Factsheet - AI at local level

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Artificial Intelligence in Local Government

Project: Name “Building Administrative Capacities of the Western Balkans and the Republic of Moldova” Publisher: Network of Associations of Local Authorities of South-East Europe (NALAS) Mr. Kelmend Zajazi, Executive Director Co-publisher.: KDZ – Centre for Public Administration Research Mr. Thomas Prorok, Managing Director Authors: Mr. Christian Rupp, International Digitalization and Smart City Expert Ms. Jana Belcheva Andreevska, Decentralization and Smart City Expert, NALAS Authors/Contributors: Ms. Dejana Radović, City of Podgorica Ms. Nermina Suljević, City of Sarajevo Mr. Branislav Misović, ALVRS Mr. Nikola Todorovski, ZELS Ms. Karina Donevska, ZELS Mr. Palii Alexandru, CALM Mr. Bosko Nenadović, SKGO This publication is a collaborative effort of NALAS Digitalization Working Group Design by: Brigada dizajn, Skopje

Supported by:

Disclaimer The views expressed in this Survey, represent the opinions of the contributors, authors and editors.

They do not necessarily represent the views of the ADA, KDZ or BACID.

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

Introduction

The digital transformation at the local level is a vital process for fostering economic growth and accelerating the European Union integration of countries in the Western Balkans and Moldova. This factsheet builds on the study Empowering Progress with Digital Transition in Western Balkan and Moldova Local Governments.

The factsheet “Artificial Intelligence in Local Government: Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova”focuses on this key component for driving progress and accelerate the transformation process - the topic of artificial intelligence (AI) in local government. Along the benefits of AI that are widely discussed, the associated risks, which call for regulations governing its use are expressed.

AI has already infiltrated nearly every aspect of life, bringing profound changes that will shape the future of local innovation and influence the fairness of the digital transition. As AI continues to evolve rapidly, its impact on industries, economies, and communities grows stronger, presenting both opportunities and challenges.

To elaborate on this factsheet, the authors employed desktop research and actively engaged members of the NALAS Digitalization Working Group, who provided valuable insights on all topics covered. The study also incorporates measurements and analyses conducted by the EU for the Western Balkans and Moldova, alongside best practices that have demonstrated successful outcomes and are applicable or recommended to local governments within the EU. In public administration, AI can revolutionize operations by streamlining internal processes, improving decisionmaking, and enhancing the delivery of services to citizens.

Local governments can leverage AI to offer more efficient, transparent, and citizen-centric services, aligning with modern expectations.

To fully embrace the potential of AI, there are significant opportunities to invest in talent development and to share knowledge and experience with peer local governments, both within the region and across the EU. Such collaboration can strengthen local capacities, build networks, and ensure that the benefits of AI are accessible and equitable.

Local governments that lack access to skilled AI talent or robust infrastructure risk falling behind in this transformative era. The gap between AI-ready and those struggling to keep pace could widen, intensifying existing inequalities in digital development. However, AI also holds the potential to act as a powerful driver of change. By focusing on place-based solutions, local governments can harness AI to address unique community needs, promoting innovation and accelerating the digital transition.

AI applications, such as chatbots, are already being used, but the potential of AI extends much further and depends on the availability of local data sets and their analytics, which must be directed towards delivering higher-quality solutions for citizens, tailored to their needs at the local level.

The authors believe that this factsheet will contribute to the next steps in digital and green transformation at the local level, helping to harness best practices, recommendations, and knowledge to bridge the gap in the quality of life for citizens of the Western Balkans and Moldova through advanced technological solutions.

Lastly, the authors extend their sincere gratitude to the teams at KDZ and NALAS for the opportunity to produce this factsheet and present it to the public.

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Artificial Intelligence in Local Government

CONTENTS Introduction

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Artificial Intelligence and Data Economy for Municipalities

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AI to solve challenges in local authorities

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Importance of change management, the legal framework and ethical principles

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Digital leadership in public administration

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Skills, education, campuses and training platform

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Ethical use, guidelines and legislation

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Excursus: EU AI Act (AIA)

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AI in Public Administration Western Balkan 6 and Moldova

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Albania

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Bosnia and Herzegovina

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Kosovo

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Moldova

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Montenegro

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North Macedonia

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Serbia

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Conclusions and recommendations

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Conclusions on AI at the Local Level in the Western Balkans and Moldova

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Recommendations for ADVANCING AI

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Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

ARTIFICIAL INTELLIGENCE AND DATA ECONOMY FOR MUNICIPALITIES The rapid and diverse development of artificial intelligence (especially after the market launch and free provision of ChatGPT in November 2022) has created a broad scope for potential applications in public administration. From the automation of processes and recommendations for decision support to real-time decision-making and the improvement of administrative services there are numerous areas of application to choose from. But which fields of benefit and application are identified for the use of artificial intelligence in public administration and how can these be utilised both effectively and efficiently?

In some areas of public administration, the use of AI is already part of everyday life.

For example, automated application and invoice processing, review of documents and preparation of judgements in mass proceedings (e.g. OLGA1 at the Augsburg Higher Regional Court and FRAUKE2 at the Frankfurt Regional Court), meeting support (e.g. F133 in Baden-Würtemberg), chatbots to relieve the burden on citizen services (e.g. WienBOT4 or LUMI5 in Heidelberg), predictive policing for better deployment planning by security authorities, optimisation of traffic management, relief in personnel management, simplification of resource planning, fraud detection, better risk management and automated translations are used as a matter of course.

Language models can be used to visualise the effects of laws in enforcement and the associated need for action in different areas of an authority. The adoption of new laws has a wide range of effects on the administration. The authorities responsible for implementing benefits are particularly affected. This results in time-consuming and error-prone interpretations, manual adjustments to follow-up documents such as implementation instructions and high training costs.

AI to solve challenges in local authorities The German AI Institute for Local Authorities - URBAN.AI6 is working on using AI to solve a wide range of challenges in local authorities. With the help of local universities and AI research institutions, municipalities can develop concrete use cases to become the smart cities of tomorrow. With the expertise of the municipalities and the technical implementation skills of the partners, prototypes can be quickly created and tested to make the benefits of AI immediately tangible in the municipalities.

1

https://de.newsroom.ibm.com/2022-12-07-OLG-Stuttgart-pilotiert-IBM-Massenverfahrensassistenten-zur-Fallbearbeitung-inDieselabgasverfahren

2

https://justizministerium.hessen.de/presse/pressearchiv/ki-projekt-codefy-am-landgericht-frankfurt-gestartet

3

https://www.baden-wuerttemberg.de/de/service/alle-meldungen/meldung/pid/kuenstliche-intelligenz-in-der-verwaltung

4

https://www.wien.gv.at/bot/

5

https://www.heidelberg.de/Digitale-Stadt/startseite/projekte/ki-buergerassistenz+lumi.html

6

https://urban-ki.de/

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Artificial Intelligence in Local Government

Table 1: Urban.AI areas of innovation AI for urban planning & (geo)databased infrastructures AI technologies automate the updating of cadastral data and the creation of condition maps and support the recognition of vegetation and sealing types for climate and environmental analyses.

AI for buildings, supply & disposal Automated processes using AI improve the updating of cadastral data, the creation of condition maps and the analysis of building structures, thereby promoting energy efficiency and sustainability.

AI for mobility planning & control By integrating remote sensing data and crowd data, AI-based systems optimise traffic control, reduce congestion and CO2 emissions and improve the user experience in traffic.

AI for environmental planning, climate protection & climate impact adaptation AI-supported evaluations of remote sensing data enable the analysis of municipal properties and the adaptation of infrastructures to climate change by recognising sealed areas and types of vegetation.

AI for civil protection & civil security

AI for administrative processes & citizens

AI-supported systems and robotic technologies support emergency services, improve data analysis and decision-making in rescue operations and promote knowledge transfer through prototypes and demonstration platforms.

AI-based applications increase the efficiency and quality of public services, reduce the workload of employees and enable barrier-free, user-friendly interactions with citizens through conversational interfaces and voice assistants.

Local public transport is also using AI in various areas to improve its offers and services, increase internal efficiency and improve safety (e.g. KARL7). The use of AI for predictive maintenance of the vehicle fleet, timetable optimisation, customer interaction, video surveillance at train and bus stations, passenger forecasts, staff deployment planning and automation in rail and bus transport are just a few examples (e.g. DAKIMO8).

Large language models also help to generate helpful text outlines and document drafts based on text bodies and file locations, which are not yet fully developed standard documents. Text summaries and translations are further valueadded services of these language models (e.g. DEEPL9).

7

https://kompetenzzentrum-karl.de/ki-im-einsatz/leitstelle/

8

https://dakimo.server.de/

9

https://www.deepl.com/

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

Importance of change management, the legal framework and ethical principles AI systems can perform certain activities more efficiently. Therefore, the introduction of AI in administration will inevitably bring about changes for employees in the public sector and will lead to a reorientation in the fields of activity.

It is not only possible fears of job losses and changes that play a role here, but also opportunities that can arise from expanding skills and focusing on more demanding tasks as well as the challenges of demographic change. The importance of change management processes is also emphasised in order to ensure the smooth integration of AI into existing workflows and to promote employee acceptance.

At the centre is always the question of attention how to ensure that AI applications comply with ethical principles, the legal framework of public administration and the free and democratic basic order. And therefore, how does the increasing use of AI solutions affect personnel in public administrations and what changes can be expected both through and in the change management processes? What competences are therefore required in the offices and authorities in order to successfully manage the use of AI and ward off any dangers without being exposed to lock-in effects or dependencies?

„Successful digital transformation does not come from implementing new technologies but from transforming an organisation to take advantage of the possibilities that new technologies provide.

Besides leading the change, this also requires that all people in an organisation-leadership, IT professionals, employees in other divisions obtain the skills to embrace technology.“ 8

One of the first and therefore oldest ‘AI learning modules’ is a portal of the Finnish EU Presidency from 2018 called “ElementsOfAI” 11 which is still regularly updated and available in around 30 languages, except from the Western Balkans.

NALAS could be easily bring the Elements of AI courses to all their partners in their native language.

Linking the use of technical tools with social structures and mechanisms necessitates a sharp understanding of what tools can and cannot achieve. It requires a clear definition of the interface between technology and social structures, including resolving questions of agency and control. It also entails a sufficiently defined focus for technical tools to deliver what is expected from them. This means tools must be well understood and evaluated as fit for purpose. And we must equally expect a clarity of design and process from the social structures that make up the system of guardrails, as well as a functioning interface. More challenging but also potentially more useful would be socio-technical setups that are capable of iteration, adaption, and learning - so that the system of guardrails not only helps individual decisionmakers to improve but also the system itself to evolve and progress as experience accrues and contexts become clearer.

Digital leadership in public administration The digital transformation is a design task that does not focus on technology, but requires a holistic view of organisation, people and technology. In order to successfully exploit the potential of the digital transformation of public administration, the skills of employees are increasingly taking centre stage. Skills are seen as a relevant driver of digitalisation in the public sector.

Local authorities need to develop as well as knowledge about the potential and risks of big data. Municipalities’ AI and smart city activities require the establishment and continuous (further) development of expertise in urban data. However, in view of existing mandatory tasks and specialised procedures, smaller and medium-sized municipalities in particular are faced with the question of how such an additional challenge can be overcome and how integration into the administration can be ensured.12 10

European Commission (2016) eGovernment Benchmark 2016: A turning point for eGovernment development in Europe (p 76f) http://publications. europa.eu/resource/cellar/b3627b36-b212-11e6-871e-01aa75ed71a1.0001.01/DOC_1

11

https://www.elementsofai.com/

12

Rupp, C.: Wie der öffentliche Sektor KI schon einsetzt (S 29-31), Fachzeitschrift Innovative Verwaltung, Ausgabe 11/2023, Springer Fachmedien Wiesbaden (ISSN 1618-9876), https://www.springerprofessional.de/wie-der-oeffentliche-sektor-ki-schon-einsetzt/26299462

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Artificial Intelligence in Local Government

Digital leadership in public administration is understood as “a new form of leadership that attempts to harmonise employees, technologies, the framework conditions of public administration and the wishes of citizens and companies in times of digital change”.13 Digital leaders are needed in public administration who act as drivers of innovation and create a climate that enables the development of a digital mindset. They are leaders to establish the local digital ecosystem and promote partnership for development.

Skills, education, campuses and training platform In terms of transfer to the day-to-day work of public administration, the identified competences can be built up through educational events such as workshops. The “Digital Leadership” centre in Germany14, for example, offers such events in which agile project management methods such as Scrum and problem-solving approaches such as design thinking are taught. However, it is emphasised that managers should not simply adopt what they have learned, but must apply it to their own situation in a self-reflective manner.

There is also informal learning, which promotes independent exploration of new technologies. In addition, employees can be trained as digital coach who act as multipliers and teach their colleagues. Communities of practice (CoP) and homogeneous focus groups offer the opportunity for managers to discuss specific use cases together and develop solutions to problems.

In the area of e-learning, the development of an education and training platform in the form of a Massive Open Online Course (MOOC) solution is recommended. Such a platform enables various universities to offer educational content that can be supplemented by blended learning (face-to-face and e-learning) and simulation games.

A good example is the AI-Campus 15 in Germany. A learning platform for artificial intelligence with free online courses, videos and podcasts in various topics of AI and data literacy. All learning opportunities are available free of charge. In addition, AI Campus Originals are openly licensed (CC BY-SA 4.0) 16. A cooperation between NALAS and the AI-Campus is recommended in order to offer these courses to Western Balkan and Moldova.

Fellowship programmes are also recommended to ensure the transfer of newly learned methods and working methods into everyday working life. Experts from the private sector can teach employees new ways of working as part of projects within the authority.

At the fellowship Tech4Germany 17, for example, the best talents and experts from the fields of product, design and engineering work with digital pioneers from federal ministries and authorities on specific digital projects. In interdisciplinary teams, they develop a deep understanding of problems and users using agile and user-centred methods and create prototype software products within three months.

13

Kusanke K., Kendziorra J., Pilgenröder S., Winkler T.J.: Maßnahmen für den Aufbau von Digital Leadership - Kompetenzen für Führungskräfte im öffentlichen Sektor, HMD Praxis der Wirtschaftsinformatik (2024) 61:202–219, https://doi.org/10.1365/s40702-023-01026-3

14

https://www.diefuehrungsakademie.de/kompetenzzentrum-digital-leadership

15

https://ki-campus.org/front?locale=en

16

https://creativecommons.org/licenses/by-sa/4.0/

17

https://digitalservice.bund.de/fellowships/tech4germany

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

Ethical use, guidelines and legislation The challenge for the use of AI in practice is to organise it in such a way that administrative processes and decisions can benefit from it without neglecting concerns, particularly with regard to data protection and ethics, and without undermining fundamental democratic values. The effects of such changes on technology, activities, processes, organisations and ultimately the entire public sector can be guessed at, but their concrete form remains shrouded in the fog of uncertainty and the exaggerated expectations of social hype.

Guidelines are essential and NALAS could develop such guidelines as a blueprint for members. Good examples from Austria include: AI compass City of Vienna18 and the AI strategy City of Linz 19, or the Guidelines from BMAS Germany20 or BMÖLS Austria 21. These guidelines also offer a practical decision tree, criteria and measures to help you decide whether and under what conditions data-driven AI technology can be used in public administration. The checklist for ethical AI 22 in public administration in Austria also provides a brief initial overview.

For starters, successfully regulating AI requires a robust and effective administrative state, the ability for individuals to bring causes of action against culpable companies, an approach to free expression focused on people and not profit, and the political will and ability to enforce the rules we’ve already got 23. Transparency, consent, self-regulation, and limiting uses of AI: lawmakers should embrace a strategy of duties, design rules, defaults, and data collection dead ends for data processing and deployments of AI. This layered approach will more squarely address data extraction, normalization, and self-dealing and better ensure that research and development into AI advances the public good.

Table 2: Global Index on Responsible AI 24 COUNTRY

Netherlands Germany Slovenia Austria Croatia Serbia North Macedonia Montenegro Moldova Albania Kosovo

INDEX SCORE

86,16 82,77 49,58 35,76 23,58 21,24 18,14 14,84 12,99 4,06 2,15

PILLAR SCORE

DIMENSION SCORE

Frameworks

Government Actions

Non-State Actors

74,33 72,69 68,89 55,85 33,59 29,96 12,69 0,00 0,00 3,38 0,00

95,46 93,00 39,63 26,87 14,76 9,11 14,85 15,01 29,04 6,07 2,81

91,23 82,48 30,84 13,38 21,20 28,04 35,64 44,19 6,85 1,41 5,15

Human Rights National Responsible Responsible AI and AI AI Capacities Governance 78,74 80,30 51,97 28,64 30,95 19,89 22,47 20,61 13,72 0,77 2,80

88,59 64,03 51,35 48,63 21,85 21,39 14,15 17,02 7,51 23,95 7,12

91,12 90,94 47,12 37,01 18,43 22,23 16,11 9,63 14,25 0,00 0,00

18

https://digitales.wien.gv.at/ki-kompass-fuer-bedienstete-der-stadt-wien/

19

https://www.linz.at/images/files/ki-strategie_stadt_linz.pdf

20

https://www.bmas.de/SharedDocs/Downloads/DE/Publikationen/a862-01-leitlinien-ki-einsatz-behoerdliche-praxis-arbeits-sozialverwaltung.html

21

https://oeffentlicherdienst.gv.at/wp-content/uploads/2023/11/Leitfaden-Digitale-Verwaltung-Ethik.pdf

22

https://oeffentlicherdienst.gv.at/wp-content/uploads/2023/11/231114_Formulare_Checkliste_ethische_KI.pdf

23

https://www.ftc.gov/policy/advocacy-research/tech-at-ftc/2024/02/ai-other-companies-quietly-changing-your-terms-service-could-be-unfairor-deceptive

24

Measuring responsible AI in 138 countries https://global-index.ai/Region-Europe

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Artificial Intelligence in Local Government

Excursus: EU AI Act (AIA) With the AI Act 25, the EU is one of the world’s pioneers in the regulation of artificial intelligence. The AI Act ensures the safe use of AI systems, creates investment security through a clear legal framework and thus strengthens the research, development and use of AI systems. The AI Act provides for many roles (actors in accordance with Art. 3 (8)) in the AI value chain: zz Provider zz Product Manufacturer zz Authorised Representative zz Importer zz Distributor zz Deployer There are also users and ‘data subjects’. However, these are not referred to as actors within the meaning of the AI Act. The various players take on different activities in the AI value chain. A distinction is made between ‘placing on the market’, ‘provision’ and ‘commissioning’, which are also legally defined in the AI Act. The AI Act follows a risk-based approach in order to introduce a proportionate, effective and binding set of rules for AI systems.

AI systems are categorised according to their risk potential as unacceptable, high, low and minimal risk. The AI Act defines risk as ‘the combination of the likelihood of harm occurring and the severity of that harm’ (Art. 3) and assesses in particular potential harm to individual and/or public interests (health, safety, fundamental rights, including democracy, the rule of law and environmental protection). Damage can be of a material or immaterial nature. It covers physical, psychological, social or economic damage.

General purpose AI models occupy a special position in this categorisation.

There is a clear distinction between the terms ‘AI systems’ and ‘AI models’. Not all AI models fall within the scope of the AI Act, but only GPAI models. Although GPAI models can be part of an AI system, they do not form an AI system in isolation. In order for a GPAI model to become an AI system, additional components - such as a user interface - must be added. In this case, it is referred to as a general purpose AI system (or GPAI system) within the meaning of Art. 3 (66) AIA. The timeframe of the EU AIA - Entry into force of the AI Act: 1st August 2024 (20th day after publication in the Official Journal of the European Union).

Six months after the AI Act comes into force (1st February 2025), the practices classified as ‘prohibited’ may no longer be used.

The regulations on AI competence (‘literacy’) also apply. This means that providers and operators of AI systems are obliged to take measures to ensure that their staff and other persons involved in the operation and use of AI systems on their behalf have sufficient knowledge. The provisions on general purpose AI systems must be applied twelve months after the AI Act comes into force (1st August 2025). Furthermore, the regulations on notification bodies also apply. EU-Member states are obliged to designate at least one notifying authority that is responsible for setting up and implementing the necessary procedures for the assessment, designation and notification of conformity assessment bodies and for their monitoring. The governance provisions must also be applied, whereby the EU-Commission at Union level and the EU-Member-States at national level are required to establish or designate the intended authorities and institutions. In addition, the penalty provisions apply from this date on.

24 months after the AI Act comes into force (1st August 2026), all obligations apply in principle. This means that the requirements for high-risk AI systems in accordance with Annex III (but not Annex I) and AI systems with low and minimal risk must be complied with. 36 months after the AI Act comes into force (1st August 2027), the requirements for high-risk AI systems in accordance with Annex I apply.

25

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202401689

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

AI IN PUBLIC ADMINISTRATION IN THE OF THE WESTERN BALKANS AND THE REPUBLIC OF MOLDOVA The first Public Administration AI projects are also already underway in the Western Balkans and Moldova. Based on the desktop research and inputs from the NALAS Digitalization working group members, the list of findings are presented in the following chapter.

Albania Albania is actively pursuing the integration of artificial intelligence (AI) into its public administration as part of its efforts to align with European Union (EU) standards and to streamline the transposition of EU legislation.

The Albanian government announced end of 2023 to use ChatGPT to translate thousands of pages of EU legal measures as well as provisions into Albanian language (shqip) and then integrate them into existing legal structures or provide a detailed overview of what and where changes need to be made to local legislation to align with EU rules.26 These efforts reflect Albania’s commitment to leveraging technology to enhance governance and facilitate its EU accession aspirations, despite concerns about the regulatory framework and the ethical implications of AI use in public administration. zz Tender for AI Integration: The Albanian government, through the National Agency for Information Society (AKSHI), has launched a tender for an AI project aimed at enhancing public administration. The budget for this project is around $2.5 million. The initiative focuses on automating tasks, translating EU legislation into Albanian, classifying institutions, and utilizing chatbots for information responses. zz Virtual Assistant Launch: Albanian government introduced an AI-based virtual assistant named “Virtual Assistant 1.0.”, a tool designed to facilitate governmental processes and improve public service delivery.

Bosnia and Herzegovina In Bosnia and Herzegovina, the implementation of Artificial Intelligence (AI) in public administration is still in its early stages. Several projects aimed at enhancing public services through digital transformation are initiated.

The only direct mention of AI in legislation currently exists within the 2021–2027 Development Strategy adopted by the Parliament of the Federation of Bosnia and Herzegovina. 27 As AI technologies continue to evolve, continual efforts are needed to update legal and policy frameworks to address emerging challenges and opportunities.

In September 2020, UNDP and the British Embassy in Bosnia and Herzegovina signed a Memorandum of Understanding to support the country’s digital transformation. 28 This partnership launched the Digital Transformation in the Public Sector Project, which aims to enhance the government’s capabilities and leverage technology and innovation for more effective and inclusive governance and public service delivery. The initiative aims to boost government institutions’ adoption of innovative technologies, including AI, creating supportive legal and policy framework for digital governance, improves e-services, and fosters knowledge-sharing among public sector stakeholders.

26

https://www.faz.net/aktuell/wirtschaft/unternehmen/chatgpt-soll-albaniens-eu-beitritt-beschleunigen-19387880.html

27

https://www.fzzpr.gov.ba/files/Strategic%20documents%20of%20FBiH/Development%20Strategy%20of%20the%20FBiH%202021-2027-summary_ENG.pdf

28

https://www.undp.org/bosnia-herzegovina/projects/digital-transformation-public-sector-bih

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Artificial Intelligence in Local Government

Kosovo Kosovo’s public administration is in the early stages of AI adoption. There are no comprehensive strategic documents dedicated to AI yet. The government recognizes the need for more preparation and infrastructure development to leverage AI technologies in public services. Ongoing discussions and regional collaborations are crucial to addressing challenges such as data privacy, public trust, and resource constraints in implementing AI solutions effectively.

A good starting point for AI is the Open Data Kosova (ODK) strategy 2023-202829 to effectively leverage technology for social, environmental, and economic development in the next five years.30 One pilot project on AI use in the public sector is „AI-powered EU legal alignment“31 done by two enthusiasts inspired by Albania efforts on harmonizing legal framework for the European Union via AI implementation. They demonstrated the transformative potential of AI in streamlining complex legal processes, optimizing resource allocation, and accelerating legal alignment.

Moldova Moldova’s government has recognized the need to improve its public administration to meet European Union standards. A significant “Public Administration Reform Initiatives Project“32 supported by the German Federal Ministry for Economic Cooperation and Development (BMZ)33 aims to enhance the capabilities of the Moldovan public administration focuses on: zz Training Civil Servants: Enhancing skills in digitalization and public finance management. zz Reforming Staff Organization: Implementing performance-based recruitment and promotion systems to create a more attractive civil service. zz Digitalizing Services: Optimizing financial administration services and expanding municipal services to improve citizen access to digital administrative processes.

The Moldova Development Strategy 203034 emphasizes the role of AI in sustainable development. The strategy outlines how AI can be leveraged to improve public administration functions, including decision-making processes and service delivery. This aligns with broader goals of digital transformation and modernization within the public sector.

The Moldovan government is also focusing on digitalization programs within the Ministry of Internal Affairs35. These programs aim to: zz Modernize Law Enforcement: By integrating information technology and communication tools to improve operational efficiency and service delivery. zz Enhance Data Utilization: Creating systems that maximize the use of data for better governance and public service delivery. zz Training and Recruitment: Developing a corps of professional public servants through transparent recruitment and training processes 29

https://opendatakosovo.org/wp-content/uploads/2024/02/Open-Data-Kosovo-Strategy-2023-2028.pdf

30

This document has been prepared as part of the Institutional Grant, granted by the Kosovo Foundation for Civil Society (KCSF) through the program ‘EJA Kosova’, co-financed by the Swiss Agency for Development and Cooperation (SDC), Sweden, and the Government of the Grand Duchy of Luxembourg.

31

(26) How can AI help Kosovo join the EU? | LinkedIn

32

https://www.giz.de/en/worldwide/142367.html

33

https://www.bmz.de/en

34

https://joinup.ec.europa.eu/sites/default/files/inline-files/NIFO_2024%20Supportive%20Document_Moldova_vFinal_Final_rev.pdf

35

https://opencode.md/en/tasks-examples/digitalization-program-internal-affairs-system/

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

Montenegro Montenegro is making steps towards incorporating AI into its public administration, but significant challenges remain.

The non-governmental organization Montenegrin AI Association (MAIA)36 was founded in 2022, dedicated to create Montenegro’s AI community and promote AI research and awareness. MAIA’s core team of scientists and engineers focuses on encouraging collaboration, providing AI education, and developing innovative AI solutions and services.

The development of a comprehensive legal framework, investment in education and infrastructure, and fostering collaboration are critical steps needed to enhance the effectiveness of AI in public services.

In Capital city Podgorica an AI-powered service called Superslužbenik (Super Officer) has been launched. (https:// asistent.epodgorica.me/). This is a pilot project in which the Super Officer is equipped to provide citizens with information and answers to questions related to the Capital City’s operations.

The vision behind Super Officer is to create a service that is well-versed in all procedures, allowing citizens to simply explain their needs in natural communication. Super Officer will handle the submission of requests, gather necessary information and documentation, and prepare and forward requests to the appropriate municipal service for further processing.

North Macedonia North Macedonia is posed to leverage AI in public administration, the success of these initiatives depends on the establishment of a robust strategy and regulatory framework.37 North Macedonia’s government launched ADA38 in April 2023, the first AI-based digital assistant39 in the public sector that provides companies with information on investment conditions and available state aid in the country.

The integration of AI in North Macedonia is part of a broader trend in the Western Balkans, where economies are increasingly looking to adopt emerging technologies to improve public service delivery and governance. However, challenges such as economic limitations and insufficient educational resources hinder progress across the region.

Serbia Serbia’s Government Data Center40 was opened in 2020 and represents an infrastructural milestone in developing e-government and information and ICT in Serbia.41 In March 2021, the Serbian government established “The Institute for Artificial Intelligence of Serbia” (IVI).42 The implementation of artificial intelligence (AI) in public administration in Serbia is guided by the Strategy for the Development of Artificial Intelligence (2020-2025)43, which emphasizes enhancing public services through innovative 36

https://aisociety.me/

37

https://fitr.mk/en/national-ai-strategy/

38

The inspiration for the design of this tool is Ada Lovelace, who is considered the first woman programmer in the world.

39

https://mia.mk/en/story/ada-%E2%80%93-first-public-sector-digital-assistant-%E2%80%93-officially-launched

40

https://www.ite.gov.rs/tekst/en/24/government-data-center.php

41

https://balkaninsight.com/wp-content/uploads/2023/03/FINAL-AI-Report.pdf

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https://ivi.ac.rs/en/

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https://www.srbija.gov.rs/tekst/en/149169/strategy-for-the-development-of-artificial-intelligence-in-the-republic-of-serbia-for-theperiod-2020-2025.php

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Artificial Intelligence in Local Government

technologies. Ministry of Science, Technological Development and Innovation formed the Working Group specifically tasked with preparing the draft law on AI. The Strategy defines three key areas where artificial intelligence can significantly contribute to the public good and the provision of better and higher quality services. These are public administration, health and medicine, traffic, road infrastructure and mobility in urban areas. The aim of Serbia’s AI strategy is to foster economic growth and enhance public service delivery while ensuring the ethical use of AI technologies. The strategy also includes measures for opening public sector data to facilitate AI development and improve transparency and accountability in public administration.

Examples of AI Applications: zz Electric Power Industry of Serbia - This public enterprise is employing AI to enhance its electricity demand forecasting. By integrating Microsoft Azure Machine Learning, Power Apps and Power BI, the company has improved its ability to predict electricity consumption, reducing both prediction time and error margins44. zz Tax Administration - A collaboration with the University of Novi Sad is in preparation to utilize AI for risk detection of personal income tax evasion.

Despite huge efforts in the region (esp. the Serbian Government) to accelerate the digital transformation, the current level of digitalisation of municipalities in WB6 is still rather low.

One example is the improvement of municipal services in Serbia and Bosnia and Herzegovina with an AI-driven ChatBot. The MIA (Municipal Intelligent Assistant) chatbot was launched in October 202145 in four pilot local self-governments: Bijeljina, Laktaši, Sombor and Šabac. The MIA chatbot informs citizens about 15 different procedures in these four local self-governments and is available on three communication channels: webchat on the local self-government website, Viber or Facebook Messenger. In the second phase of the project, additional functionalities were launched so that MIA initiates or implements the procedure on behalf of users: zz Ordering extracts from registers and certificates of citizenship (all LS) zz Report utility problems (all LS) zz Checking the status of utility application (Bijeljina) zz Scheduling an appointment to conclude a marriage (Šabac) zz Debt check for utilities and fees for advertising and lease of public areas (Laktaši)

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https://www.ai.gov.rs/tekst/en/101/application-of-ai-in-the-public-sector.php

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Partners in the project are GIZ, SAGA d.o.o. Belgrade (Intellya), SAGA NFG d.o.o. Banja Luka, NALED, PKRS

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

CONCLUSIONS AND RECOMMENDATIONS Conclusions on AI at the Local Level in the Western Balkans and Moldova The adoption of Artificial Intelligence (AI) marks a paradigm shift across all levels of society—from children in schools to governments and industries. This transformative wave demands an immediate and coordinated response, engaging actors at every level to ensure no one is left behind.

Addressing AI requires a shift in mentality, one that is more human-centered and inclusive. Local and regional stakeholders— governments, industries, educational institutions, and communities—must work together, fostering a collaborative ecosystem where diverse perspectives contribute to tailored solutions.

Data, the essential raw material for AI, must be safeguarded. Strong regulations for data protection are vital to ensure security and build trust among users. Collaboration between all actors in the digital ecosystem is equally critical.

Strengthening capacities, developing skills, and sharing knowledge assets will lay the foundation for sustainable progress.

AI’s ability to democratize access to global knowledge presents an unparalleled opportunity. The challenge lies in fostering innovation and partnerships that enable co-creation of localized solutions. By encouraging creativity and collaboration, regions and municipalities can tailor AI to their specific needs while leveraging its global potential.

The EU’s progressive bottom-up approach provides a model for inclusive development. Encouraging an entrepreneurial mindset and fostering partnerships between local actors and the broader ecosystem can drive meaningful change. EUlevel support, such as guidance from the Joint Research Centre (JRC), should be accelerated to help local governments and communities take action.

Effective organization of projects is key to creating societal and cultural value. By integrating multidisciplinary data, innovation, and research, municipalities can achieve holistic advancements that benefit both communities and industries.

Research must be paired with strong communication and collaboration with industrial actors to build tools with global relevance.

The Western Balkan 6 and Moldova face challenges in competitiveness and knowledge development, but their potential can be unlocked through collaboration with the EU and more advanced regions. However, insufficient number of local actors currently use supercomputers from Digital Innovation Hubs (DIHs), or Academia highlighting the need for improved access and utilization of such resources.

Research results at the EU level must be translated and applied at national and local levels in non-EU regions. The goal is not to compete with the EU but to work in synergy, fostering shared progress. Societal innovation and scaling up AI solutions require continuous learning opportunities for all local actors, ensuring that knowledge is both accessible and actionable.

By embracing collaboration, safeguarding data, fostering innovation, and leveraging EU partnerships, the Western Balkans and the Republic of Moldova can navigate the AI revolution, building competitive, resilient, and inclusive local ecosystems

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Recommendations for ADVANCING AI To advance progress for citizens, municipalities, and Local Government Associations, the following actions should be prioritized by NALAS and its Digitalization Working Group.

Capacity Building and Continuous Learning Empowering local governments with AI skills is essential for effective digital transformation. NALAS should continue organizing workshops and webinars on AI applications, data protection standards and ethical use for the Digitalisation Working Group, Local Government Associations and municipalities.

NALAS could provide new trainings by launching education programs for all local stakeholders, including citizens, on AI’s potential and its responsible use. Collaborations or formal partnership between NALAS and organizations such as Elements of AI or AI-Campus Germany is recommended to offer municipalities with online courses in the languages of Western Balkan and Moldova, as free, high-quality AI learning resources and ensuring accessibility for all partners.

Additionally, developing a Massive Open Online Course (MOOC) platform would allow universities to contribute educational content, combining in-person training with e-learning tools.

Foster Knowledge Transfer, Innovation and Collaborative Ecosystems with enhanced DIH Utilization AI is not a universal solution, but rather a tool that requires context-specific applications especially at local level.

NALAS should establish a regional knowledge hub to document and share AI best practices, research, and successful implementation cases. Encouraging peer-to-peer exchanges with municipalities in the EU and fostering collaboration through digital innovation projects will strengthen local expertise.

NALAS is capable to apply peer learning opportunities with municipalities in EU focusing on specific project development in partnership with local digital ecosystems. Municipalities must work together with businesses, academic institutions, and Digital Innovation Hubs (DIHs) to accelerate AI adoption. NALAS should facilitate partnership, ensuring that local governments can access DIH resources and overcome barriers to adoption. A structured framework should be established to support digital leadership in public administration, equipping municipal leaders with the skills to foster AI innovation. Promote partnerships by using good examples such as Tech4Germany, where digital pioneers collaborate with government institutions to develop solutions, would provide valuable models for AI adoption in public services Support networking events to connect municipalities with regional stakeholders, Digital Innovation Hubs, EU-level actors and resources remains NALAS activity with Digitalisation Working group. It is empowering NALAS members to develop partnership for creating necessary framework at local level with all stakeholders involved, or use examples such as Digital leadership - drivers of innovation. The organization of examples from NALAS EU members on partnering and co-financing city digitalization with EDIHs is also recommended.

Monitor and Measure Progress AI is a powerful tool for local development and its progress monitoring is important for this region. It is recommended that NALAS create a structured database to map and monitor AI initiatives across the Western Balkans and Moldova, with a particular focus on local-level applications.

This platform would monitor and measure progress in the region and would additionally facilitate knowledge sharing, promote best practices, and support municipalities in identifying relevant AI-driven solutions for local challenges. It is recommended to establish benchmarks to track the impact of AI initiatives on local communities.

Promoting a Responsible Data Governance and Ethical AI guidelines The effective and ethical adoption of AI at the local level requires robust data management frameworks and clear regulatory guidelines. Ensuring that AI policies reflect local needs and citizen engagement is essential for building trust

Driving Innovation, Bridging Gaps, and Shaping the Digital Transition in the Western Balkans and Moldova

and transparency in digital governance. To achieve this, inclusive policy-making should be promoted by NALAS, allowing local governments and citizens to actively contribute to local AI strategies.

Ensuring responsible AI implementation requires strong governance and ethical standards. AI adoption requires robust data management and clear regulations to ensure security, transparency, and citizen trust. NALAS should support local governments by providing Technical Guidance on secure data handling and compliance with EU standards.

NALAS should also develop an Ethical AI guidelines as a blueprint for members based on the good examples from Vienna, Linz or regions in Germany guidelines. These guidelines offer practical decision-making measures that help local governments determine how AI can be safely and effectively used in public administration.

NALAS should further work with Digitalization Working group on knowledge sharing for data protection policies and practical AI usage guidelines aligned with EU regulations to help municipalities implement AI responsibly.

Advocacy for Strengthening Policy Alignment Through a Bottom-Up Approach Local governments must play an active role in shaping national AI policies through inclusive decision-making that reflects local community needs. NALAS should continue to empower its members to advocate for inclusive policy-making processes where municipalities contribute to the development of AI strategies in all its phases, from preparation to implementation and monitoring.

Communicating AI Policy and EU Regulations NALAS, through its Digitalization Working Group, should lead efforts to raise awareness and ensure that municipalities understand the impact and obligations of AI regulations. The European AI Regulation, now in effect, must be disseminated at the local level, not just to central authorities. Close cooperation with ReSPA and RCC in disseminating EU regulation shall contribute and accelerate this initiative at all government level in the Western Balkans and Moldova. By strengthening coordination and multilevel governance, local governments will be better prepared to implement AI responsibly and align with EU standards.

Leveraging EU Support and Absorption capacity for AI Development NALAS should serve as a liaison to facilitate access to EU resources and EU programs, to promote awareness of EU programs and empower municipalities to apply for funding AI initiatives and EU-supported capacity-building programs for local stakeholders.

NALAS supports municipalities and city networks in developing funding proposals for EU programs. This effort to enhance funding absorption for local innovation should continue sustainably, with a strong focus piloting projects on real local challenges, such as AI-driven local digital twins for urban planning, energy transition, climate adaptation or AI-assisted building permit systems.

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