Strategic Study on Social Economy Development in the Context of the South East Europe 2020 Strategy, provided to the Regional Cooperation Council (www.rcc.int) and national governments of Croatia, Bosnia and Herzegovina, Montenegro, Serbia, Kosovo, Albania and Macedonia.

1. National Report
Montenegro
Anto Jankovic
Sarajevo
June 2014

2. General remarks
•Challenges during research
• no official data on size and structure of social economy sector
•Expected/unexpected results
• no framework for development of social economy (SE)
• legislation not particularly supportive for development of SE
• legislation not limiting on the other side
•Expectations from the meeting and
feedback for improvement of the report
• future steps for SE advocacy in the region

3. Content of the presentation
•Current situation within the sector
•Institutional and legal framework
•Financial incentives and support
mechanisms
•Conclusions and recommendations

4. Current situation within the
sector
• concept not well known
• no official data
• no of registered CSOs and cooperatives significant, but
SE sector underdeveloped
• lack of framework - no law on professional associations,
private charity foundations or humanitarian
organizations, no law on cooperatives and social
enterprises
• preconditions: human capital and Employment Agency
programs

5. Current situation within the
sector
• 140 cooperatives registered (FRY 1996)
• Cooperatives Alliance of Montenegro - 100 cooperatives,
primarily agriculture, 7 employees, over 1,000 members
and over 5,000 subcontractors with total of around 500
employees (0.3% of total employees in the country), 2
million EUR Alliance budget (0.06% of GDP).

6. Current situation within the
sector
• 3,096 CSOs: 2,908 non-governmental associations, 95
foundations and 93 representative offices of foreign CSOs.
• Financial sustainability remains open question. Poor
communication and cooperation.
• 410 registered CSOs for business activity, but no research
about their activity.
• 213 CSOs in Montenegro – 5 million EUR i.e. 0.26% of GDP
(“Annual financial Reports of CSOs in Montenegro - 2010”);
149 generated income up to 10,000 EUR, only 18 CSOs over
100,000 EUR

7. Current situation within the
sector
• rare examples of social enterprises – NGO “New chance in Herceg Novi” -
“Our ID card” project; Roma women Craft cooperative “Rukatnice”
established by SOS Niksic…
• luck of trainings, consultancy and mentorship to develop their managerial,
financial and marketing skills.
• 2 business incubators: IT Business Incubator “Inventivnost” from Podgorica
and BSC Bar.
• “Inventivnost” established in 2008 by the Directorate for Development of
SME and the Capital City of Podgorica, with support by the University of
Montenegro, GIZ, TAM/BAS and a Dutch CSO SPARK.
• BSC Bar established in 2010 by the Municipality of Bar, through support of
SPARK. Total area of 1,100 m2, utilities for a period of 3-5 years, provides
different trainings, advisory services, micro-loans…

8. Current situation within the
sector
• “Business development incentives program” (Government of
Montenegro, Dec 2011) - tax and administrative benefits for
development of business zones in Berane, Kolasin, Podgorica, Bar,
Cetinje, Bijelo Polje and Niksic, and potential business zones in
Zabljak, Mojkovac, Tivat and Danilovgrad.
• IPA project ''Third sector and social enterprises development in
Montenegro'' - Montenegro Chamber of Skilled Crafts and
Entrepreneurship (ZanaPredaK) and COSPE from Italy. 6 CSOs to
receive grants of 7,500€ each for their business start-ups.
• “Belgrade declaration on the development of social
entrepreneurship”

9. Institutional and legal
framework
• A number of laws, strategies and policies adopted in the field
of labour market
• Lack of legislation in the area of SE (types of organization,
procedure of foundation, registration, operation and funding)
• The Constitution, the Agenda of Economic Reforms, the
Poverty Reduction Strategy, the Regional Development
Strategy, the Sustainable Development Strategy, the
Agriculture and Rural Development Strategy outline the goals
and priorities that are closely related to the development of
social economy.

10. Institutional and legal
framework
• Law on Non-governmental Organizations: non-governmental
associations and non-governmental foundations; economic activities for
up to 4,000 euro or 20% of the total annual revenue in the previous
calendar year (obliged to register with the Central Registry of the
Commercial Court in Podgorica)
• Law on the state administration - transfer of certain services to CSOs
through the provision of "transfer i.e. delegation of state administration
services."
• Law on business organizations defines following forms of organization
pursuing economic activities: 1) the individual entrepreneur; 2) the
general partnership (GP); 3) the limited partnership (LP); 4) the joint
stock company (JSC), 5) the limited liability company (LLC); 6) the
foreign company branch.

11. Institutional and legal
framework
• “The concept of social entrepreneurship, which has not yet taken
hold in Montenegro, can contribute to the opening of alternative
jobs, especially for those who are members of vulnerable groups of
the population (p. 31)”. The National Strategy for Employment and
Human Resources (2012-2015)
• Work Programme of the Government of Montenegro for 2013 -
MLSW to prepare a draft of the Law on Social Entrepreneurship
(November 2012), the Strategy for Social Entrepreneurship 2013-
2016 and the Action Plan for 2013; Ministry of Agriculture and Rural
Development – draft Law on agriculture cooperatives (2012)

12. Institutional and legal
framework
• Draft Law on social entrepreneurship, Mr. Dragan Golubovic, key issues: 1)
Why do we need specific law on social economy organizations; 2) How is it
related to the Law on business organizations and 3) What would be sources
of funding
• Working group for the preparation of the Strategy of Development NGOs
2014-2016, (Ministry of Interior) - social entrepreneurship as 4th measure
• The Law on professional rehabilitation and employment of persons with
disabilities, (2008)
• The National Strategy for Employment and Human Resources Development,
2012-2015: 1) increase of employment and reduction of unemployment rate;
2) improvement of knowledge, skills and competences in view of increasing
employment opportunities and increasing of competitiveness through formal
and informal education and training and 3) promotion of social inclusion and
reduction of poverty.

13. Financial incentives and support
mechanisms
• New Law on NGOs (Aug 2011) vs. Fund for Minorities and the Commission
for the allocation of revenue from gambling.
• Lack of transparency, limited number of areas of public interest, lack of a
systematic approach to monitoring the implementation of projects and
control of spending
• Lack of understanding that funds are allocated for solving social issues in
the communities, not just a „spending”.
2010 2011 2012 2013
Total giving for CSOs (national level) in EUR 4,721,991 3,078,028 2,338,164 1,546,886
% Current Budget in EUR 0.73 0.49 0.39 0.26

14. Financial incentives and support
mechanisms
• International donors losing interest in Montenegro
• Political issues such as corruption and birocracy, together
with environmental issues still dominate.
• Local funders (primarily corporate ones) are focused on
specific activities linked to their CSR strategies.
• Individual philanthropy and Corporate Social
Responsibility are at a low level

15. Financial incentives and support
mechanisms
The Law on professional rehabilitation and employment of persons with
disabilities:
1) Grants for adapting the workplace and working conditions for employment of
persons with disabilities;
2) Credit funds on favourable terms for the purchase of machinery, equipment
and tools required for employment persons with disabilities;
3) Participation in financing the cost of personal assistants of persons with
disabilities;
4) Subsidies to earnings of persons with disabilities: a) 75% of gross earnings
paid for the entire period of employment, for employer who hires a person with
at least 50% disability; b) for employers who hire a person with less than 50%
of disability, the subsidy is in the first year is 75%, in the second year 60%, in
the third and each subsequent year, 50% of the gross earnings.

16. Financial incentives and support
mechanisms
• The Employment Agency: measures of active employment policies such as
financing or co-financing of job creation, inclusion of unemployed and co
public works program, loans for investments in employment on the basis of
new production and other capabilities, co-seasonal employment (in tourism,
construction, hospitality, agriculture, etc.), assistance in the training of newly
hired employees, development of employment programs for certain
categories of unemployed persons (disabled persons and persons who are
waiting longer to employment), co-adapting premises and technical
equipment for the disabled, etc.

17. Financial incentives and support
mechanisms
• Regulation on subsidies for hiring certain categories of unemployed (2012) –
subsidies for several categories of unemployed people:
• people with at least 40 years of age;
• Roma, Ashkali and Egyptians;
• people who are unemployed for more than 5 years;
• people who are employed in the execution of public works;
• people who are employed after completion of the training or the
internship;
• people whose work is no longer necessary (due to techno-economic
surpluses);
• people who are employed to perform seasonal jobs and
• unemployed people with over 25 years of experience.

18. Financial incentives and support
mechanisms
• Coo-financing and loans under favourable conditions - Ministry of Agriculture
and rural development and the Investment and Development Fund of
Montenegro (IDF)
• Supporting mechanisms for development of SMEs - Directorate for
development of small and medium sized enterprises and Ministry of
Economy.
• Montenegro Chamber of Commerce and business associations (Montenegro
Employers Federation and Montenegro Business Alliance) who have
cooperatives among their members provide different types of technical
support to their members and it is expected that they will take part in
development of cooperatives in Montenegro.

19. Conclusions and
recommendations
• Elimination of regional disparities
• Encourage employment of the groups that are not
competitive on the open market
• Activation of potential economic resources (arable land,
pastures, forests, rivers, industrial facilities that are not
operational)
• Development of the institutional and legal framework for SE
• Financial and non-financial (know-how) support mechanisms
• Increase of awareness and understanding of social economy
and social entrepreneurship

20. Conclusions and
recommendations
• Social inclusion, reduction of poverty, deinstitutionalization in the
field of social care, rural development, employment of vulnerable
group are not areas with high profitability
• Increase efficiency of existing social funds
• No need for large budgetary allocations and changes in the system,
but more on introduction of new mechanisms in order to match
supply and demand on the market.
• Has to be integral part of the strategy for overall development of
Montenegro.
• Upgrade of data collection system
• Capacity building (trainings, mentorship, consultancy…) for SE
organizations
• Mutual programs and exchange of experience

21. Thank you!
Contact information
E-mail: anto@faktcg.org; antoj@t-com.me
http://about.me/anto.jankovic