POVERTY-STRICKEN SMALL-SCALE INDUSTRY

Make a Profit to Build a House

AIM Pristina, 4 January, 1997

Uncertainty in business dealing is the main cause which affects development of privately-owned enterprises, and a recent investigation showed that out of the questioned enterprises only 11.3 per cent used short-term financial aid, and that the state annually, in the form of various fines, charges on the average 4,200 German marks from each. Is there any truth in speculations that the Albanians on accounts in different banks abroad have 11 billion German marks, and that those in Kosovo are capable of saving 358 million marks a year?

Private entrepreneurship in Kosovo can still be considered to be "under age" and said to be having teething troubles. Not such a long time ago, almost ten years ago, there were only 52 contractual enterprises and 12 craftsmen's cooperatives. However, in 1990, after mass sacking of workers of Albanian ethnic origin, private business began to flourish. This is true only for the number of private firms, but not when speaking of the scope of work and amount of capital. In just three years five thousand firms were established, so that the total of 16,815 private enterprises are registered nowadays. It should be kept in mind, though, that 19,252 private shops also belong in the category of privately-owned economic enterprises.

Professor of the Economic Faculty in Pristina, taught in Albanian, Dr Muhamet Mustafa, says that nowadays, significance of economic enterprises which are privately owned is large and that there are many indicators which prove it. In the social product of Kosovo they participate with 55 per cent, while in Serbia their participation is 32.6 per cnt, and in Montenegro 36.5. But these data are not a realistic indicator of the situation, because their large percentage of participation in the social product is a reflection of the situation which state or socially owned economy in Kosovo is in. The latter is in a deep crisis with small chances of recovery and a long-lasting trend of decline of its participation in national income.

The institute for development research Riinvest in Pristina, conducted a poll among 300 privately-owned enterprises and collected interesting data. The poll shows that 71.5 per cent of the pollees consider unstable economic conditions to be the largest obstacle to development and operation. Private enterprises have no institutional support, they have no capital, and only 12 per cent of them used shortterm bank loans or credits as popularly called. Despite that, in the past years they registered a growth of the gross product of 7 per cent, while the socially-owned economic enterprises had a negative trend - of 27.7 per cent on the average.

Halim Xherxhizi, an associate in the Riinvest institute, says that in view of the fact that the "large-scale" economy is in such a collapse, it should cherish no illusions about large influence of privately-owned enterprises in global economic trends. "We are mostly concerned about unfavourable structure of their economic activities. Three years ago there were 12,820 privately-owned enterprises which were engaged in trade alone and they participated in the total number of private firms with 76 per cent. Private firms in industrial branches participated with 6.3 per cent in the total number of privately-owned enterprises, agriculture with 1.1, construction with 1.9 per cent, transportation with 2.6, and catering with 3.9 per cent", says Xherxhizi.

The situation is now almost identical. This shows that reorientation of the private sector is taking a long time, and that it is considerably influenced in this sense by a lack of ideas and projects. It is a fact that there is much "mimicry and copying". When somebody starts with a new "program", a number of the same or similar entreprises spring up overnight. It is also absurd that in such a comparatively small territory as Kosovo, 140 gas stations were constructed. At the moment, the greatest "hit" is construction of facilities for manufacturing joinery made of wood, plastics or aluminium.

It is interesting to stress that this poll has revealed certain developments which are characteristic for circumstances in Kosovo alone. It showed that in 44.8 per cent of cases, confidence affects mutual cooperation. No less than 74.2 per cent of the pollees replied that they regulated mutual relations on the basis of verbal agreements, and that in 81.4 per cent no controversies arose from striking a bargain in this way. It is also a fact that in Kosovo conditions have not been created for racketeering and other forms of resolving disputes by means of coercive measures. State judiciary is not engaged either, because even when disputes do arise, one third of them are resolved by intervention of business associates, while 61.5 per cent settle controversies by mediation of joint friends. As concerning employment, 33 per cent of the total number of employees get their jobs thanks to family connections with the owner, and in 34.2 per cent of cases they are sacked "because of failure to meet obligations", or because of theft or abuse (23.1 per cent).

In his research, Prof. Dr Muhamet Mustafa arrived at data that only four per cent of the owners of private enterprises are preoccupied with development of their firms and investments. It should not be disregarded, however, that out of the total investments, private owners have invested 69 per cent into fixed assets. The fact that the amount of investments in Kosovo is five times lower than in 1987 also shows how unfavourable the situation is.

On the average, every privately-owned enterprise annually invests 10,962 German marks, which means that 300 entzerprises which participated in the poll, invest more than three million marks. This is not little, but the structure of investments is very inadequate, because 23.6 per cent of this sum is invested into construction of business premises, 22.9 per cent is allocated for purchasing of transportation means, 18.8 for luxury cars, and only 14.3 per cent are invested into means of production. "The official statistical results also show that 60 per cent of the investments in private sector are allocated for housing construction, and 28.6 into agriculture; 9.4 into trade and 4 per cent into other activities", says Prof. Mustafa.

There are also analysts who compare the situation in Kosovo expressed in figures with that in Kuwait or another petroleum state. Haki Shatri arrived at the figure of 358 million German marks a year which can be saved in various ways. Fadil Govori stated the fact in his doctor's thesis that the Albanians in different banks abroad have savings amounting to 11 billion German marks. But, Naip Zeka, president of the commission for economic trends of the Democratic Alliance of Kosovo, believes that this figure is much smaller, that it amounts to up to three billion German marks, but that "the fact should not be neglected that annually 1.5 billion marks are spent on meeting the most fundamental needs of the population of Kosovo".

Nevertheless, the real situation in Kosovo reflects a completely different image. Private enterprises are becoming poorer every day, they cannot rely on any form of aid from any financial institution and they are slowly losing the race on the market. Their job has been brought down to collecting the remaining foreign currency and placing them on other markets where they are supplied mostly with various food stuffs. But even the money which is left as a profit ise easily spent on construction of enormous houses, purchasing of luxurious cars...

AIM Pristina

Ibrahim REXHEPI