes in how we partner with Serbia will need to continue to stand strong. Going forward, the Government. We’re confident it will remain committed we’ll work with Serbia to mitigate the impact of this and futo our shared priorities: Serbia’s EU accession and stimulat- ture crises, and to continue along its path of economic and ing the economy. We’ll continue assisting government institu- democratic development. tions to meet the public’s demand for improved accountabil- We’ve certainly had to adjust the way we work, and while ing off. We’ve seen civil society organizations and companies, ity and responsiveness, as well as making Serbia a more at- In addition to helping Serbia become more resilient in the tractive place to do business. face of future crises, how have you directly assisted Ser-

We’re currently in the process of finalizing a new five- bia in responding to the challenges of the pandemic during year strategy that will build on the work we’ve already done, these last six months? but we’ll also be looking to explore new opportunities. One - We’ve actually provided quite a bit of assistance to battle the pandemic during these last several

One of the overriding themes of our new five-year strategy will be to help halt the brain-drain by driving reforms that show youngsters that they can build their futures here in Serbia months. USAID funded and partnered with different UN agencies to help meet Serbia’s most pressing needs, including the provision of COVID test kits, oxygen concentrators, pulse oximeters, patient monitors, X-ray machines, and testing containof the overriding themes will be to help halt the brain-drain ers for health facilities. by driving reforms that show youngsters that they can build We also worked through UNICEF and the Serbian Red Cross their futures here in Serbia. We know that improving the en- to provide food parcels, hygiene, sanitation, and educationvironment for doing business will allow innovative companies al kits for thousands of vulnerable families. Ahead of the reto create more and higher-paying jobs, but good jobs are on- cent elections in June, we provided the Election Commission ly part of the equation. People also want to know that they with a COVID Risk Assessment and Mitigation Strategy and can enjoy the same rights and opportunities they would have helped them to inform voters about effective safety measures. abroad. Stimulating regional economic growth is a U.S. prior- And we’re working right now with the regional COVID hospital ity, as reflected by this year’s efforts of Special Presidential in Pančevo to get its heating and hot water system working Envoy Richard Grenell. properly and efficiently. Meanwhile, other sections of the U.S. Did your post-COVID strategic priorities change as a result send Personal Protective Equipment (PPE) and other items of the pandemic? If so, in what sense? requested by the Serbian Government. Government, like the Department of Defense, stepped up to we may be exploring other sectors to work in, such as health, Based on the surveys you’ve conducted during the COVour development priorities have not fundamentally changed. ID-19 pandemic, in which areas do businesses need assisWherever we work, our goal is to work ourselves out of a job. tance the most? To do this, we work to help countries along what we call the - For small and medium-sized enterprises, which we commonJourney to Self-Reliance. An excellent example of how this ly refer to as SMEs, the short answer is financing and digitizaworks is one of our largest beneficiaries of U.S. assistance tion. This pandemic has required most businesses to pivot in from years ago – South Korea. Today, the Korean equivalent some significant way. While half of businesses were able to of USAID actually partners with us in some of the other coun- transition some employees to telework, we also saw that 20

percent of respondents reduced business operations and near- - I believe that when you create a strong business enabling enly 15 percent had to temporarily shut up shop. Overall, nearly vironment, you make investing in Serbia more attractive for 90 percent of companies expect revenues to drop this year. both domestic and international investors. For a country like

We knew that having eCommerce capacities was impor- Serbia, you need foreign investments to create jobs, but, of tant for SME growth even before the pandemic. USAID actu- course, you want to make sure these investments are benefially helped the Government of Serbia to produce its E-com- cial for local communities and the country without hampering merce Development Program and Action Plan, which was ad- the growth of viable businesses that already exist. opted several months before the pandemic hit Serbia. This Regarding our partner SMEs, we were working with them capacity for eCommerce has now become indispensable for even before the pandemic to introduce digital solutions and most businesses. The exponential growth in food deliveries diversify their markets. This has definitely helped them to this year shows how this works. Restaurants could keep mak- mitigate the impact. Online sales are here to stay, and domesing food and continue serving their customers. Brick and mor- tic online payments in Serbia have skyrocketed over the last tar shops also began dipping their toes into two years. We saw that once the pandemic online marketplaces, but this shift is still in hit, many SMEs quickly transitioned to sellits infancy. Buyers need to feel that shop- ing more online, accelerating digital transping online is both convenient and safe. In formation and essentially mainstreaming order for this to happen, companies need it. Our partner, the Shopen.com platform, to invest in things like cybersecurity, which facilitated this transition free of charge in requires financing. order to help SMEs switch to online sales.

Speaking of financing, helping busi- SMEs all over the country took advantage nesses to more easily access credit would and now more than 500 are actively using hugely spur Serbia’s economy. In this regard, the platform. Another great example is the USAID recently partnered with the Minis- startup Gajbica.rs. They pivoted from cortry of Agriculture to develop a $91 million porate to home food deliveries and experiloan guarantee for a wide range of SMEs enced a 500% increase in orders and even operating in the agriculture sector. In just hired more staff. Even in the post-COVID-19 the first year, the commercial banks with period, we expect that many of these drawhich we’re working have already provid- matic shifts in how businesses do their work ed $20 million in loans, and they expect to will in fact continue, and we’ll work with our provide another $20 million in loans in the partner SMEs to transition into this brave next couple of months, as a result of our new world. loan guarantee. Given USAID’s tremendous success in the agricultural sector, we’ll also be exploring sizable loan guarantees in the media and energy sectors, where an inability to access credit is also problematic. USAID helped the Government of Serbia to produce the E-commerce Development Program and Action Plan, which was adopted several months before the pandemic hit Serbia. This capacity for eCommerce

Additionally, we assisted the Ministry of Finance in creating the new Alternative Investment Funds EU accession is by far the most important goal for Serbia. Law, which is instrumental in supporting the private equity How do you plan to assist this process in the coming period? market. We helped develop the new law along with a novel - We obviously support Serbia’s decision to pursue EU memset of tax incentives to spur local equity investment. Adopt- bership – it’s our top priority as well. So, all our programming ed a year ago, this new law represents a cornerstone of the is aligned with Serbia’s efforts to move in that direction. Reimproved financial system in Serbia, since it helped with the gardless of when Serbia enters the EU, the actual process of establishment of a local investment fund market and broad- adopting and executing the required reforms to legislation ened the range of available equity financing options. to meet this goal ultimately benefits Serbia, and the country’s people. As such, we coordinate closely with our EU colSome people suggest that, under these new circumstances, leagues, especially in the areas of rule of law, media reform, Serbia needs to change its growth strategy by focusing on and anti-corruption, while our private sector assistance fodomestic companies. How well are the companies that were cuses on creating a functioning market economy to help Sersupported by USAID handling the challenges of the pandemic? bia become increasingly more competitive.