Overcoming regional disparities and reducing the impact of economic crisis in Montenegro

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According to the Monstat data, even though the North of Montenegro is rich in natural resources, poverty statistics shows us the other side of the coin: poverty rate in the northern region is two times higher than in the central part of the country and four times higher than in the South, while 45.2% of the country’s poor live in the North. But, the nature’s richness offer many opportunities for development projects. Regional and local development and decentralization in general are key priorities of UNDP in Montenegro. The ownership of this topic from partners both at the national and local level is of substantial importance.UNDP provides assistance to Montenegro in strengthening the resilience of the ecosystem, economies and communities in a face of various socio-economic and environmental risks (disaster risk reduction, protected area management, entrepreneurship development, etc.). On the local level this means new jobs and income through improving existing and creating new services in protected areas (considering that over 1/4 of country’s territory will be under protection in the coming year, most of it in the north), strengthening preparedness for various disasters, as well as creating cross-border tourism linkages with neighboring countries.

The Ministry of Economy established close partnership with UNDP Montenegro during the preparation of the Strategy for Regional Development: UNDP provided global experience and wide knowledge, including best practices and lessons learned in regional development from the pre-accession and accession countries. In parallel with preparation of the Strategy, Ministry of Economy worked on a comprehensive data-base, the Map of Resources. The Map of Resources serves now as one of the main pillars for strategic planning in all municipalities in Montenegro.

Partnership between UNDP and the Ministry of Economy continued with preparation of the Action Plan for implementation of the Strategy for Regional Development for the period 2012-13. Our experts worked together with the Ministry of Economy to define the model, identify activities and projects and define indicators to monitor progress in implementation of the Strategy. Implementation of the Action Plan remains a key priority for the Ministry of Economy and for UNDP. Particular focus is on support to Northern Montenegro in a holistic manner. Priorities are on local economic development and competitiveness, sustainable energy and environment, social inclusion of vulnerable groups and development of capacities of all governance actors within the region.

Priority is given to the policy, legal and regulatory framework for regional and local development, as well as for political, administrative and fiscal decentralization. At the local level, UNDP is providing support to local governments to achieve sustainable socio-economic development and establish good local governance.

The focus is on the improvement of performance of the local authorities in managing public resources and discharging their responsibilities for delivery of economic and social services, promotion of economic development and protection of the environment and management of natural resources.

At the same time, UNDP strives to strengthen citizen participation in decision-making processes in local public sector, as well as to enhance partnerships between local governments, civil society organizations and private sector.

While implementing its activities related to local and regional development, UNDP is applying equally two approaches: vertical approach, which is targeting specific sectoral areas such as employment, social inclusion, environment and energy, local economy; and horizontal, multi-sector approach. In cooperation with its partners, UNDP focuses on the following areas:

  • Local economic development (including rural and agricultural development; private sector growth and – creation of jobs);
  • Sustainable development, environmental protection and energy;
  • Good local governance (including improved delivery of services, anti-corruption and defence sector reform);
  • Social inclusion of vulnerable groups (including active labor market measures, access to services), as well as
  • Policy and institutional reform to facilitate further decentralization and local development in Montenegro.

Main activities will be implemented with the primary focus to revitalize the region, by addressing key development challenges, such as migrations and depopulation, increased poverty, high unemployment and social inclusion; the issues of quality and access to municipal services, deterioration of the communal infrastructure, overstaffed municipal administration and public utility companies, twinned with scarce capacities for good governance.

One of UNDP’s objectives in the project “Strengthening mechanisms for public finance at the local level in Montenegro” is to reinforce public finances at the local level through transparent and accountable planning and execution of municipal budgets. It would contribute to a more efficient implementation of defined strategic projects and initiatives, which would foster more systematic and comprehensive regional development. Within project activities, the municipalities of Žabljak and Kolašin were supported in developing municipal strategic plans.

Also, UNDP provides assistance to Montenegro for:

  • a swifter market transformation toward low emissions;
  • resource efficient economy in order to create new green jobs, generate/conserve income;
  • reducing emissions of GHGs and dependence on energy import (renewable energy sources, energy efficiency and policy level work including development of a legal framework for renewables, preparation for the Rio+ conference, development of a new NHDR on the topic of resource efficiency and low emissions). On the local level this means supporting municipalities to obtain clean energy to power their service providers and businesses locally, and to save on energy consumption.

The Third International Conference on Overcoming Regional Disparities: „How to Reduce the Impact of the Economic Crisis on Regional Challenges in Europe“

While implementing its activities related to local and regional development, UNDP is applying equally two approaches: vertical approach, which is targeting specific sectoral areas such as employment, social inclusion, environment and energy, local economy; and horizontal, multi-sector approach. In cooperation with its partners, UNDP focuses on the following areas:

  • Local economic development (including rural and agricultural development; private sector growth and – creation of jobs);
  • Sustainable development, environmental protection and energy;
  • Good local governance (including improved delivery of services, anti-corruption and defence sector reform);
  • Social inclusion of vulnerable groups (including active labor market measures, access to services), as well as
  • Policy and institutional reform to facilitate further decentralization and local development in Montenegro.

„In Montenegro, despite the economic crisis, the business environment has not been disturbed, nor its development potential were affected,“ said Minister of Economy at the Government of Montenegro Vladimir Kavarić at the opening of the conference. Minister Kavarić said that if Montenegro is not economically competitive there will be no regional development. He emphasized that not a single tax has been increased even though the state treasury is in serious condition. „We believe that for a healthy business relationship in Montenegro it is very important that there is competition between municipalities,“ said Minister Kavarić. „The project of Business Zones is something that we are trying to accomplish not only from the point of regional but also national  economic policy,“ Minister Kavarić emphasized.

„National Parks generate €68 million annual revenue, which is great. Our research has shown that additional services, such as hiking and biking tours or agricultural products, would still attract €19 million more. One way to combat regional disparities is to get tourists who come to the south to visit the north, too, as only 5-7 percent of them do so now,“ said UN Resident Coordinator and UNDP Resident Representative in Montenegro Rastislav Vrbensky. He believes that further decentralization process is of utmost importance. „For us the priority remains the development of the northern region of Montenegro. In urban parts of the country poverty level is around 4%. It is interesting to note that the rate is 3.2% in Pogorica, 1.9% in other urban centers, while in rural areas the poverty rate is nearly 11.3%. You can imagine that most of the rural population also lives in the northern region,“ said Mr. Vrbensky. As a positive developmental example he mentioned establishing of 26 clusters in the area of ​​Durmitor in various fields like tourism and wood industry, which should create 1,500 new jobs but also attract many tourists. In addition, he proposed an improved evaluation of the national parks that are great Montenegrin national wealth. „Good examples exist in the region, therefore they should be used and adapted to the local circumstances,“ said Mr. Vrbensky.

Mayor of the Royal Capital Cetinje Aleksandar Bogdanović announced measures to be taken to overcome the difficult economic situation which has existed in that city for many years. „Without the stimulus one cannot talk about improving the business environment in the true sense of the word. This is particularly true when it comes to local communities like Cetinje, with high unemployment rate and industrial facilities that discontinued operations. Representatives of the Capital have designed a concept for attracting investors. These include, among other things, a free utility fee for furnishing of building land, release of property tax until the third year of business and others. Similar initiatives should be designed by the municipalities of the north, where the poverty rate is two times higher than in Podgorica and four times higher than in the south,“ Mayor Bogdanović suggested. German Ambassador in Podgorica Pius Fischer announced that the country’s balanced regional development will be a very important segment in terms of the future accession of Montenegro to the EU. Nicola Bertolini, Head of Operations Sector of the Delegation of the European Union in Montenegro reminded that 40% of the money that Montenegro has received from the IPA funds have gone to regional development. He mentioned the following as essential to improve the situation in the North: „I always say that mayors must invest in young and capable people who speak English and know how to write and do good projects.“

„In Montenegro, despite the economic crisis, the business environment has not been disturbed, nor its development potential were affected,“ said Minister of Economy at the Government of Montenegro Vladimir Kavarić at the opening of the conference. Minister Kavarić said that if Montenegro is not economically competitive there will be no regional development. He emphasized that not a single tax has been increased even though the state treasury is in serious condition. „We believe that for a healthy business relationship in Montenegro it is very important that there is competition between municipalities,“ said Minister Kavarić. „The project of Business Zones is something that we are trying to accomplish not only from the point of regional but also national  economic policy,“ Minister Kavarić emphasized.

„National Parks generate €68 million annual revenue, which is great. Our research has shown that additional services, such as hiking and biking tours or agricultural products, would still attract €19 million more. One way to combat regional disparities is to get tourists who come to the south to visit the north, too, as only 5-7 percent of them do so now,“ said UN Resident Coordinator and UNDP Resident Representative in Montenegro Rastislav Vrbensky. He believes that further decentralization process is of utmost importance. „For us the priority remains the development of the northern region of Montenegro. In urban parts of the country poverty level is around 4%. It is interesting to note that the rate is 3.2% in Pogorica, 1.9% in other urban centers, while in rural areas the poverty rate is nearly 11.3%. You can imagine that most of the rural population also lives in the northern region,“ said Mr. Vrbensky. As a positive developmental example he mentioned establishing of 26 clusters in the area of ​​Durmitor in various fields like tourism and wood industry, which should create 1,500 new jobs but also attract many tourists. In addition, he proposed an improved evaluation of the national parks that are great Montenegrin national wealth. „Good examples exist in the region, therefore they should be used and adapted to the local circumstances,“ said Mr. Vrbensky.

Mayor of the Royal Capital Cetinje Aleksandar Bogdanović announced measures to be taken to overcome the difficult economic situation which has existed in that city for many years. „Without the stimulus one cannot talk about improving the business environment in the true sense of the word. This is particularly true when it comes to local communities like Cetinje, with high unemployment rate and industrial facilities that discontinued operations. Representatives of the Capital have designed a concept for attracting investors. These include, among other things, a free utility fee for furnishing of building land, release of property tax until the third year of business and others. Similar initiatives should be designed by the municipalities of the north, where the poverty rate is two times higher than in Podgorica and four times higher than in the south,“ Mayor Bogdanović suggested. German Ambassador in Podgorica Pius Fischer announced that the country’s balanced regional development will be a very important segment in terms of the future accession of Montenegro to the EU. Mr. Nicola Bertolini, Head of Operations Sector of the Delegation of the European Union in Montenegro reminded that 40% of the money that Montenegro has received from the IPA funds have gone to regional development. He mentioned the following as essential to improve the situation in the North: „I always say that mayors must invest in young and capable people who speak English and know how to write and do good projects.“

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