With the least competitive economy in Europe, an oversized and inefficient public sector, and minimum investment in research and education, Bosnia and Herzegovina is a challenging place to do business. Now, Norway is helping bring about much needed changes in the country’s business environment through supporting education reform, entrepreneurship development and smarter public spending.
81 days and 13 separate procedures are needed to start your own business in Bosnia and Herzegovina (BiH). Coupled with bureaucratic red tape, a shrinking pool of qualified candidates hinders the development of sophisticated industries in the country. The nascent IT sector offers some of the best and highly paid jobs in the labor market, but industry needs are often not met by an education sector teaching outdated curricula with matching teacher skills and obsolete, if any, learning aids.
“We definitely need to be better at keeping up with technology. We have to bring the classroom closer to the real world, learn about new developments rather than things taught in schools 20 years ago”, says 17-year-old high school student Lejla from Sarajevo.
Without investment in education and research, the private sector will continue to be restricted to low-value, outsourced work in traditional industrial sectors with little scope for innovation and new product development. This further worsens a growing brain-drain problem where creative, highly skilled people continue to leave the country in search of meaningful employment. This is a particularly pressing problem in border towns, such as Gradiška.
The mayor there, Zoran Adžić, notes an increase in demand for skilled labor while acknowledging an inherent weakness in supply, with many people still on unemployment benefits due to a gap between their qualifications and the needs of the modern industry.
"We need to use the coming period to make substantial adjustments to our education system, matching teaching curricula to the needs of the economy, especially in fast-paced industries such as IT," says Adžić.
A new initiative by the Government of Norway, working with the United Nations Development Programme (UNDP) and local authorities, aims to address this, and a number of other issues hampering the growth of the BiH economy. With a blueprint for better economic governance, the project, titled “Economic Governance for Growth”, will invest some 4 million KM to help create an environment conducive to entrepreneurship and the development of new skills for a future-facing economy. At the same time, the intervention will help local authorities better utilize their available financial resources, cutting unnecessary cost and generating additional revenues, in order to raise funding to support business development.
“Promising industries, such as IT and automotive, will be supported in building their human capital and upgrading their production capacities based on current and projected market needs. The high degree of sophistication required to compete in these industries also translates into better salaries for workers as well as more value generated for the local communities where these companies reside” said H. E. Guri Rusten, Ambassador of Kingdom of Norway to BiH.
The project is expected to initially generate some 100 jobs in high value industries and help establish 15 new businesses that will meet pressing industry needs identified through the intervention. Finally, the project will look to further develop support infrastructure for new and emerging entrepreneurs through a network of hubs that will provide business development and training services across Sarajevo, Banja Luka, Mostar and Tuzla.
“IT companies in BiH currently employ some 4,000 software engineers while annually around 180 new engineers graduate. This is an extremely low number, when compared to the needs and opportunities present in the industry. With 25,000 software engineers, which is a realistic target figure for the industry in BiH, we would generate some 2.5 billion BAM of export, which is about 8% of the country’s current GDP” says Armin Talić from Bit Alliance, the umbrella organization for the software industry in BiH.
In the mid to long term, a selection of elementary and secondary schools will be assisted in upgrading their curricula and introducing new learning technologies through STEM (Science, Technology, Engineers and Mathematics) academies and fab-labs that will make use of 3D printing technology and robotics in teaching. Secondary schools will also see the introduction of much needed entrepreneurship curricula.
“Practical education remains one of the pressing problems faced by industry in Bosnia and Herzegovina, with both curricula and teaching aids in need of serious overhaul” said Sukhrob Khoshmukhamedov, UNDP Deputy Resident Representative to BiH.
The Project “Economic Governance for Growth” is financed by the Government of Norway and implemented by United Nations Development Programme in partnership with local authorities.
 According to 2018 Global Competitiveness Report published by World Economic Forum.
 World Bank’s annual Doing Business report.