In this article Rhiannon discusses the post conflict region of Kosovo. She is a student journalist with us on a placement organised by the Oxford University Career Services. This article was edited using Lex.page.
🎧 listen to Rhiannon’s backstory here - she discusses her motivation & research as well.
Navigating the hurdles of building a business: war legacy and the issues facing entrepreneurs in post-conflict Kosovo
Kosovo emerged from the conflict between ethnic Albanians and Serbians in the Kosovo region. The Kosovo Liberation Army, formed in 1996, attacked Serbian police and politicians, prompting a response from Serbian police and Yugoslav armed forces. The forces committed atrocities, forcing refugees to flee. From March 1999, Yugoslav and Serbian forces drove out over 1.5 million Albanians. A peace accord was signed in June, tensions persisted. In 2008, Kosovo declared independence from Serbia, recognized by the US and leading members, though Serbia refused to acknowledge it.
The conflict's history affects Kosovo's social, economic, and political aspects today. The fact that it continued into the 21st century is exemplified in 2004 riots claiming 30 lives and displacing over 4000 Serbs across Kosovo. This shows that repercussions of the 1990s conflict weren't fully resolved when Kosovo became independent in 2008. Thus, they faced a double burden of recovering from the war and building public services and infrastructure for the new nation. This impacts entrepreneurship, seen in the ongoing struggles of business owners.
The conflict has a long-term effect on key infrastructure. The reliability of infrastructure like electricity is crucial for business owners because Kosovans can't rely on it due to the legacy of the conflict. Electricity is expensive and unreliable, ranked as the second greatest barrier to business start-up in a survey. Despite a $1.9 billion investment by 2017, poor communications and transport almost 20 years after the conflict highlight its continued impact on Kosovan society. Huge investment notwithstanding, the country has had to rebuild basic infrastructure due to extensive war damage.
Kosovo's new political structures, established after its 2008 independence, compound the challenges of accessing basic infrastructure. These include vulnerability to political instability, corruption, and unnecessary bureaucracy, creating hurdles for business stability. A survey revealed that 37.8% of Kosovars lack confidence in starting businesses due to continuing political instability, while 28.5% attribute it to corruption. The USA’s International Trade Administration website suggests that corruption reflects a ‘cost-of-doing business mentality’ in the country, hindering local and international business. Opinion polls confirm that this perception hinders local and international business, with corruption in the form of political interference being a major obstacle to investment and growth. This comes in the form of inconsistent economic policies weakening public trust in the government's capability, and accusations of bribery and racketeering among senior public officials exacerbating mistrust.
The new Kosovan political system causes unnecessary bureaucracy for business owners dealing with legal matters, aside from corruption. For instance, the Patent and Trademark Office has a large backlog of Intellectual Property rights disputes and recommends alternative dispute resolution, contributing to mistrust in government institutions. The backlog is caused by understaffing linked to poor education.
The poor education system is a legacy of the conflict which interrupted education, leaving many adults without the skills to run a successful business. At the start of the school year, Albanian students were refused entry to their previous schools across the country - a pattern which persisted until the end of the conflict. In some schools, especially in the capital city, Albanians were forced to use a small classroom and learn in shifts, with shortened classes up to 15 minutes. This affects the workforce today as many have received inadequate education, reducing their ability to manage businesses.
Setting up a business in Kosovo presents one of the most significant challenges, which is finding the financial means. Economic disruption and dislocation continue to affect the population. In 2019, unemployment was at roughly 30%, the highest in Europe, with 17% living below the poverty line. The people cannot rely on the government or national financial institutions for support due to political independence and the legacy of war. External finance for entrepreneurs is rare, as highlighted by a World Bank BEEPS survey where 73% of business activities are financed internally and only 17% come from banks. Many small start-ups find loans unaffordable due to high costs. These financial troubles, exacerbated by the conflict in the late 1990s and the subsequent foundation of a new state, mean many Kosovans lack the means to maintain a stable business.
The legacy of the Kosovo war and the creation of a new independent nation impact entrepreneurs' efforts to establish stable and economically productive businesses. The conflict's influence remains prevalent in economic and political aspects of Kosovan life, whether overt or indirect. The lack of infrastructure, political turbulence, and challenges in securing financial aid reflect the lasting impact of a conflict that ended over 20 years ago. This raises questions about post-conflict areas. If businesses are hindered by war's legacy, is the term ‘post-conflict’ adequate? Perhaps we should emphasize the transition to a post-conflict region, recognizing the complexity of this process. This also highlights the resilience of businesses and their owners. Many entrepreneurs in Kosovo see their ideas come to fruition, which is commendable in the context of the ongoing legacy of war and economic challenges.
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