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Public policy recommendations in
the area of youth entrepreneurship
Montenegro
Ministry of Finance
Montenegro
Ministry of Economy
Directorate for Development of
Small and Medium Sized Enterprises
2
Publisher: United Nations Development Programme (UNDP) in Montenegro
Author: Dragana Radević, PhD
Proofreading: Lida Vukmanović-Tabaš
Translation: Danilo Leković
Design: Bošković and Associates d.o.o.
Podgorica, 2017
This publication as prepared in the framework of the Joint UN Youth Empowerment
Programme. The views expressed in this paper are those of the author and do not
necessarily represent the views of UNDP/UN System in Montenegro or the project
partners - Ministry of Finance and Directorate for Development of Small and Medium
Enterprise.
CIP - Kaталогизација у публикацији
Национална библиотека Црне Горе, Цетиње
ISBN 978-9940-614-28-7
COBISS.CG-ID 33827600
3
Contents
FOREWORD ................................................................................................................................4
1. INTRODUCTION ...................................................................................................................... 5
2. YOUTH UNEMPLOYMENT AS A PROBLEM ..........................................................................7
3. YOUTH ENTREPRENEURSHIP AS A SOLUTION TO UNEMPLOYMENT
OR A DEVELOPMENT PARADIGM? ......................................................................................9
4. THE ENVIRONMENT FOR ENTREPRENEURSHIP IN MONTENEGRO ...............................12
4.1 The regulatory framework for starting and running a business ....................................12
4.2 Existing policies to support the development of entrepreneurship ..............................13
4.3 Opportunities for self-employment of young people in Montenegro
- selection of sectors and business ideas ..........................................................................14
5. WHICH BARRIERS DO YOUNG PEOPLE FACE WHEN THEY START
ENTREPRENEURIAL ACTIVITY IN MONTENEGRO? ...........................................................18
Barrier 1: The negative attitude towards entrepreneurship/insufcient social support .18
Barrier 2: (Un)preparedness for entrepreneurship ..................................................................19
Barrier 3: Lack of experience, knowledge and business contacts .......................................20
Barrier 4: Lack of nancial resources ........................................................................................20
Barrier 5: Market competition ......................................................................................................20
Barrier 6: Regulation ......................................................................................................................21
Barrier 7: (Un)cooperativeness of institutions .........................................................................21
6. GUIDELINES FOR PUBLIC POLICIES AIMED AT THE DEVELOPMENT
OF YOUTH ENTREPRENEURSHIP .......................................................................................22
6.1 Creating a positive attitude of the society towards entrepreneurship .........................22
6.2 Development of entrepreneurial skills.................................................................................24
6.3 Provision of information, advisory services and mentoring support ...........................34
6.4 Financial support ....................................................................................................................36
6.5 Development of entrepreneurial infrastructure .................................................................39
6.6 Further improving the environment for entrepreneurship and access to institutions 4 2
7. PRINCIPLES AND CONCRETE RECOMMENDATIONS FOR PUBLIC POLICIES
AIMED AT THE DEVELOPMENT OF YOUTH ENTREPRENEURSHIP .................................45
8. CONCLUSION .......................................................................................................................56
REFERENCES ...........................................................................................................................57
4
FOREWORD
The Public Policy Recommendations in the Area of Youth Entrepreneurship have been developed in
the partnership of the UN System, the Ministry of Finance and the Directorate for the Development
of Small and Medium Enterprises. The document has been produced in the framework of the
Joint UN Youth Empowerment Programme. In addition, the creation of this document has been
envisaged in the Youth Strategy 2017-2021, specically the Action Plan for 2017.
The goal of the document is to map good practices and bottlenecks in youth entrepreneurship,
and to propose guidelines for improving the environment, services, programs and attitudes
towards youth entrepreneurship.
Preparation of the Recommendations was preceded by a thorough analysis of the legal and
institutional framework in relation to youth and entrepreneurship, as well as the analysis of
relevant domestic and international reports on the entrepreneurship environment in Montenegro.
The existing forms of support are mapped, both nancial (loans, tax and other subsidies) and
non-nancial (programmes for the development of soft skills, entrepreneurial training programs,
advisory support, mentoring, entrepreneurial awareness initiatives and various support related
measures linked to the education system, and support measures related to providing the
necessary infrastructure for potential entrepreneurs, especially in the innovations and IT sector),
regardless of whether they relate exclusively to young people or have a wider scope. Within the
research, and in particular in direct interviews with representatives of relevant institutions and
organizations, good practices that can serve as a model for creating new or linking existing
programs have been identied. The analysis also included identication of the barriers for greater
involvement of young people in entrepreneurial ventures. In addition to data and information
from previously conducted mostly quantitative research, the barriers were dened based on
the outcomes of the workshops held with young entrepreneurs and representatives of relevant
institutions. The workshops were based on the principles of human centred design.
The draft version of Recommendations was presented at the round table “Youth Entrepreneurship
- Challenges and Opportunities“, organized by the National Partnership for Entrepreneurial
Learning in June 2017. The received comments and suggestions have found their place in this
nal version of recommendations, with the aim of making them realistic and applicable.
5
1. INTRODUCTION
The global nancial crisis put young people into the policy focus due to a prominent unemployment
rate that is signicantly higher than the unemployment rate of the total population. In such
circumstances, the promotion of entrepreneurship has become one of the key policies aimed
at reducing unemployment and creating new jobs. However, entrepreneurship alone cannot
fully solve the problem of youth unemployment. Despite the expressed positive aspirations
and popularity which entrepreneurship enjoys in a society, the number of young people opting
for self-employment is rather small. The reasons behind this can probably be found in various
constraints that young people experience when starting their own business and generally
considering entrepreneurship as a career option, which will be discussed later in this document.
The reduction of economic activity affected by the global economic crisis has reduced the
absorption capacity of the labor market. The unemployment rate of the total population in the
EU28, at the end of 2015, stood at 9.4%, while in August 2016 it was 8.6%1. In the same period, the
youth unemployment rate in the EU28 stood at 20.3%, while at the end of July 2016 it was 18.8%2.
Trends in Montenegro are similar - the youth unemployment rate is double the unemployment
rate of the total population. In addition, the labor market in Montenegro is characterized by a
structural unemployment, with a high level of long-term unemployment3, and the high prevalence
of employment of foreigners, who come from the neighboring countries and whose employment
is dominantly seasonal in nature.
Statistics show that young people in Montenegro are very educated. However, the unemployment
rate of young people with a university degree is extremely high and one third of university
graduates are unemployed. The employment rate is also very low - only one quarter of young
people in Montenegro are employed compared to the EU28 average, where every second young
person works (2013). Among those who are employed, the dominant form of employment is
salaried employment (90%) while other forms of work (as an employer4, independent worker,
or working family member) are less frequent. Nearly one in six young people works without the
legal protection of a written work contract, while informal employment accounts for nearly 60%5.
Montenegro needs policies that can speed up the process of economic development, which
involves the creation of new jobs, increasing income, introducing innovation and the creation of
knowledge-based economy.
1 For more details and statistics by country, see: www.statista.com/statistics/268830/unemployment-rate-in-eu-coun-
tries/
2 For more details and statistics by country, see: http://ec.europa.eu/eurostat/statistics-explained/index.php/Unem-
ployment_statistics The data relate to young people aged up to 25.
3 In mid-2016, the unemployment rate in Montenegro amounted to 17.2%. Out of 39,983 unemployed persons, 37% were
younger than 25, 54% were under 30 years of age. 42.2% of the unemployed (total population) has been unemployed
for more than a year. Source: Report on the work of EAM for the rst half of 2016
4 The terms used in this document physical persons in masculine entail the same terms in feminine gender.
5 Source: Source: Labour market transitions of young women and men in Montenegro, ILO and MONSTAT, 2015
6
Youth entrepreneurship is recognized as an important leverage of such policies. Although
entrepreneurial youth initiatives cannot fully solve the existing problem of high unemployment in
this population, motivating young people to become entrepreneurs and improve their knowledge
about entrepreneurship and starting their own business, as well as the development of an
entrepreneurial culture in Montenegro and improvement of the environment for entrepreneurship,
would considerably contribute to the objective of speeding up economic development.
Furthermore, the development of entrepreneurial skills in young people contributes to increasing
their employability.
7
2. YOUTH UNEMPLOYMENT AS A PROBLEM
Youth unemployment is one of the leading problems of today, not only in Montenegro, but in Europe
as well. Generally, the unemployment rate is an important indicator of the vitality of any economy,
which has both social and economic dimensions. Rising unemployment leads to the reduction
of income of individuals, increases the pressure on the budget because of the greater demand
for social benets, while there is a reduced income from taxation due to a lower income. At the
individual level, research shows that the time of unemployment may have a signicant impact
on the operating performance of the person in the future (in the form of lower revenue realization
and exclusion from society). The longer the duration of unemployment, the more likely it is that
the effects of unemployment may be transmitted to the next generation.6 In economic terms, the
unemployment rate is a reflection of the unused capacity of the workforce. This impacts the lower
volume of production in society and generally reduces the potential for economic growth.
Young people aged 15-297, make up a fth of the population of Montenegro8. According to a
research conducted by the International Labor Organization9, the youth unemployment rate (age
15-24) in Montenegro in the third quarter of 2015 was 34.5%, which was two times more than
the overall unemployment rate in the same period (16.5% for persons aged 15-64). Young people
across Europe have similar difculties when entering the labor market as well. However, the
percentage of unemployed youth in Montenegro is above the EU average, but is lower than the
rate of youth unemployment in the region10. Looking at the wider age group of 15 to 29, the rate of
youth unemployment in Montenegro is higher and stands at 41.3%. The analysis of unemployed
youth by gender indicates that the unemployment is more common in young males than in young
women (44.8% and 36.4% respectively). As expected, the rate of youth unemployment in urban
areas is lower than in rural areas (37.7% and 48.2% respectively). Also, the level of education is
crucial for employment, while the unemployment rate of young people with primary school is
twice as high compared to young university graduates (65.2% compared to 32%). According to
this research, only one quarter of young people are employed (25.2%), which is signicantly lower
than the average in the European Union (46%), as well as when compared to the gures from the
countries in the region11.
Although the economic crisis has affected all age groups, it seems that young people were the
6 Source: Gregg, Paul and Tominey, Emma, 2005, ‘The wage scar from male youth unemployment’, Labour Economics,
Vol. 12, pp. 487–509
7 Youth Law (Off. Gazette of Montenegro 42/2016) species that young persons are those between 15 and 30 years of
age.
8 Source: Census 2011, MONSTAT
9 Source: Report “Labour market transitions of young women and men in Montenegro”, ILO and MONSTAT, 2015
10 Youth unemployment in the EU was 20.7% in 2015, while in B&H it was 62.7%. In Croatia it was 45.5%.
11 At the time of writing this analysis, there were available data from the Labor Force Survey conducted by MONSTAT
for the second quarter of 2016 (www.monstat.org/userles/le/ars/2016/2/Saopstenje%20-%20ARS%20II%20KVAR-
TAL%202016.pdf). In analyzing the data, MONSTAT uses the age group 15+, 15-24, 25-49, 50-64 and 65+, noting that
the assessment of the active population and employed persons in the age category 15-24 are “less accurate”. Because
of the above, but also because of the comparability of the data, we will be using data from the report “Labour market
transitions of young women and men in Montenegro.”
8
rst to be affected. Due to lack of experience, the rst professional engagement of young people
tends to be a xed-term one. It has been signicantly easier to terminate these contracts when
there was a drop in economic activity. In addition, limited and slow job creation further reduced
the chances of employment for young people. At the level of the OECD countries that have
detailed statistics, it is evident that the youth unemployment rate has been two times bigger
than the unemployment rate of the total population for a longer period (from 2010 onwards).
However, what cannot be seen at rst is a disturbing fact which relates to the reduction of youth
participation in the labor market. In other words, if they experience the problem of unemployment
for a prolonged time, young people give up looking for a job12.
Having in mind the statistics, youth unemployment was recognized as a burning issue in
Montenegro, so the policies aimed at solving this problem have been incorporated into its strategic
framework. In both broader and narrower context, youth employment has been addressed by the
Strategy for Employment and Human Resources Development 2016-2020, Program of Economic
Reforms 2016-2018, Development Directions of Montenegro for the period 2015-2018, the
Program of reform of employment and social policy 2015-2020, Strategy of the development of
Southeastern Europe 2020. One of the outcomes from the National Youth Strategy 2017-2021
(adopted in September 2016) reflects one of the key priorities: “Young people achieve economic
and social security through improved access to labour market and employment.” However, it is
important to note that youth employment policies are closely linked to the results achieved in
the education sector, improving the business environment and development of SMEs, industrial
policy and so on.
12 Source: Policy Brief on Youth Entrepreneurship - Entrepreneurial Activities in Europe, OECD/European Union, 2012
9
3. YOUTH ENTREPRENEURSHIP AS A SOLUTION TO
UNEMPLOYMENT OR A DEVELOPMENT PARADIGM?
Although it would be logical to conclude that due to lack of experience and lack of funds to start
their own businesses, young people are not particularly interested in entrepreneurship, research
shows that a signicant number of young people in Montenegro do consider self-employment as
their preferred life choice. However, these considerations are not effected.
A research on knowledge, attitudes and behavior of young people in relation to employment
and social participation, procured by UN System in Montenegro and conducted by IPSOS 2013
(hereinafter referred to as IPSOS 2013) shows that young people13, at least declaratively, claim
that they would rather for work for themselves than for an employer – with over 60% of them
reporting this preference. When it comes to attitudes towards entrepreneurship, the majority of
young people (75%) think that starting business is risky, but they also report that entrepreneurs
in Montenegro enjoy good social reputation. One third of young people think that in order to
start their own business, a young person needs “knowledge/skills/education” (31%), while 27% of
them think that it is necessary to secure funds14. Slightly more than half of respondents believe
that they mostly or fully possess the characteristics required for starting a business, while 29%
of respondents consider the possibility of start their own business, on their own or with others;
4% are already working on it, while 67% do not consider this possibility at all.
A 2013 research on the lifestyle of young people, carried out by DAMAR also provided interesting
information about the preferences of young people in Montenegro towards entrepreneurship.
When asked whether they have their own business ideas, two-thirds of the surveyed young
people (up to 24 years of age) answered “Yes” (total 67.3%); when asked whether they intend to
start their own business someday, 48% of them replied “Yes“, 38.1% said they did not know at
that time, while the remaining 13.9% responded with a categorical “No”.
Although it appears that the entrepreneurship is popular and desirable among young people, the
study “The transition to the labor market of young women and men in Montenegro“ has shown
that self-employment is not widely practiced among young people. Namely, self-employed youth
represent 9.9% of the total number of employed persons; 1.5% are employers (have their own
employees who respond to them), 5.1% are own-account workers while 3.3% are working family
members (working in family businesses without being paid).
The most common reason for self-employment of young people is the expressed the need to
have greater autonomy (42.2%). This is especially true in the self-employed young people in
rural areas (62.2% compared to 36% in urban areas). Equally present motive for self-employment
among both young people in rural areas and those in urban areas is the fact that they could not
nd any paid work. More flexible working hours represent a motive for 6.5% of self-employed
youth, while one in ve respondents claims that key motive for self-employment was higher
13 The research has included young people aged 15 to 30.
14 Respondents had the option of giving multiple answers.
10
income (22.8%). It is interesting that the family does not appear to have a decisive influence on
the self-employed youth when it comes to optig for entrepreneurial initiative.
Comparative practice in OECD countries shows that the percentage of self-employed young
people increases with the age of population. Thus, there are only 5.1% of self-employed men in
the age category of 15 to 24 years, while the percentage of self-employed men over 55 years of
age is 29.2%. In women, these percentages are 3.6% and 15.9% respectively15. Although direct
comparability is not possible due to different denitions of the categories of young people16, for
illustration purposes, we have to note that the self-employment rate in the EU in the age category
of 15 to 24 years, in 2010, amounted to about 4%, compared to almost 15% of the total population.
Rates of self-employment in young people and the general population are above average in the
countries whose labor market absorption capacity has been signicantly weakened (Greece:
rate of self-employment among young people up to 24 years - 9%, the total population - 30% of;
Italy: 11% and 23% respectively)17. This tells us that individuals are opting for self-employment
when they exhaust all other options, or do not have the second chance for employment.
Although young entrepreneurs often share a similar motivation for entrepreneurship with “adults“,
they usually differ in their approach to business and the sector in which they are active. The
European practice is that young entrepreneurs more often manage small companies – on many
occasions, the founder is the only employee. Only one in ten young entrepreneurs has employees,
while this percentage among the “adult“ entrepreneurs is 30%. Young entrepreneurs usually
choose the sectors which are easier to enter (there are no signicant barriers to entry), which
usually means a lot of competition and sectors that do not require a signicant initial capital.
In Europe, these sectors are construction, information technology and other types of services.
The range of products/services offered is usually very limited. In addition, young entrepreneurs
are most often focused on the local market because they know it best, and at the same time
because they do not know the possibilities offered by other markets and how to make use of
those possibilities. Nevertheless, research shows that young entrepreneurs are more willing to
turn to the international markets compared to the “adult“ entrepreneurs18.
Given that the corresponding statistics are not available for Montenegro, the practice and
behavior patterns of young entrepreneurs in the European Union could serve as an important
illustration of possible trends in our country. Namely, due to the fact that young entrepreneurs
enter the sectors that have no entry barriers and that are characterized by high competition,
they tend to run businesses that often do not show signicant growth rates and sustainable
income. On the contrary, studies conrm that the mortality rate of businesses run by young
entrepreneurs is higher than in the general population. However, the same research shows that
companies that survive the critical period of the rst three years have a higher growth potential
15 For more details see OECD (2016), Entrepreneurship at a Glance 2016, OECD Publishing, Paris. http://dx.doi.
org/10.1787/entrepreneur_aag-2016-en
16 In a study “Labour market transitions of young women and men in Montenegro”, the category consisted of young re-
spondents aged 15 to 29.
17 Source: Policy Brief on Youth Entrepreneurship - Entrepreneurial Activities in Europe, OECD/European Union, 2012
18 Source: Policy Brief on Youth Entrepreneurship - Entrepreneurial Activities in Europe, OECD/European Commission, p. 9
11
compared to businesses run by “adult“ entrepreneurs. In particular, research has shown that
businesses run by young entrepreneurs, which survive the rst three years of operation, have
the potential for employment growth of over 200%, which is almost two times higher rate than
the rate of employment growth in companies run by entrepreneurs who are over 40 years old19.
For more than a decade, entrepreneurship has been in the focus of the economic policy of the
Government of Montenegro (since the Economic Reform Agenda 2002-2007). However, even
when the issue of youth entrepreneurship was raised, the focus had been on the development
of small and medium-sized enterprises and increasing competitiveness of the overall economy.
Only recently we started discussing youth entrepreneurship as one of the instruments for solving
the problem of unemployment in this population.
Analysis of current policies, not only in Montenegro, but also in countries of the European
Union, tells us that youth entrepreneurship is seen as one of the instruments to mitigate the
problem of unemployment of this population, and to a lesser extent, it is being promoted and
supported as an element of an overall shift of social development towards a society based on
entrepreneurial culture and value system. In order to achieve sustainable results in terms of
activation of young people as an important economic and social resource, it is necessary to
change this approach.
19 Source: Eurostat, 2006, “The prole of the successful entrepreneur - Results of the survey ‘Factors for Success’’’, Statis-
tics in Focus 29/2006
€
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12
4. THE ENVIRONMENT FOR
ENTREPRENEURSHIP IN MONTENEGRO
Improving business environment is high on the agenda of the state administration since the
restoration of independence. Research on the business environment conducted by both
domestic and international organizations point to the improvement of the global ranking of
Montenegro in the period. However, the last two years saw “stagnation or even decrease in the
ranking of Montenegro“ in the eyes of the international community20. Some of the areas with the
lowest ratings in all reports are: the rule of law, ght against corruption, protection of property
rights - the execution of contracts, real estate registration, issuance of building permits and scal
freedom, i.e. the payment of taxes21.
4.1 THE REGULATORY FRAMEWORK FOR STARTING
AND RUNNING A BUSINESS
Although Montenegro did a quality preparation and adopted the most important legislation
related to the above areas, the implementation by the relevant institutions remains a problem.
The following causes leading to such a poor practice have been identied:
• Poor communication between state institutions that carry out procedures as independent
entities not as the system, particularly when it comes to communication with the investors;
• Arbitrary application of regulations by local governments, cadastral ofces, and regional
units of state institutions;
• The resistance of the ofcials in terms of lack of willingness to implement reforms at full
capacity22.
The regulation related to starting a business, paying taxes and enforcing contracts is of
paramount importance for young entrepreneurs. In the area of starting a business, Montenegro
is only less than 10 percentage points behind the countries with the best practices covered by
the Doing Business Report. However, the fact that young people are not familiar with the steps
in procedures, and the fact that the procedure sometimes takes longer than expected, can be
rather discouraging.
Paying taxes is the only area, in which Montenegro, according to the latest Doing Business
Report (2017), has made progress in a way that it simplies doing business. Notwithstanding
the positive trend in this area and the fact that Montenegro is very competitive in Europe in terms
of the tax system, young entrepreneurs perceive tax and social contributions as great burdens,
especially at the very operation beginning of their business. The uncertainty of revenues in the
rst months of operations is coupled with a certain list of obligations that a company has to
20 Source: Analysis of “Montenegro through international economic indicators”, the Council for improvement of the busi-
ness environment, regulatory and structural reforms, the Government of Montenegro, 2016
21 Source: Analysis of “Montenegro through international economic indicators”, p. 7
22 Source: Analysis of “Montenegro through international economic indicators”, p. 7
13
settle, which is discouraging. This is the reason that a number of young people do not register
their undertakings and remain in the informal economy, or give up on starting a business.
When it comes to the execution of contracts, the problems reflect in challenging and lengthy
procedures. According to the Doing Business Report, the average number of days to enforce
a contract in Montenegro is 545, while in Europe is 486. When it comes to the costs of the
proceedings, they were higher by about 20% compared to the OECD countries.
4.2 EXISTING POLICIES TO SUPPORT THE DEVELOPMENT
OF ENTREPRENEURSHIP
Policies to support young entrepreneurs can be dened as a set of measures aimed at helping
young people in different stages of the entrepreneurial process, so that more young people
could go into entrepreneurship and start their businesses. At the same time, these measures are
aimed at increasing the employability of young people in general. Also, these policies are specic
because they are targeting not only a specic “niche“ in terms of the needs of end users, but
also certain population (young people). The common practice in European countries is to create
such policies in response to a specic problem, such as high youth unemployment. However,
experience shows that the effect is much stronger if the support measures are part of the overall
“holistic“ entrepreneurial policy whose wider goal is developing and strengthening entrepreneurial
culture and entrepreneurial approaches through coordinated action23.
The starting point of any policy to support the development of entrepreneurship is that the market
is not functioning in a perfect manner which is why entrepreneurship is not optimally developed.
Furthermore, the assumption is that these market failures occur due to asymmetric information
which needs to be “corrected“ by a public policy intervention. One of the shortcomings of the
market, which is at the same time crucial for policies to support youth entrepreneurship is the
lack of awareness or limited awareness of young people regarding their entrepreneurial potential,
or even the fact that entrepreneurship can be an adequate choice of career. This is “solved”
with measures oriented towards the entrepreneurial learning and other various initiatives that
establish links between the education system and increasing public awareness, even in young
people, about the benets of entrepreneurial activity.
Policies that aim to facilitate access to sources of funding for potential entrepreneurs respond
to market failure relating to the standard loan approval procedure, given that young people often
do not have a credit history or property that could be offered as a mortgage when taking the
loan. Another market failure, which can also affect policies to support youth entrepreneurship,
comes from lack of knowledge about the benets of external support, primarily raining and
expert advice, for the development of skills necessary for starting and developing businesses24.
Various measures to support youth entrepreneurship have been implemented and are still being
implemented in Montenegro. These can be grouped into different categories, depending on which
23 For more details see Eurofound (2016), Start-up support for young people in the EU: From implementation to evalua-
tion, Publications Ofce of the European Union, Luxembourg
24 Source: Eurofound (2016), Start-up support for young people in the EU: From implementation to evaluation, Publica-
tions Ofce of the European Union, Luxembourg, p. 19
14
specic limitations that entrepreneurs experience, these measures are trying to compensate/
overcome. These are the categories of support measures:
• Measures solely relating to various forms of nancial support (loans, tax and other relieves);
• The development of so-called “soft” skills, entrepreneurship training programs, technical
assistance, mentoring;
• The combination of nancial and advisory support;
• Initiatives related to raising awareness of entrepreneurial vocation and various support
measures connected with the education system;
• Support measures relating to the provision of the necessary infrastructure for potential
entrepreneurs, particularly in innovation and IT sector.
Despite the relatively large number of identied initiatives25 aimed at promoting entrepreneurship
and supporting start-up businesses, most of them are not exclusively focused on young people.
This is reected in a weaker effect of correcting market failures when it comes to starting a
business from a position of a young individual. In addition, most of the identied measures
are isolated, relatively small, ad hoc and discontinuous measures that are usually not part
of a broader comprehensive policy to support the development of youth entrepreneurship.
Precisely for this reason, the scope of such initiatives is limited.
Although this report points to the examples of good practice (with no intention to map all the
support measures), there is an evident lack of cooperation between line ministries which in their
respective elds do share topics of importance for promoting entrepreneurial activity in young
people.
4.3 OPPORTUNITIES FOR SELF-EMPLOYMENT OF YOUNG PEOPLE IN
MONTENEGRO - SELECTION OF SECTORS AND BUSINESS IDEAS
Strategic documents recognize tourism, energy, agriculture and rural development, and
industry as priority development sectors of the Montenegrin economy26. Sectors which are
recognized to have a growth potential, and which may be drivers of industrial development
with the potential for increasing the competitiveness of the domestic market and export
potential are: manufacturing – food, wood, metal, and pharmaceutical industries; energy and
tourism. The sectors that have growth potential and should contribute to the development
of modern industrial development are: transport, ICT and creative industry sector, business
services and construction. In addition to energy, tourism, and agriculture, the National
Sustainable Development Strategy until 2030 recognizes the importance of development of
25 A detailed review of these initiatives implemented both by government institutions and NGOs, was prepared in the
research phase that preceded the drafting of this document. A number of initiatives that have been recognized as
desirable and good practices are given below as an illustration of the possible actions, depending on the priority of the
policy.
26 Source: Government of Montenegro, Montenegro Development Directions 2015-2018
15
green entrepreneurship for generating new employment and contributing to the development
of local communities and overcoming inequalities. Opportunities for development of green
entrepreneurship exist in the areas of energy, waste management, organic agriculture, eco-
tourism, recycling, eco-products and other activities27.
With the exception of dening sectoral support programs (e.g. when IDF in Montenegro does that,
favorable credit lines for priority development sectors are dened, such as ones for agriculture,
tourism, etc.), there are no examples of policies that impose or recommend sectors to invest
or business ideas to be developed.
Good practices of encouraging youth entrepreneurship in OECD countries also do not recommend
particular opportunities for self-employment of representatives of this target group. This is the
case only in some projects such as the establishment of centers to provide support to beginners
in business or the establishment of business incubators or providing micro-nancial support. In
these particular cases, dening the narrow sectors from which business ideas can come, aims
to facilitate the selection of participants in the program, especially when the amount of nancial
assistance is relatively small, and intention is to facilitate the networking of entrepreneurs and
possible clustering for joint appearance on the market in the future. Thus, for example, project
garage Hamburg (www.garagestartups.de) that included micro loans and networking, restricted
eligible applications to those related to business ideas in the eld of music, art, lm, design,
production/TV, architecture, media, advertising and software production.
When it comes to the aspirations of young entrepreneurs, there is research that can serve as a
reliable source of information regarding the interest and disposition for entrepreneurial activity
in a particular sector. The survey conducted among over 50 students of the International School
“Entrepreneurial ideas of young people in the EU“, which took place in Montenegro in November
2016, within the Erasmus+ Program28, showed that young people see greatest potential for
entrepreneurship in tourism and hospitality (30.7%), information technology (12.4%), agriculture
(10.9%) and marketing (10.1%).
Startup community has been rather active in Montenegro in the last few years. Although only
a couple of the startups have managed to go through international accelerator programs so far
(such as the hub:raum’s WARP or Bulgarian Eleven), the group of enthusiasts gathered around
Digitalizuj.me tries to popularize this business concept in young people and create possibilities
for them to get in touch with regional and international platforms which support startups. Startup
represents “an innovative technology business with rapid growth potential and far-reaching
possibilities.“29 This concept of business development has no systemic support in Montenegro.
There are no specialized investors, a network of mentors and experts is relatively limited, and
the term startup itself is very often equated to the term beginner in business. Startups are
27 Source: Government of Montenegro, the National Sustainable Development Strategy until 2030, p 66
28 Source: The school was organized by the Center for Monitoring and Research (CEMI) in cooperation with partners:
the University of Donja Gorica (UDG), Art Communications from Podgorica, the Center for International Studies from
Croatia, and the Center for European Perspective from Slovenia.
29 Source: www.digitalizuj.me/2015/12/sta-je-to-startup/
16
mostly technological in nature and are oriented towards the source, because Montenegro itself
is not a market which is big enough. Startup development can be one of the options for young
entrepreneurs and an orientation towards regional and international support initiatives, while
Montenegro develops its critical mass and a better environment and understanding for their
development and necessary support.
It might be interesting here to point out the results of a research30 about the preferred employment
sectors among youth (when they are hired for a salary). Most of the young employees in
Montenegro (87.7% of them) work in the services, which is especially prominent in women
(up 95.1%). This is a consequence of the general trend of the Montenegrin economy in which
services dominate at the expense of industry (according to the Labor Force Survey conducted
by MONSTAT, 8 out of 10 employees are engaged in the service sector). The industrial sector
employs 11.2% of young people, 16.8% of men and only 4.5% of women, while there are only 1.1%
of young people employed in the agriculture sector. When we analyze services sector in detail,
we see that the greatest number of young people are engaged in wholesale and retail trade
as well as accommodation services sector (26.9% and 11%, respectively), followed by public
administration (7.3%), health and social work (5.9%), arts and entertainment (6.1%) and other
services (6.6%). A signicant proportion of young male workers are also engaged in technology
sector (8.2%). Two sectors with signicant potential for self-employment, in which the proportion
of young people is higher than the percentage of total employment (according to the Labor Force
Survey), are information and communications and the arts and entertainment.
If we analyze the business ideas of young people supported by IDF in 2016, we can conclude
that these are mainly related to the service sector (rent-a-car agencies, trade and craft services,
tness centers, etc.). Lack of inventiveness in developing business ideas is primarily the result
of poor education and weak intensity of life of young people (e.g. lack of mobility).
On the other hand, a survey among companies in the manufacturing sector31 has shown that
there is a high awareness of the need to innovate in order to raise the level of competitiveness of
enterprises, both in the domestic and regional and international markets. The most signicant
effects of innovative activities are manifested through the increase of: the range of products
and services, production capacity/volume of services, company’s productivity and investments
and sales in the existing market. The most important limiting factor for innovation appears to be
the lack of nancial resources since the costs of innovation in processing industry are usually
high. However, other limiting factors which have been identied are insufcient innovative
potential of the company and the lack of skilled personnel; and low availability of external
services / innovation services. These can be the areas in which young entrepreneurs can be
engaged, especially when it comes to the following segments: product design, production of
promotional material/development Internet presentations; advertising and product placement;
digital prototype design and packaging.
30 Source: Report “Labour market transitions of young women and men in Montenegro”, ILO and MONSTAT, 2015, p. 20
31 Source: The survey was conducted within the framework of the implementation of the joint project of the United
Nations: “Strengthening the competitiveness and innovative capacity of Montenegro through sustainable policies for
economic growth” nanced by Delivering results together fund.
17
It has been said that, due to lack of initial capital, young people tend to enter the sectors that
do not require signicant investment. These are mainly service activities, information and
communication technology, and they tend to be linked to the domestic market.
To conclude, when it comes to the choice of sector and business idea, no one can take the
responsibility but the entrepreneurs themselves. Forcing an idea to them or recommending
a business idea is not an option. Even in optimal conditions, the realization of an idea requires
genuine personal interest - passion and commitment. Instead, we will list several characteristics
of a good business idea32:
1. It connects skills and interests of entrepreneurs (those that create sense of pleasure in the
entrepreneur);
2. It represents an area which is familiar enough to the entrepreneur so that they can identify
at least three key factors for success;
3. It entails the use of knowledge and skills that an entrepreneur already has or can quickly
master;
4. It requires funds that can be provided relatively quickly;
5. It promises return on investment that is at least four times greater than that which would
be obtained if the funds have been deposited in the bank;
6. It does not require hiring a larger number of workers in the rst year of operation;
7. It is aimed at a target market of customers/users with whom the entrepreneur does
business with pleasure.
Therefore, we may conclude that a good business idea is a combination of interests and skills
of entrepreneurs; it does not require a large initial investment or employment of more workers in
the rst year of operation; it is directed to a market in which there is an unmet demand and has
a dened competitive advantage.
32 For more information, see guidelines “Design and check your business idea”, created by a group of authors published
by the University of Osijek, Faculty of Economics in Osijek
18
WHICH BARRIERS DO YOUNG PEOPLE FACE WHEN THEY
START ENTREPRENEURIAL ACTIVITY IN MONTENEGRO?
Studies have shown that being an entrepreneur has a positive connotation among young people
in Montenegro. Also, most of them admitted having their own business idea. However, practice
shows that the percentage of young people who opt for self-employment is much lower than
those who decide to “work for salary “ (10% of self-employed vs. 90% who work for salary). With
greater or lesser discrepancies from country to country, a similar trend was registered in the
countries of the European Union. In addition, the experience of developed countries shows that
companies founded by young people are three times more likely to fail compared to companies
founded by the “adults“.
The key questions are - which barriers do young people face when considering self-employment,
and what problems that thez face affect the higher mortality rate of their companies.
Broadly speaking, limitations that affect entrepreneurial activity of young people in
Montenegro come from their immediate environment, lack of skills which they recognize as
important for entrepreneurship, inadequate education that does not prepare young people for
market competition, lack of experience, lack of funds for starting a business, lack of social
networks and contacts, inadequate entrepreneurial ecosystem, but also market barriers and
regulatory burdens. Of course, all the listed limitations are inter-related to a certain extent,
which indicates that in order to encourage youth entrepreneurship, it is necessary to take
integral and comprehensive approach instead of separate activities focused on only some of
the said limitations and without adequate follow-up support.
The following is a preview of the identied constraints for the increase of the representation of
youth entrepreneurship in Montenegro and the rationale for each of them33.
BARRIER 1: THE NEGATIVE ATTITUDE TOWARDS ENTREPRENEURSHIP/
INSUFFICIENT SOCIAL SUPPORT
Young people are highly influenced by their families, teachers and society in general. The changes
caused by the transition from centrally-planned to a market-economy system, and pronounced
influence of globalization have created a huge gap between the generations. “The specic tradition
in upbringing and education created under the strong influence of customary and political currents,
met the developed world and created a specic type of gap in young people, between what they are
and what they are required to be.“34
33 In addition to data and information from previously conducted mostly quantitative research, barriers are listed based
on the outcomes of workshops held with young entrepreneurs and representatives of state institutions. Detailed re-
sults from the workshops are presented in a separate document that contains details of desk analysis and conducted
qualitative research. The workshops were designed, guided and helped in terms of interpretation of the results obtained
by Joshua Harvey, consultant of the Joint UN Youth Program, using human centered design research methods. It is a
process that starts with the target group for which the solution (to a problem) is being designed and ends with creating
new solutions that correspond to their needs.
34 Source: CEED, Entrepreneurship as a support to the development of young people in Montenegro, 2015
19
The impact of the negative attitude of society towards entrepreneurship is best conrmed by
conflicting answers to questions about the popularity of entrepreneurship, on one hand, and the
high percentage of young people who prefer “stable“ job in the public administration, that is less
paid, over better-paid jobs in the private sector. This reflects the tendency of choosing “certainty“
of the work in the civil service, regardless of the lower income, compared to the involvement of
the private sector, which is seen as uncertain and risky business.
Media, on the other hand, play special role in promoting a phenomenon and creating public
opinion. In this particular case, positive media coverage of the issue, in particular the issue of
youth entrepreneurship, is rare, regardless of the format. Also, there is a prevailing culture of
judging failure both by media and the public in general. Those who once experienced bankruptcy
practically do not get “a second chance“35. Instead, they are labeled as unsuccessful and should
therefore be avoided.
BARRIER 2: (UN)PREPAREDNESS FOR ENTREPRENEURSHIP
One in four young persons (26%) believes that formal education does not provide them with practical
knowledge that can be put to use in their future work. One-third believes that the lack of practical
knowledge is the biggest problem of formal education in Montenegro. However, awareness of the
importance of lifelong learning is expressed, so 86% of respondents believe that it is necessary
to learn and develop themselves throughout their lives (IPSOS 2013)36.
Young entrepreneurs nd that their existing systems of formal and informal entrepreneurship
education do not provide them with enough practical, relevant and reliable information on the key
steps and stages in the process of starting a business. In addition, they doubt the usefulness and
accuracy of the available information. Quite the opposite, they believe that the information they
receive is incomplete and/or inaccurate regarding the procedures and services offered to them,
and that they very rarely reflect real experiences.
Young entrepreneurs also think that there are not enough opportunities for both formal and informal
professional development and preparation for entrepreneurship. They report that it is difcult to
obtain information about the existing resources, claiming that the quality of training offered is of
extreme importance. The gaps were recognized in several key areas such as market research,
understanding clients/customers, networking and relationship management, expanding the
customer base, the presentation of offers, looking for and securing nancial resources.
35 In May 2011, the Competitiveness Council for the of the European Union issued a recommendation to promote the
“second chance” and to limit the time for resolving the issues of debt and relations with numerous institutions, for hon-
est entrepreneurs who have gone through the process of bankruptcy, for a period up to three years.
36 It may be interesting to mention the employers’ assessments of the knowledge and skills that are most often lacking
in young people when hiring. In the rst place they put working ethics, followed by the ability for independent work,
knowledge of English language, teamwork skills, creativity and innovation. Source: Employers’ Survey 2015/2016, Em-
ployment Agency of Montenegro
20
BARRIER 3: LACK OF EXPERIENCE, KNOWLEDGE
AND BUSINESS CONTACTS
The lack of experience, similar to the lack of knowledge/qualications (32% and 19% respectively),
but also underdeveloped network of business contacts and lack of relevant information have
been identied as obstacles faced by young people when leaving the education system and
entering the “world of work“37. Research at the global level indicate that the highest percentage
of entrepreneurs belongs to the age groups 25-34 and 35-44. This actually shows that the
entrepreneurship requires accumulation of certain work experience and creating a network of
contacts and other resources necessary to run a business38.
BARRIER 4: LACK OF FINANCIAL RESOURCES
Lack of nancial resources (30.8% of the total youth population; 34.3% of men and 23.4% of
women), along with market competition, presents the most important challenge for starting
a business in Montenegro. Almost half (46.8%) of respondents who are self-employed young
people said they had borrowed money from family or friends, a quarter of them (24.4%) had
their own savings, and 19.5% said that they did not need the money. Only 9.3% of self-employed
young people reported that they had taken a loan from a bank. Although young people are in a
problematic situation because they often do not have their own savings or property that could
be used as a mortgage when taking a loan, it appears that “adult“entrepreneurs in Montenegro
nd equally challenging to secure funds for starting and developing a business. This is especially
true for women entrepreneurs given the fact that the property which could serve as a collateral is
usually listed as the property of their male family members (father, brother, husband)39.
Young entrepreneurs expressed frustration regarding the available information about the
possibility of nancing their business ideas, to the extent that they became suspicious and
believe that the information they receive do not correspond to the real situation. This is primarily
related to access to funds and understanding the expectations of creditors. Noting that the
creditors were often uninterested even to listen to them, it seems that young entrepreneurs are
not familiar with the process of making decisions on investments and on the basis of which
information/data creditors decide on funding.
BARRIER 5: MARKET COMPETITION
As said above, atogether with the lack of nancial resources, market competition is a
leading challenge when starting own business (31.1% of the total youth population, with
29.1% representation of men and 35.4% women). This is primarily due to the fact that young
entrepreneurs are entering the market which do not have entry barriers, but which are usually
37 Source: Report on the transition to the labor market of young women and men in Montenegro, ILO
38 Source: GEM Global Report 2015/2016, p. 26
39 Montenegrin Employers Fedaration recognize the unavailability of funds and poor credit conditions as one of the “5
killers of business,” along with inadequate regulatory framework, the gray economy, corruption in all areas and the
discrepancy between the education system and the actual needs of the labor market.
21
characterized by high competition. Moreover, young people are focused on local markets
especially in the beginning of operation which further complicates the start. Small market size
often forces businesses to diversify their activities in order to be protable. Young people at the
beginning do not see this as acceptable, while it can be decisive when it comes to sales.
BARRIER 6: REGULATION
One in ten self-employed persons in research on the transition to the labor market of young
people in Montenegro has recognized that the legislation presents a signicant challenge when
starting a business, and this opinion (in a much higher percentage) is shared by established
entrepreneurs as well. 97% of the companies in Montenegro believe that the current regulatory
framework does not encourage companies to expand their business. More than a half of
companies (60%) believe that the state (and local) administration is inefcient, ineffective and
expensive. Only 4% of companies disagree with this claim40. Progress made on the global lists
that rank the countries in various elds (primarily economic) indicates that Montenegro has
been making progress in the last 10 years, especially in the area of adoption legislation (in all
areas which are the subject of evaluation). However, the expected level of progress on these lists
has not been achieved because the adopted laws or particular regulation are not being applied
in their entirety. This barrier comes from the fact that young people often are not familiar with
the regulations, and that information is not usually available in one place and in a transparent
manner.
BARRIER 7: (UN)COOPERATIVENESS OF INSTITUTIONS
Young entrepreneurs almost always have negative comments regarding the support of
institutions. Most often they make comments on poor quality of services, lack of access, too
much red tape or negative attitudes of those to whom they spoke, or those who had been obliged
to provide required service to them on behalf of the institution. Analyzing the way they talk about it,
it seems that young entrepreneurs are not familiar with the content and description of services
offered by public institutions and their scope of work41. Also, it seems equally probable that
the operation and decision-making processes of public service providers are extremely unclear.
The fact that representatives of institutions were not willing to talk about it, even when they
pointed to the dissatisfaction of young entrepreneurs in this segment, appears to be yet another
proof of the validity of this claim. Analyzing the outcomes of the workshop with representatives
of institutions, it was concluded that there was no mention of the problem of relationships
between clients/beneciaries and service institutions; there was no mention of the importance
of evaluation and the quality of services, as well as the mechanisms used to design and create
services to be offered to young entrepreneurs.
40 Source: “5 Killers of Business” Montenegrin Employers Fedaration
41 IPSOS 2013 research conrms this view. Namely, as many as 64% of young people aged 15 to 30 believe that young
people in Montenegro are not familiar with the institutions, organizations, programs and support services available to
them when they are looking for an employment.
22
GUIDELINES FOR PUBLIC POLICIES AIMED AT THE
DEVELOPMENT OF YOUTH ENTREPRENEURSHIP
Entrepreneurship and self-employment may be of importance for resolving the problem of
unemployment. However, good results cannot be achieved overnight. The development of
entrepreneurship and, in this context, improving the environment for doing business, have been
a priority of Government policy in Montenegro for many years. Following the recommendations
from international reports (WEF, Doing Business, etc.) focusing on the business environment,
as well as initiatives such as the European Commission’s Small Business Act, the government
develops and implements measures which improve the overall entrepreneurial ecosystem.
Entrepreneurial activity of young people cannot completely eliminate the problem of
unemployment in this population, but may be a part of the solution. Depending on the limitations/
barriers which are recognized and faced by young entrepreneurs, it is necessary to make a proper
combination of support measures, taking into account the overall economic, social and cultural
context. Based on the research which was carried out, we propose the priority areas for action in
order to encourage and support entrepreneurial activity of young people in Montenegro. We shall
also present good practices that are currently being implemented or activities that had been
previously implemented, which in our opinion deserve full support of policy makers and/or can
be to replicated in the same or slightly modied form.
6.1 CREATING A POSITIVE ATTITUDE
OF THE SOCIETY TOWARDS ENTREPRENEURSHIP
THE GOAL
Environment heavily influences the actions of entrepreneurs42 - it is where the entrepreneur’s
business ideas originate from, but also an important factor in supporting the implementation of
the ideas. At the same time, the lack of support of the immediate environment can discourage
entrepreneurs and influence their decision to abandon the planned activities when they face
the rst obstacle. Montenegrin society has relatively recently gone through the process of
transition from centrally-planned to a market economy. The average age of the population is
39.2 years (MONSTAT, Census 2011), and the parents of Montenegrin twenty-ve year olds have
vivid memories of the era of the culmination of socialism and (mostly) long for it. Creating a
positive public opinion about the importance of entrepreneurship, can additionally influence the
popularization of entrepreneurship as a profession.
42 The terms used in this document physical persons in masculine entail the same terms in feminine gender.
23
THE APPROACH
Promoting entrepreneurship through the effects achieved (primarily through self-employment
and job creation) and presentation of successful entrepreneurial stories, can change public
attitudes towards entrepreneurship, and then increase the interest of young people in it.
There are several global initiatives that contribute to creating a positive attitude towards
entrepreneurship. For example, Global Entrepreneurship Week43 is the largest world initiative
celebrating entrepreneurship, entrepreneurs, innovators and those who create new jobs, drive
economic growth and improve the well-being of human civilization. Since 2008, when it was rst
celebrated, Global Entrepreneurship Week has become the largest festival of entrepreneurship
– during one week in November, with numerous public meetings, conferences, competitions,
etc., which connect entrepreneurs and potential entrepreneurs on one side with the policy
makers, mentors and investors on the other side. National host of the Global Entrepreneurship
Week in Montenegro is the Institute for Entrepreneurship and Economic Development (IEED).
In the past three years, various other organizations and public institutions, especially primary
and secondary schools, took part in the entrepreneurship week by organizing fairs and other
activities aimed at promoting entrepreneurship. A similar initiative at the European level is the
European Week of SMEs campaign organized by the European Commission, which is also being
celebrated in Montenegro44. During the campaign, entrepreneurs are assisted in getting the
necessary information on support options and interested ones are encouraged to start their
own businesses. The main event is organized during the autumn together with the Assembly for
SMEs and the award ceremony for the promotion of entrepreneurship. In both cases, organizers
expressed desire to organize events throughout the whole year, because it best reflects the
importance of entrepreneurship for the development of a society.
The media have a great influence on creating public opinion, in almost all aspects of social
life. Communication via the mass media becomes more and more important, and information
published through the mass media generally are generally considered proven and accurate. A
large number of media thriving in a rather small media landscape in Montenegro leads to a
relatively easy access to media. Although this could be a positive feature of the Montenegrin
society, positive news about entrepreneurial ventures do not end up on the front pages, and they
are often perceived as a content for which it is necessary to pay. When it comes to the youth,
studies show that short forms common to social media have more signicant impact while the
television remains the most influential among general population.
EXPECTED EFFECTS
Research conducted in the UK showed that the campaigns that promote entrepreneurship
and business-related “reality“ programs on television, do not have a direct impact on a specic
43 For more details see www.gew.co
44 The European week of SMEs is a pan-European campaign aimed at promoting entrepreneurship in Europe. A part of
the campaign is to help existing entrepreneurs to obtain the necessary information about the support oportunities
and encourage them to be interested in starting their own businesses. The campaign is coordinated by the European
Commission, and is celebrated by organizing various events throughout the year. The main event is organized in the fall
along with the Assembly of SMEs and award ceremony for the promotion of entrepreneurship. For more information
see http://ec.europa.eu/growth/smes/support/sme-week/
24
entrepreneurial activity or intentions of an individual. However, there was a marked positive impact
on social norms and values, which positively contributed to the image of entrepreneurship and
created a culture that favors entrepreneurship45. In this way, the media, albeit indirectly, influence
the actual patterns of entrepreneurial activity. The survey also conrmed the synergistic
effect between the positive media coverage of entrepreneurs and campaigns such as Global
Entrepreneurship Week. The popularity of entrepreneurship directly affects the willingness of
individuals to more easily engage in programs and activities that will help them develop skills
and gain the knowledge necessary to start their own business.
6.2 DEVELOPMENT OF ENTREPRENEURIAL SKILLS
THE GOAL
Programs that focus on the development of entrepreneurial skills are intended to compensate
for the lack of practical knowledge and skills which, in their opinion, young people usually do not
acquire in the course of their formal and informal education. Such programs should support the
development of entrepreneurial competences among young people, regardless of whether they
intend to start their own business or get employed. In any case, the entrepreneurial competencies
contribute to improving the employability of young people.
THE APPROACH
The usual approach to the implementation of programs for development of entrepreneurial
skills is to offer them through the education system, with the methodology and objectives
varying depending on the age of pupils or students. At the primary level, the goal is to develop
the awareness about entrepreneurship and a set of knowledge, skills and attitudes that are
characteristic for an entrepreneur. This is usually achieved by organizing visiting lectures, when
entrepreneurs come to a school and talk about the early days of their entrepreneurial careers, or
organize visits to their respective companies.
When it comes to secondary education, more emphasis is put on certain technical skills which
students need to develop, such as business planning, dealing with nances and simulation of
work in a company.
In the higher education institutions, students are supposed to move to a higher level, and learn
about the essentials of starting and running a business, but also about the importance of
networking and associating. This is accomplished by inviting entrepreneurs to attend practical
classes, through the cooperation of universities and businesses, and by organizing internship
programs and the like.
Of course, entrepreneurial skills can be developed outside the education system in cooperation
with the business community and society in general, or through an agile involvement of
business associations in order to take students outside their classrooms and allow them to
spend some time in a business environment. EU program Erasmus for young entrepreneurs is an
45 Source: Impact of Media on Entrepreneurial Intentions and Actions, Global Entrepreneurship Monitoring, 2010
25
example of good practice46. This particular program allows participants to acquire and develop
entrepreneurial skills through interaction with other entrepreneurs.
Youth activism is of special importance for the development of entrepreneurial skills. Actions
and initiatives whose ultimate goal is not starting own business can greatly contribute to the
development of creativity, innovation and self-motivation in young people.
EXPECTED EFFECTS
Generaly, studies conducted in European countries show that young people who take part
in the programs of development of entrepreneurial skills are generally more interested in
entrepreneurship. Also, such programs show that 15-20% of the participants do choose to start
their own business at some time in the future. There are also negative examples where the
students’ interest in entrepreneurship declined after participating in such programs. Most often
it happens to young persons with negative preconception about entrepreneurship, who deeply
believe that they do not have the traits inherent to an entrepreneur47.
The latest report of the European Commission (Small Business Act), presented to Montenegro in
May 2016, states that Montenegro is an example of best practice in the region when it comes to
entrepreneurial learning. Positive results are already visible through various awards Montenegrin
schools and colleges received. The Entrepreneurship 360 competition, organized by the OECD for all
educational institutions at all levels of education, resulted in 105 entries from 27 OECD countries.
Two applications from Montenegro were among the 20 selected ones. Even though they were not
among the most inspiring 20 entries, there were 2 more applications from Montenegrin schools
which were praised together with 11 other applications for their particular inventiveness and
which were chosen by OECD for upcoming series of activities within the Entrepreneurship 360
project. All other selected entries came from EU countries that incorporated entrepreneurship into
their curricula 10 years ago. In addition to this, students of the Faculty of Economics, University
of Montenegro, Podgorica won rst place in the eld of entrepreneurship at the Euroskills 2016.
46 The Chamber of Commerce of Montenegro was the implementing partner
47 Source: Eurofound (2016), Start-up support for young people in the EU: From implementation to evaluation, Publica-
tions Ofce of the European Union, Luxembourg
26
ENTREPRENEURSHIP AS A KEY COMPETENCE AND ENTREPRENEURIAL
LEARNING
Seen as a key competence for lifelong learning, entrepreneurship refers to the ability of an
individual to turn ideas into action48, which includes creativity, innovation and risk-taking,
as well as the ability to plan and manage projects in order to meet the objectives. The
basis of this competence lies in the ability to recognize the context in which the person
acts and proactive responding to the opportunities offered to him or her. A small number
of individuals are born entrepreneurs, but research suggests that education and training
can signicantly contribute to the development of entrepreneurial attitudes, knowledge and
skills.
The entrepreneurial competence entails49:
Knowledge of available opportunities in order to identify those that correspond to personal,
professional and/or business activities of a person.
Skills:
• The ability for cooperative and flexible working within a team,
• The ability to identify personal strengths and weaknesses,
• The ability to take proactive action and have positive response to change,
• The ability to assess and take risks when and where it is justied.
Attitudes:
• The tendency to take the initiative,
• Positive attitude towards change and innovation,
• Willingness to identify areas where a person may demonstrate their full range of
entrepreneurial skills - for example at home, at work and in the community.
In a narrow sense, entrepreneurial learning refers to the acquisition of knowledge necessary
for starting own business and acquisition of economic literacy. In a wider sense, it refers to
the development of personality traits and skills that are considered to be a prerequisite for
successful entrepreneurial activities.
48 Proposal of Recommendations on key competences for lifelong learning, Work program “Education and Training
2010“, European Commission
49 Work program “Education and Training 2010”, European Commission
27
ACTIVITIES RELATED TO THE INTRODUCTION OF ENTREPRENEURIAL
LEARNING IN PRIMARY AND SECONDARY SCHOOLS IN
MONTENEGRO - THE BEST PRACTICE IN THE REGION IN THE FIELD OF
ENTREPRENEURIAL LEARNING
A program named “Entrepreneurial learning in the areas of activities in preschool education” (3
to 6 years) has been introduced at the level of general education. Entrepreneurial learning
was also included in the primary school curriculum as a curricular area from the school
year 2014/15 included, for all primary school students; Entrepreneurship, as an elective
subject, was rst introduced in general secondary education in Montenegro in 2015. An
entrepreneurial platform that will enable direct cooperation and exchange of information
between schools and teachers at all levels of education has been introduced50.
Entrepreneurship is taught as an elective subject in the eighth grade elementary school
(one class per week). Total of 335 eighth graders, which makes 4.2% of the total number of
students in this grade at the state level, have chosen to take this subject in 2014/15.
Entrepreneurial learning in general secondary education is carried out by means of a cross-
curricular program: cross-curricular area of entrepreneurial learning in subject programs for
general secondary education, which was adopted by the National Council for Education. Since
the school year 2015/16 in all secondary schools have been implementing entrepreneurial
learning as a cross-curricular area. In secondary vocational schools, this program is used
for the group of general educational subjects. In gymnasiums it is being implemented as
an elective subject in the rst or second grade. In the previous school year, 234 students of
the rst grade of gymnasium (10.1%) and 132 students of the second grade of gymnasium
(5.7%), that is 15.8% of all students, chose this particular subject.
The implementation of entrepreneurial learning as a cross-curricular area is carried out in a
specic and rather different way, compared to the mandatory courses. In this regard, there
has been created a training program to train teachers to integrate entrepreneurial learning
in the regular teaching activities. The training program was delivered to 2,700 teachers,
which is more than 50% of all employees in elementary schools. One-day seminars have
also been delivered to all elementary school principals.
In the previous period, the Center for Vocational Education introduced the subject/module
Entrepreneurship in all new, reformed educational programs for secondary vocational
education. The Training Company, as a module, is taught as a compulsory subject in the
Economics sector programs.
Training of all teachers who teach these subjects/modules has been carried out (about 150
teachers have been trained).
50 Source: Report on the implementation of the action plan for implementing the Strategy for Lifelong Entrepre-
neurial Learning 2015-2019 for 2015, the Directorate for Development of Small and Medium Sized Enterprises,
March 2016
28
Teachers’ and Students’ Manuals for the Training Company and Entrepreneurship
have been created and posted on the websites www.serviscentarpzv.me and
www.preduzetnickicentri.me.
Training of a number of secondary vocational schools principals on the topic of realization
of entrepreneurial learning and their involvement in the process was also carried out.
Cooperation with entrepreneurs was established and a training was delivered to them in
order to be included in the teaching process. A dozen of entrepreneurs from the northern
Montenegro passed this training.
An entirely new concept has been developed - Entrepreneurial Centers in secondary
vocational schools - to encourage young and unemployed people to gain entrepreneurial
knowledge and skills through certain forms of education that will enable them to start their
own companies. Four entrepreneurial centers were established in schools in Bar, Bijelo
Polje, Berane, and Mojkovac.
The concept - Entrepreneurial clubs in secondary schools - was developed as a form of
extracurricular activity for the purposes of development of entrepreneurial spirit and
entrepreneurial mindset. So far, around 20 entrepreneurial clubs have been established
throughout Montenegro, in which students produce certain products and sell them on the
market (souvenirs made using various decoration techniques, decorative lamps, applications,
etc.). This concept is realized in secondary vocational schools and gymnasiums.
The Center for Vocational Education organized two international and four national fairs of
training companies and participated in more than 30 international fairs for students from
secondary vocational schools.
The Center for Vocational Education organized two national competitions for the best
business plan for students of secondary vocational schools.
29
TRAINING COMPANY - AN EXAMPLE OF GOOD PRACTICE
Within the project which is being carried out by the Center for Vocational Education and the
Ministry of Education in cooperation with KulturKontakt Austria, since 2005, there has been
introduced the innovative teaching method “Training company“ in secondary vocational
schools in the eld of economics. The aim of the project and this form of teaching was to
allow to acquire entrepreneurial knowledge and skills, develop a positive attitude towards
work and connect with the local community and economy. Training company provides a
simulation of a “real” economic enterprise with varying degrees of difculty. The aim of the
course is to foster interdisciplinary transfer of knowledge about business flows within the
company and interdependence of enterprises. It is oriented toward carrying out activities
and problem solving, which are student-centered. Activities that were initiated primarily by
business partners encourage the learning process and lead to a high level of motivation
among students. Acquiring key skills (such as teamwork, analytical thinking, mastery of
foreign languages) qualies students for business mobility and flexibility in international
business and professional world. For example, a student who is acting as a purchase
ofcer of the company, should apply their knowledge in procurement, with reference to the
situation in the company, and make optimal decision regarding the purchase in consultation
with partners. They should also identify implications for business success and justify their
decision before the management. One of the important characteristics of this learning
model is the establishment of cooperation with real companies. Many training companies
have partners from the respective industry that support them with their knowledge and
skills in practice (know-how). For example, they provide them with real documents, product
samples, and sponsor their participation in fairs and allow them to visit their companies.
Representatives of real companies, in agreement with the teacher, regularly visit the classes
and transfer their practical business knowledge to students.
Innovative teaching model Training company has made a change in school environment,
both in the classroom and school as a social space. Establishment of cooperation
with real businesses and entrepreneurs, and better links between schools and the local
community contributed to improved implementation of this model of teaching. A large
number of real companies and entrepreneurs are now involved in the teaching process.
Through various types of support, they provide help to both students and teachers in the
implementation of these classes. Center for Vocational Education is home to the Training
Company Service Center, which was established in 2005 and whose role is to provide real
business environment to training companies, assuming the role of institutions with which
real companies cooperate. Since school year 2009/2010, this teaching model has been
implemented as a mandatory subject in the framework of practical training in third grade
of programs Economics technician and Marketing and trade technician which ensured its
sustainability. Also, this model of teaching was expanded to higher education, and certain
faculties began to use it as an example of good practice, to teach their students.
30
UNIVERSITY OF DONJA GORICA AS AN ENTREPRENEURIAL UNIVERSITY
- AN EXAMPLE OF GOOD PRACTICE
University of Donja Gorica (UDG) is one of the rst universities in Southeast Europe that
offered entrepreneurship to students of non-economics faculties either as an optional
or as a mandatory course, in cooperation with the Center for Entrepreneurial Learning
Southeast Europe (SEECEL). All university units are under one roof, and in the context of
teaching, especially in the case of the course Entrepreneurship and Innovation, students
are expected to cooperate in order to practice multidisciplinary approach. Teaching and
work with students are organized in a way to develop the entrepreneurial skills of students.
The focus is on the “awakening the entrepreneurial nerve“ in students, so that they could
to develop the ability to identify opportunities in problems, the ability to take initiative,
analyze data, think creatively, take optimistic perspective on world and life, develop
independence and individuality, create and maintain social networks and contacts, develop
ideas, focus on success, teamwork and the like. There are several elective courses which
offer multidisciplinary knowledge (Media Economy, Architecture and Business, Wine and
business, etc.), and recently the University adopted the concept of abandoning course
structure of teaching and shifted towards the development of the subject elds (integration
of multiple subjects that are connected to each other). Within the series of Entrepreneurial
roundtables “¥ € $” students have the opportunity to listen to the visiting lecturers and
guests, usually successful entrepreneurs from Montenegro and abroad. Also during their
university education, the students are offered both paid and unpaid internship in private
companies and state institutions, in addition to theoretical, and practical knowledge
acquired. The students are taught in groups of 10, in order to practice the teamwork skills,
with the obligatory communication with the mentor of the group, who is an experienced
professional. The UDG has been committed to the idea of entrepreneurship to such an
extent that they founded an applied degree program called Entrepreneurship, Management
and Business whose mission is “Business as a career.“
UDG also established the Student Business Center (SBC), whose main function is the promo-
tion of student entrepreneurship and innovation, which is achieved through communication
with the business and academic environment and thus facilitates the employment of
students during their education. For the past six years, on Europe Day, every May 9th, this
Center has been organizing the Stock Exchange of entrepreneurial ideas whose aim is a to
foster competition among young people in the development and presentation of their own
business ideas that are presented to potential investors, who purchase the ideas or invest
in their realization together with the owner.
In order to provide their students with technical and nancial support at the early stage of
development of their business ideas, UDG founded the “Freedom and Entrepreneurship“
Foundation (in April 2016). In addition to university education, students are nancially
supported by the Stock Exchange. The plan is to support young people through the newly
established Foundation by means of purchase of equipment, payment of accounting
services, consulting, leasing space, etc. The plan is also to establish a business incubator
at the University.
31
CAREER CENTER FOR DEVELOPMENT OF SKILLS - AN EXAMPLE OF
GOOD PRACTICE
Career Center of the University of Montenegro (UoM) implements the activities aimed at
developing practical skills of students at all levels of university education, improving
their competences and preparing them for the labor market. Career Center offers career
information, advice and guidance to students in the eld of their respective study programs.
The work of the Career Center is focused on connecting students and fostering cooperation
with the business sector, through nding opportunities for professional practice and
potential professional engagement. The aim is to enable students to learn more during
their university education about the business environment and gain work experience after
graduation in order to have a competitive position in the labor market. With regard to
entrepreneurship as a discipline taught only in selected university units, UoM has signed a
Cooperation Agreement with the Capital City Podgorica in April 2016, which envisages the
areas of cooperation to strengthen entrepreneurial skills in UoM students. In the framework
of this cooperation, educational training “Start Up in the XXI Century“ was organized. On
this occasion, students could hear more about the experiences of entrepreneurs who
started their business in Montenegro. Also, thanks to the cooperation with other partners
(Innovative Entrepreneurship Center Technopolis, ETG group, the Association of Managers
of Montenegro, etc.) students have the opportunity to attend lectures, info days and similar
activities whose aim is to wake up and promote entrepreneurial spirit among young people.
32
YOUTH ORGANIZATIONS AND ORGANIZATIONS FOR YOUTH FOR
DEVELOPMENT OF ENTREPRENEURIAL SKILLS - EXAMPLES OF GOOD
PRACTICE
Youth activism proves to be of particular importance for the development of entrepreneurial
spirit among young people and the creation of an entrepreneurial culture in general. Even
youth organizations whose activities are not necessarily focused on entrepreneurship
in the narrower sense (starting own business) greatly contribute to the development of
entrepreneurial competences among young people. Youth organizations and non-formal
education are basic and ideal environment to promote a culture of creativity, personal and
professional development, personal responsibility and self-expression. In this way, they
largely contribute to the empowerment and employability of young people.
The Foundation for New Communications - Dokukino organized competition for the best
social business/creative ideas for young people aged 16 to 35 years at regional level. At the
beginning of 2016, Montenegro saw launching of an award for social change (Social Impact
Award - SIA) - this program is intended for all students of the University of Montenegro
who want to start their own social business. During the course of this program, there was
a series of promotional events and workshops. The talks and dreams about inspirational
ideas regarding social business led to concrete solutions, with accompanying business
models and plans. During the competition, students received practical support and
transfer of practical knowledge in the elds of business planning, organizing and starting
businesses, meeting the basic legal procedures, managing nances, marketing, public
speaking, campaigning and promotion through traditional and online tools. The best four
teams received the nancial support of 2,000 euros as an initial capital and possibility to
travel to the international SIA summit in Vienna and meet their counterparts from other
countries, exchange experiences and enrich their knowledge.
A similar concept of combining workshops, motivational training courses and mentoring
has been used by United Nations program for the empowerment of young people called
“Kreaktivacija”, under which UNICEF manages the Innovation Lab for young people in
Montenegro. It is very important to point to the concept of UPSHIFT program that empowers
young people to get into the teams and apply for assistance in solving the problems faced
by them or their communities. The top ten teams attend a three-day workshop during which,
with the help of mentors, they develop solutions to the problems identied. At the end of
the workshop, the teams present solutions they developed and the best ve teams receive
€ 2,000 euros each and mentoring assistance for the implementation of their solutions.
33
THE LINK BETWEEN EDUCATION AND THE ECONOMY/CIVIL SOCIETY -
EXAMPLES OF GOOD PRACTICE
Entrepreneurial associations also contribute to promotion of entrepreneurship as a career. Thus,
Montenegro Business Alliance implemented several projects aimed at primary and secondary
school students, and even kindergarten children, through preparing, printing and distribution of
“My Business“, “Youth and Business“ and MEF Growing up with ideas“ publications. Campaigns
are carried out periodically, for example, “My Business“ publication for children in grades 5 and 6
of primary school was distributed three times from 2004 until today, “Growing up with the idea
of“ is being prepared, printed and distributed on a monthly basis, and the campaign “Youth and
Business“ which involves preparation, printing and distribution of publications on the method of
registering businesses and the benets of entrepreneurs, to the secondary school students, is
organized once in every 2-3 years.
The Montenegrin Employers Federation (MEF) continuously realizes activities and projects in
this area. Thus, in 2015, with the support of the Center for Vocational Education and Training and
management of the ve secondary vocational schools in Podgorica, MEF marked the European
SME Week by organizing a series of lectures of successful young entrepreneurs for the students
of these schools. The series of lectures was entitled “Entrepreneurs in schools“ and it aimed
at promoting entrepreneurship as a possible career option among young people through real
entrepreneurial experiences. In 2011, MEF created and published a brochure “Business Start-up
Guide“ which provided a detailed insight into all the procedures necessary for registering and
starting a business. On this occasion, the MEF organized free seminars throughout Montenegro
and offered copies of the guide to all interested persons, while a part of circulation was presented
to students of the Faculty of Economics of the UoM - Entrepreneurship department. Regarding
the cooperation with this faculty, the most notable was the organization of lectures of successful
women entrepreneurs and managers, attended by about 100 students of undergraduate and
postgraduate studies, in the context of the MEF project “Women’s business - the potential of the
Montenegrin economy“.
Within the framework of the European Vocational Skills Week, the National Entrepreneurship
Learning Partnership organized an international conference aimed at promoting examples of
good practice that stimulate and promote entrepreneurial learning in primary, secondary schools
and in the area of improving the skills of employed persons and youth.
Non-governmental organization Digitalizuj.Me greatly helps the promotion of entrepreneurship
and creation of start-up community in Montenegro. By organizing lectures at least once a
month, they bring together young people interested in starting their businesses, especially in the
IT sector. The emphasis is on educating citizens about the new opportunities for social change
and business in the digital environment by using social media and innovative business models.
As part of its corporate social responsibility program Domain.me which manages the national
Internet domain .ME, has been organizing annual business internet conference Spark.me since
2013. According to the organizers, the mission of Spark.me is to improve the quality of life of
people in South East Europe by developing awareness of the possibilities offered by the Internet
and new technologies through education, competitions and networking.
34
6.3 PROVISION OF INFORMATION, ADVISORY SERVICES AND
MENTORING SUPPORT
THE GOAL
Even if a student goes through certain programs for the development of entrepreneurial skills,
they face the problem of lack of information, experience and business contacts at the very early
age of starting their own business. Provision of information, advisory services and mentoring
support, collectively called “soft“ support, are extremely important for young entrepreneurs.
This kind of help allows them to compensate for the lack of knowledge and skills from formal
education, but also the lack of previous work experience.
THE APPROACH
The rst step in this area of support is providing the relevant information to all potential (young)
entrepreneurs. This can be done via the Internet, or in some resource centers at local and national
levels, through social networks that young people use or through the mentoring process. There
are well-known examples of good practice when the Government use specialized web portals to
provide all the necessary information and advice regarding the establishment of small businesses,
including additional information on sources of funding and other support programs. The second
step is to provide advisory services for young people, which can be fully subsidized or the state
itself can nance part of the cost of advisory services. Very often these programs require from
entrepreneurs to pass some training courses. The third step is mentoring support provided
by the established entrepreneur or a licensed specialist in the given area of the mentoring. An
example of good practice that is already mentioned is Erasmus for Young Entrepreneurs, which
connects young entrepreneurs with international mentors with signicant experience in private
business. In general, there are some programs in Montenegro (good practices are presented
below) that can be used for this goal, however, these are individual, often ad hoc initiatives that
are implemented within current projects and have no continuity. Also, they chiefly target specic
groups (e.g. women in business). In order to eliminate this restriction, young people need to be
have one-stop shop where they can get complete information and guidance for further steps in
starting their own undertaking.
EXPECTED EFFECTS
There are programs that have undergone serious forms of evaluation, which conrmed that
these types of services can signicantly contribute to a larger number of young entrepreneurs.
However, it is expected that providing such services would foster elimination of a part of the
constraints which young entrepreneurs faced. Providing information about the process as a
whole and the ability to plan several steps in advance provides the necessary sense of security
in young entrepreneurs and gives them a sense of control which can be important. Advisory
services can be crucial in solving specic problems that entrepreneur face and the experience
of the practitioner may signicantly reduce or even eliminate the risk. Most programs that
include mentoring include a selection process that precedes it, so only selected individuals with
a predisposition for success end up being selected for the program. Certain experiences show
that mentoring can be very important for those who are about to start their own business, but
not necessarily for those who are already in business.
35
ADVISORY SERVICES AND MENTORING SUPPORT - EXAMPLES OF
GOOD PRACTICE
Advisory support can be obtained from international nancial institutions and development
organizations. Thus, UNDP through the IPA program for gender equality implemented by
the Ministry for Human and Minority Rights delivers a program to support women in business
offering the whole spectrum of services from education and linking with nancial services
to mentoring, working in parallel on raising the capacity of local governments to provide
support to entrepreneurs and work to remove regulatory barriers. In cooperation with IDF, a
special loan program with more favorable condition for women was created.
There are regional programs and European organizations such as European Bank for
Reconstruction and Development, European Investment Bank, and certain foreign
embassies which also offer possibilities for support. When it comes to beginners in
business, conditions for obtaining funds from these sources are very complicated.
In 2014 and 2015, the Directorate for development of small and medium-sized enterprises,
implemented the project “Establishment and promotion of mentoring system in small and
medium-sized enterprises in the Western Balkans - Serbia, Bosnia and Herzegovina and
Montenegro“ with the support of the Japanese Government. Mentors have previously
undergone appropriate training in specic areas (nance, marketing, business plan,
production management and diagnosis of enterprise) after which they provided free
mentoring assistance to companies for up to 50 hours, during this six-month long project.
Chamber of Commerce of Montenegro (CCM) established a network of mentors for
women entrepreneurs, in cooperation with the Institute for Entrepreneurship and Economic
Development (IPER), as part of a larger project supported by the European Commission,
which was implemented in 17 European countries. After completion of the project, there
has been created a platform www.wegate.eu for further communication and mentoring to
entrepreneurs in all countries that participated in the project.
Important components of the success of SMEs and entrepreneurs are networking
and promotion. Enterprise Europe Network, the largest European network for business
cooperation, which offers a wide range of forms of assistance to small and medium
enterprises in the EU and beyond, is also available in Montenegro. the Directorate for
development of small and medium-sized enterprises has formed a consortium with the
Chamber of Commerce of Montenegro, Faculty of Mechanical Engineering, University of
Montenegro and the Business Start-Up Center from Bar and founded the European Center
for Information and Innovation Center Montenegro (EIICM, www.euroinfo.me), as a part of
the „Enterprise Europe Network“, which includes over 600 organizations from 53 countries
across Europe (EU 28, Norway, Iceland, Switzerland), the candidate countries (Turkey,
Macedonia), third countries (America, Russia, Japan). The network is co-nanced by the
European Program of competitiveness and innovation (Competitiveness and Innovation
Framework Program - CIP, 2007-2013), which aims to improve the competitiveness
36
of European enterprises. Their services are primarily intended for small and medium-sized
enterprises, but also include other institutions, universities, research centers, etc.
The Capital city Podgorica, under the auspices of the Mayor’s Ofce, founded the Bureau for
Economic co-operation and support to the business community (in March 2015). Free professional
support, from the preparation of business plans through the provision of free accounting services
and “one on one“ consulting, on a weekly basis and at a xed time, along with the reimbursement
of business registration fees and provision of ofce space, is an example of good practices that
local governments may employ in the development of business.
37
6.4 FINANCIAL SUPPORT
THE GOAL
Lack of nancial resources and difculties in securing nances, are some of the most common
limitations listed by the young entrepreneurs. According to the ILO report Labour market
transitions of young women and men, only one in ten self-employed persons opted for loan,
while almost half (46.8%) of the surveyed self-employed young people reported that they
borrowed money from family or friends, a quarter of them (24,4%) had their own savings, while
19.5% said they did not need the money. There are no available alternative sources of funding
(business angels, venture capital, etc.) in Montenegro, so beginners nd difcult to secure equity
investment, especially when it comes to young entrepreneurs. In response to this rather typical
problem, the government came up with various measures of nancial support in order to support
the young entrepreneurs. In addition to improving access to existing sources of funding, the aim
could be the development of alternative models of nancing (business angels, venture capital,
promoting crowdfunding platforms, etc.).
THE APPROACH
An OECD research51 provides an overview of various nancial support programs for young
entrepreneurs. Some of these approaches are not represented in Montenegro, such as
covering the cost of living for a certain period (examples of France and Greece) or support in
the preparation of presentations for investors who then invest in the idea if they perceive its
worth investing into. In addition to credit support, the governments often provide grant support,
while market (commercial banks and micro-credit organizations) can offer its own products in
order to support young entrepreneurs. Unlike banks, which apply the same procedure for both
small and large clients, including a lot of paperwork and necessary mortgage lien, microcredit
organizations offer less money with a higher interest rate.
EXPECTED EFFECTS
It is expected that favorable nancing opportunities for business ideas of young entrepreneurs
contribute to increasing their survival rates after one, two or three years of operation. However,
there is no hard evidence for this is due to the fact that there has not be done any proper research.
Taking look at the current practice in the implementation of nancial support programs around
the world, it can be concluded that a quality selection of candidates who will be able to use
the funding increases the success rate, the rate of growth of the company and the survival rate
during the critical period for beginners (up to 3 years).
Another important conclusion is that the programs of nancial support provide better results if
implemented in combination with any of the projects of so-called “soft“ support.
51 Source: Policy Brief on Youth Entrepreneurship - Entrepreneurial Activities in Europe, OECD/ European Union, 2012
38
COMINATION OF FINANCIAL AND ”SOFT” SUPPORT
In 2015, in order to support the development of entrepreneurship and encourage specic
target groups including young people, the Investment and Development Fund of Montenegro
has created a special credit line intended for entrepreneurs, start up businesses, youth,
women in business and individual farmers through which they nanced a total of 80
projects in the amount of 2.9 million euros. 13 “Youth in Business“ projects with a total
value of 0,363 million euros were among the selected projects. In 2016, 21 loans for youth
businesses were approved, and the total value was 0.68 million euros.
In cooperation with the Directorate for Development of Small and Medium Enterprises (DDSME)
and EAM, there has been created the Program to support the development of entrepreneurship,
which is in addition to the aforementioned nancial, entaild non-nancial support as well.
DDSME announced two public calls and received 76 applications. It was followed by
two cycles of training programs whose topics were: registration of companies; nancial
management and tax system; Business communication and protocol, SME support
institutions, national and international sources of nancing; how to develop a business idea
and business plan. In addition to paying visits to all interested candidates, DDSME have
provided support in developing business plans and collection of project documentation,
after which the completed loan applications were sent to IDF which made the nal decision
on nancing. A total of 16 applications, whose implementation has created 48 jobs, and
whose worth was about EUR 0.59 million were approved. The remaining 60 applicants did
not qualify for further procedure, out of which 16 voluntarily left the process.
On the other hand, a similar activity was implemented by EAM where the focus was on
registered unemployed persons, without any particular selection. Although precise statistics
are not available, according to the EAM ofcials about 500 people have attended the three-
day workshops organized throughout Montenegro, while less than 10 received credit funds.
Ministry of Agriculture and Rural Development has published a public call for the allocation
of support to young farmers aged between 18 and 30 years, who are unemployed and have
completed agricultural/veterinary school or college, and who woul like to start their own
businesses. Based on the approved business plan, the successful candidate will receive a
mentor from advisory services to monitor the implementation of activities. Grant support in
the amount of 10,000 euros will be paid in installments, depending on the dynamics of the
implementation of the activities envisaged by the business plan.
39
6.5 DEVELOPMENT OF ENTREPRENEURIAL INFRASTRUCTURE
THE GOAL
One of the ways to support young entrepreneurs used by governments across Europe is an
investment in the so-called entrepreneurial infrastructure that can help eliminate the usual initial
problems such as lack of funding, ofce space, contacts, through the construction of business
incubators and support to networks/associations of young entrepreneurs.
THE APPROACH
Networking of young entrepreneurs is important for creating opportunities for peer education
and exchange of experience, but also for direct cooperation among themselves and cooperation
with third parties/clients, in order to make joint appearance. Building a business incubator at the
state or local levels, either general or sector-specic ones (e.g. an IT incubator), is yet another
important measure to strengthen young entrepreneurs. Staying in a shared space, and using
technical support in the business incubator, attending compulsory training programs, gives a
certain sense of security to young beginners in business. Depending on the management and
primary goal of the establishment of the incubator, the conditions for entry and exit from the
incubator are dened. To a large extent, this indicates its success.
EXPECTED EFFECTS
There are no relevant evaluation reports about the effects of business incubation for start-ups
as well as no initiatives for networking young people. There are a number of examples showing
that support in terms of business incubators can be important for the success of the companies.
However, we should bear in mind that the business incubator also allow tenancy to companies
that undergo a process of selection. In other words, it has already recognized the potential and
realistic grounds for their successful market performance. Unlike business incubators that can
be nancially demanding projects (especially when it involves the construction of ofce space,
equipment, etc.), support to network organizations of young entrepreneurs is usually not very
demanding regarding investment, and it can be an effective tool if it achieves the desired effect.
40
CREATING ENTREPRENEURIAL INFRASTRUCTURE AND
COMPLEMENTARY SERVICES
During the research, there have been identied specic projects and activities that have
resulted in specic entrepreneurial infrastructure available to current and prospective
entrepreneurs, including young people. While it is common that such infrastructure is
created to support innovative and high-tech sectors, it is not the case in Montenegro. The
capacities are available more or less all interested parties. The adoption of the Strategy of
innovative activities, it is expected that these activities in the future intensify and further
contribute to creating a favorable climate for the development of youth entrepreneurship.
In this context, the (young) entrepreneurs in Montenegro can use the capacities of Innovative
Entrepreneurship Center Technopolis in Niksic and three other business incubators.
IPC TEHNOPOLIS52 (opened in September 2016) is focused on promoting the development
of entrepreneurship, through the establishment of new companies, job creation and
development of enterprises based on new, innovative ideas and technologies. It is currently
occupied by fourteen tenants, one of which is virtual tenant. Three occupants are in the
pre-incubation phase, eight of them are in the incubation phase, while two of them use
available resources on a commercial basis53. Technopolis provides consulting services to
newly established and existing enterprises; it also organizes educational programs, training
programs and acquisition of practical skills; helps the networking of institutions, scientic
and research communities, ad international partners with regional and local economies.
If tenants do not use the facility on commercial terms, they can use the opportunity of
the subsidized lease of ofce space, free high speed internet space; and all resources of
the TECHNOPOLIS (electro-mechanical, and bio-chemical laboratories, ICT data center,
convention center, a meeting room, a lounge bar, additional common areas) under certain
conditions.
Although the activities of the business incubator Inventivnost Ltd in Podgorica, providing
support to the primary IT companies, founded in 2008 by the Government of Montenegro
and the Capital City Podgorica, recently died down, this entity is still listed as active.
BSC Incubator Bar54 started working in 2010, with the primary mission to support the
promotion of entrepreneurship through a comprehensive and integrated support to SMEs.
BSC Bar is a common incubator, which conducts activities with special emphasis on the
development of SMEs through business skills training, consulting, mentoring, nancing
through the competitions of the best business plans, and providing ofce space in the
business incubator on favorable terms. Tenants can use resources of the incubator and
support services available to them in a critical period of the operation of their businesses, in
the period of 3-5 years, such as subsidized use of ofce space; consulting services; access
to bank loans; free registration of companies; business training programs in business and
52 www.tehnopolis.me
53 Status of tenants determines the level and form of assistance being provided.
54 Source: www.bscbar.org/en
41
the like. In order to help tenants to run their businesses, the staff organize: entrepreneurial-
oriented training, mentoring and nsulting. In order to support market presence of tenants’
businesses, thay also organize appearances at trade fairs and business-to-business
meetings.
Regional Business Center (RBC)55 in Berane was founded in March 2015 and started
working in February 2016, within the project “Establishment of a regional business center
with business incubator in the northeast of Montenegro“, which was largely nanced by
the European Union and implemented by the Municipality of Berane, in partnership with
the Regional Development Agency for Bjelasica, Komovi and Prokletije and municipalities
Andrijevica, Bijelo Polje, Plav and Rozaje, as founders. Business area „Rudeš“ saw
reconstruction and equipping of the facilities for the Regional Business Center and Business
Incubator. The building whose total surface are is 1,000 m2 is planned to be used by
beginners in business and is intended for production-service provision. The project involved
training of the incubator employees in order to create conditions for businesses beginners
to realize their business ideas.
Within the activities of the Bureau for economic co-operation and support to the business
community, the Capital city Podgorica founded the Business Center where start-ups
(companies that are founded less than a year ago) or older businesses (12 to 24 months
in operation) can make use of free ofce space and free accounting services during their
rst 12 months in the business center. Since 2017, for a number of companies, the Bureau
offers reimbursement of business registration costs of up to 100 euros.
One form of institutional support, which becomes increasingly popular is called coworking
space, which can be developed either as a private initiative, or, most often, as a local
government initiative. Often, the coworking spaces are part of the business incubator. They
are intended mostly for start-ups, self-employed persons and a new generation of so-called
technological nomads. Coworking space can be used for a certain number of hours or even
days (if entrepreneurs are traveling they often need space which they can temporarily use),
with certain favorable conditions for renting. In addition to space (usually it comes to a
desk and a chair), users of coworking spaces make use of available high-speed Internet,
professional support of the local community, meeting rooms, access to events organized
by the Incubator which hosts the coworking space, educational programs and the like.
Coworking spaces can be interesting for business people who are passing through cities
and spend several hours/days in them during their trip56.
In practice, there is also a business accelerator, which is in essence a business incubator
that provides additional support in nding investment opportunities to its tenants. This
means that in addition to space and certain additional services (most often so-called
mentoring and consulting services), business accelerators usually provide initial (seed)
investments to companies. we still do not have this type of suppor in Montenegro.
55 For more details see www.rbcberane.me
56 An example of a coworking incubator in the region: www.ucsibenik.hr
42
6.6 FURTHER IMPROVING THE ENVIRONMENT FOR
ENTREPRENEURSHIP AND ACCESS TO INSTITUTIONS
THE GOAL
Public policy measures in this eld apply to all remaining, but no less important, support
programs for (young) entrepreneurs, including improving the regulatory framework, removing
barriers to business development, tax incentives, and reduction/elimination of payments for
taxes and contributions. Based on the assessment of international reports dealing with the
business environment in Montenegro, the activities regarding changes of laws and/or procedures
to improve the ranking, but also to simplify and improve procedures are being dened. It is of
particular importance to make all institution within the entrepreneurial ecosystem available
and accessible to young people. This entails a clear presentation of the responsibilities of
institutions, transparent procedures which are known in advance, the distribution of information
that correspond to the real situation, but also two-way communication with the (potential) young
entrepreneurs who need to feel the support of institutions at every stage of the process.
THE APPROACH
Based on the published rankings, relevant government body analyzes the results achieved
and denes measures to improve the business environment in Montenegro. This is where the
need for cooperation between the national bodies which implement procedures comes into
play - consistent application of regulations at both national and local levels, and commitment
of employees at the relevant departments to implement the dened reforms. The institutions
must be open for communication with the (potential) entrepreneurs and willing to educate them
about their responsibilities, making the decision-making processes as transparent as possible.
Wherever possible, information about the responsibilities of institutions and procedures should
be provided and regularly updated on the Internet (including digital services). Predictability of
process and knowing of several steps in advance in young people creates security and trust.
Also, access to information is only the rst step in this process. An Internet portal with a
detailed description of the procedure can offer information on available sources of nancing for
businesses, as well as other support measures.
Since it is closely related to the acquisition of entrepreneurial skills and creating overall social
environment for entrepreneurial shift in development and since it requires changes in the
regulatory framework, we suggest paying more attention to social entrepreneurship. Dening
regulatory framework for the establishment of social enterprises can influence the creation of
a favorable environment for the development of entrepreneurial skills at the level of educational
institutions, but also open space for economic engagement of the less employable groups.
EXPECTED EFFECTS
Improving the environment for entrepreneurship should primarily reflect in reducing the costs
for entrepreneurs – both in terms of time and money spent. Predictability of process and
knowing several steps in advance leads to the feeling of security and trust in youth. At the same
time, creative energy is focused on business and market/customer, instead of searching for
information and interpretation of complicated procedures.
43
TAX INCENTIVES AND REDUCTION / ELIMINATION OF PAYROLL
LIABILITIES
This type of support is mainly related to incentives that entrepreneurs can get if they start
their business, for example, in the business areas of their respective municipalities or
municipalities that are considered underdeveloped. Support refers to the exemption from
various payments, such as local taxes and fees, utility fees and the like for a period of up to
10 years. For example, at the state level, there was adopted the Decree on subsidies for the
employment of certain categories of unemployed person57, Off. Gazette no. 80/15. Subsidies
may be used by an employer who employs, among others, persons in the business zones.
For such persons, under this Regulation, the employer does not pay:
• Social Security Contribution on wages (contribution for pension and disability
insurance, health insurance contributions, contributions to the unemployment
insurance, contribution for the Labor Fund);
• Personal income tax.
In the economically underdeveloped municipalities in Montenegro, whose development
index is below 7558, the Law on Prot Tax provides that a newly established legal entity
shall not pay prot tax for the rst eight years of operation. Also, according to the Law on
Personal Income Tax, the accrued income tax is reduced by 100% in the rst eight years
of operation59. These decisions at the state level are accompanied by obligations of local
governments to dene the benets of doing business, as follows:
• Facilitation of the payment of utility and other fees;
• Favorable price of lease/purchase of premises for business zone;
• Reduction or release of surtax of income tax of employees;
• Reducing the tax on real estate;
• The possibility of dening the favorable model of PPP;
• Creating infrastructure in areas where it does not exist.
When it comes to foreigners and/or refugees (in Montenegro, they predominantly have the
status of a foreigner with permanent residence), it is important to note that there is a national
treatment of foreigners, which means that there is no discrimination against young people
57 Subsidies from the Article 1 of this Regulation, may be provided to the employer who employs a person:
- older than 50 years of age or who live as a single person with one or more dependents;
- who has not been employed in the past six months;
- who has not completed secondary education or vocational qualication or who completed their regular
education, did not have a work contract for up to two years after that;
- belonging to the Roma and Egyptian population;
- participating in public works programs.
58 This refers to the royal capital Cetinje and municipalities Pljevlja, Kolasin, Mojkovac, Berane, Šavnik, Rožaje, Bijelo
Polje, Plav and Andrijevica.
59 Tax exemption does not apply to a taxpayer who operates in the sector of the primary production of agricultural
products, transport or shipyards, shing and steel.
44
in this context. Pursuant to the amendments to the Law on Foreigners from 2009 and the
accompanying Regulation of July 2010 on access to rights, “refugees“ in Montenegro have
access to all services, including education, employment, pensions, social and child care,
same as Montenegrin citizens, so the barriers mentioned and recommendations for their
elimination equally apply to young people in these categories and generally to young people
in Montenegro.
A SINGLE WEB PORTAL WITH COMPREHENSIVE INFORMATION ON
BUSINESS PROCEDURES - AN EXAMPLE OF GOOD PRACTICE
Based on the already tried concept that has been successfully implemented in other
countries, UNCTAD in Montenegro through eRegulations project has been ivolved in
preparation of a portal with an overview of the procedures for registration of business,
registration of property, and obtaining building permits. Unied and clearly presented
information aims at increasing the transparency of procedures and reducing their costs.
After mapping procedures, the plan is to work on their simplication. UNCTAD has a relevant
reference in the development of a portal for electronic registration which can be interesting
for application in Montenegro.
Bureau for economic co-operation and support to the business community in the City of Podgorica
built a portal www.investinpodgorica.com where one can nd detailed information on the
procedures for registration of limited liability companies and joint stock companyis or other
useful information for doing business in Podgorica.
EGovernment Portal which marked its sixth year online in April 2017, is a kind of an
electronic counter, both for citizens and for the businesses and currently offers 206
e-services in the jurisdiction of 30 state administration organs. Since the beginning of its
operation the Portal saw continuous growth in the number of e-services - in 2016 only,
the number of electronic services on the portal increasing by more than 50% compared to
2015, and more than 90% when compared to the time when it was launched (2011). The
idea behind the e-government portal is the ensure a 24/7 availability of e-services including
weekends and days of religious and national holidays. It is administered by the Ministry
of Public Administration, which provides constant support to end users of the portal. The
eGovernment portal, and its eLicence section, allow legal entities to obtain information on
certain procedures, though in a very limited form, and it is possible to make use of certain
of electronic services.
45
PRINCIPLES AND CONCRETE RECOMMENDATIONS FOR
PUBLIC POLICIES AIMED AT THE DEVELOPMENT OF YOUTH
ENTREPRENEURSHIP
Based on the research, identied good practices and experiences from Montenegro, region and
the Western Europe, in this section we will present some concrete recommendations for policy-
holders in the eld of youth entrepreneurship in Montenegro.
If policy-makers remain consistent in their effort to support the development of youth
entrepreneurship, they should take into consideration the following important principles of such
support:
1. Encouraging entrepreneurship among young people takes an integrated and
comprehensive approach, rather than individual activity that deals with just one of
the barriers faced by young people. The experience of other countries and recently
implemented activities in Montenegro show that the development of entrepreneurial
spirit in young people requires a synchronized action on several fronts in order to achieve
desired results. This means that it is not enough to ensure favorable funding opportunities
without accompanying advisory and mentoring support. Also, ad hoc training programs
cannot fully contribute to the development of entrepreneurial values and attitudes until
entrepreneurship is integrated in the learning process from the earliest age. Finally, without
adequate business environment which entails clear, simple and transparent procedures,
none of the above measures will lead to good results.
2. In order to achieve sustainable results in the development of youth entrepreneurship,
it is necessary to take action and to think taking the long-term perspective rather than
the short-term one. This, once again, demonstrates the importance of education as an
important component for the development of any entrepreneurial society. Some research
suggests that only 2-3% of the unemployed decide to start their own business and become
successful entrepreneurs. These are usually men in their late twenties60. In other words,
after a few years of being unemployed, it is unlikely that the individual will independently run
a successful business. However, if a person is trained in entrepreneurship in the course of
their regular education, the chances for success are much bigger.
3. Openness and cooperation between institutions. The institutions involved in the
implementation of programs to promote entrepreneurship among young people should be
open and willing to communicate with young people, and they must cooperate closely. The
interviews carried out with young entrepreneurs have brought us to the conclusion that they
are not familiar with the content and description of services offered by public institutions or
existing restrictions. This is a probable reason for persistent negative comments regarding
the work of the institutions. The dissatisfaction of young people is so serious that they
60 Source: Policies for improving the youth employability in Montenegro, White Paper, ILO, July 2016
46
become suspicious and believe that the information they receive (especially in relation to
obtaining nancial resources) does not correspond to the real situation. On the other hand,
the authorities are not aware of this issue. They do not even discuss any of the problems
with beneciaries, nor do they conduct evaluation of the importance and quality of services.
There are no known mechanisms based on which they design and create of services for
young entrepreneurs.
A particular problem is the lack of cooperation between institutions. Although cooperation
exists in certain segments, it needed to be strengthened it in such a way as to avoid overlapping
of activities, to make institutions complementary in their activities to complement, and to
make sure they communicate when harmonizing their respective action programs.
4. The focus of measures to encourage entrepreneurship among young people should be
on the development of entrepreneurial competencies, rather than the establishment of
enterprises per se. This is because youth entrepreneurship cannot solve the problem of
unemployment existing in this population. We draw this conclusion from the information
about the percent of self-employed youth in OECD countries and the EU. On the other hand,
the development of entrepreneurial competencies contributes to the transformation of
values in a society and increases general employability of young people.
5. Simplication of procedures and working on their transparency should be continuous
activities. In order to eliminate barriers to the development of entrepreneurship, the
authorities must continuously work on simplifying procedures at all levels. Also, information
on the procedures need to be clear, transparent, and easily accessible. It is necessary to
create a single web portal listing all relevant procedures which will be updated regularly, and
linked to other useful web portals that may be of importance for young entrepreneurs. In
the short and medium term perspective, the procedure should be performed electronically.
Research indicates that even when there is a change in procedure, end users are often
unaware of it, or even if they are aware, the changed regulations are not applied consistently
in practice. This undermines the credibility of the system and leaves room for the retention of
the negative associations with the administration, although that might not be the case. It is
particularly important that a single web portal displays all the incentives that entrepreneurs
can use both at the state and local levels.
The concrete proposals to promote and support youth entrepreneurship are presented below.
DEVELOPMENT OF ENTREPRENEURSHIP AS A KEY COMPETENCE THROUGH
FORMAL EDUCATION
1. Monitoring the implementation of the program “Entrepreneurial learning as activity area
in preschool upbringing and education“, which is designed for children 3 to 6 years old.
It is essential to provide the necessary didactic instructions and distribute them to all
kindergartens, along with the organization of training for kindergarten teachers who pilot
this program. Based on the evaluation of the pilot program, it is necessary to make changes
in the short and medium term to ensure implementation of the program in all preschool
institutions in Montenegro.
47
2. At the primary and secondary education levels, it is necessary to continue with the
implementation of entrepreneurial learning as an inter-curricular area, by means of
compulsory subjects, from grade 1 to grade 9 in primary schools, and by means of general
subjects in secondary vocational schools. An evaluation (survey) should be carried out
among students, as well as in-depth interviews with teachers in order to determine achieved
effects and possibilities for the advancement of the program. This evaluation should provide
feedback from teachers if they consider they need additional training or specic teaching
resources for the implementation of this inter-curricular area.
3. Coordinators for entrepreneurial learning in primary and secondary schools should
develop municipal and national competitions in the eld of entrepreneurship (possibly on
the occasion of the celebration of Global Entrepreneurship Week). The best schools and
the most active teachers should be rewarded. The award may be money in order to create
and support funds for carrying out similar activities in the future, or as a means of support
for participation in similar competitions at the regional level.
4. Continuation of the implementation of the Training company project at the secondary
level of education. This concept proved to be very interesting and useful for students when
it comes to acquiring practical knowledge and skills, considering that students use this
opportunity to establish collaboration with real enterprises. Working in teams and using
analytical thinking skills, the students are trained in business mobility and flexibility, and
gain knowledge of the workflows within the company.
5. The introduction of Entrepreneurship as an elective or mandatory course at non-
economic faculties. Collaboration between universities and businesses should result in
involving entrepreneurs in teaching process, providing paid and unpaid internship programs
while still studying and allowing students to learn the essentials of starting and running a
business, as well as to learn about the importance of connecting and associating. Practice
programs must be well planned with established learning outcomes and with the possibility
of obtaining a certain number of ECTS credits, which will further motivate students to use
this option (related to recommendation 10).
Of particular importance is the introduction of Entrepreneurship course at faculties that
educate future educators, for example, at the Faculty of Philosophy, within the study
program Teacher Education.
6. Organization of a national competition for the best students’ business ideas/plans. “The
stock exchange of entrepreneurial ideas“, organized at the University of Donja Gorica can
be a good model, as it already brings together interested students not only from the host
university but also from other Montenegrin and regional universities. It is also attended by
Montenegrin students who participate with their business ideas.
7. It is necessary to provide mentoring and advisory support to students during their
studies to develop their business ideas while attending universities that recognize the
importance of entrepreneurial competences. This kind of support in the medium term
leads to the establishment of a business incubator, and possibly accelerators, within the
universities or resource centers, which usually demands signicant investment.
48
In order to implement these activities, it is necessary to involve the Ministry of Education and
the Institute of Education, the institutions of primary and secondary education, higher education
institutions, Center for Vocational Education and industry/business associations. Proposed
activities should be implemented in the short, medium and long term, and most of them require
permanent activity.
DEVELOPMENT OF ENTREPRENEURIAL SKILLS AND KNOWLEDGE THROUGH
INFORMAL EDUCATION
8. Providing more support to organizations dealing with youth activism. Youth organizations
and organizations working for the benet of the youth are not necessarily focused on
entrepreneurship in the narrower sense (entrepreneurial learning, starting own business,
company management). However, their activities, which often involve the mobilization of
a large number of young people in solving social problems, signicantly contribute to the
development of entrepreneurial competences in the target audience. This is why they make
an ideal environment to promote a culture which fosters creativity, personal and professional
development, personal responsibility and self-expression. Not only this contributes to the
increase of chances of young people taking up entrepreneurship in the future, but it also
signicantly contributes to their employability.
9. Organizing specialized training programs in the eld of market research; understanding
clients/customers and developing a customer base; networking and relationship
management; marketing, branding and the like. Young entrepreneurs do recognize that
their formal education does not provide them with enough practical knowledge and skills for
a successful self-employment. In addition to being interested in additional training in these
areas, young people also care about the quality of the training they attend, which, according
to the research, it is not necessarily taken into particular consideration by institutions.
Certain training programs are being organized without young entrepreneurs being informed
about the possibility of participation. High-quality specialized training programs often tend
to be very expensive, and the young business beginners cannot afford them. It is necessary
to provide continuous, specialized training programs available to all, which would cover
above mentioned topics, and which would be carried out within institutions involved in
this domain. Information on the organization of training programs should be promoted
and available to all. Participants should be allowed to provide feedback on the quality of
training so that organizers could make necessary changes if necessary. Ideally, the training
calendar should be published online on a particular website with detailed information about
the content of the training and the trainer’s references.
10. Organization of (un)paid internship with learning outcomes. During their education, both
at the secondary and tertiary levels of education, young people must be provided with the
possibility of spending time in a real business environment in order to put their theoretical
knowledge to a test, to gain additional practical knowledge and skills but also to learn about
the skills and knowledge they lack. The internship programs may be shorter (a couple of
weeks) or longer (six months), depending on the educational program, but they must have
learning outcomes. In other words, both the employer and student need to be fully aware
49
of the content of the practice and its learning outcomes. At the level of higher education
institutions, ECTS credits can be awarded, which would further motivate students to
become actively involved in this scheme. This activity could be implemented in cooperation
with business associations at the level of the educational institution or at the national level
using the model used in The Program of professional training of university graduates. In
order to motivate educational institutions to cooperate with business in this initiative, it is
possible to organize a public call (managed by the Ministry of Education and Ministry of
Economy) in order to dene the content of the internship program and learning outcomes,
with a symbolic remuneration for pupils/students during their stay at the companies.
11. Strengthening the role of the National Partnership for Entrepreneurial Learning. The
National Partnership is the rst major step forward in linking institutions and other
organizations involved in the development and promotion of entrepreneurship and
entrepreneurial thinking in Montenegro. In the coming period it is necessary to provide
greater support to its operation so that this body will continue to act as a key promoter
of entrepreneurial learning at all levels of education, as well as promoter of successful
entrepreneurial stories and examples of good business practice.
In order to implement these activities, it is necessary to involve the Ministry of Sports as
a line ministry in charge of youth affairs, Ministry of Education, Ministry of Economy, Center
for Vocational Education, members of the National Partnership for Entrepreneurial Learning,
business associations, non-governmental organizations, and higher education institutions.
Proposed activities should be implemented in the short, medium and long term perspective, and
most of them require permanent activity.
OPENNESS TOWARDS YOUNG PEOPLE, MUTUAL COOPERATION OF
INSTITUTIONS AND AVAILABILITY OF INFORMATION
12. Creating a single portal with an overview of information on business procedures that
will be regularly updated. Information on the procedures must be accessible and clear,
and should be regularly updated. Currently, there are several web portals that offer partial
overview of procedures that are important to business - from registration to operation. It
is necessary to identify the most proper web portal that will consolidate information from
all the others and become a central place for presenting and updating information on the
procedures. This portal should contain forms, information on the steps in the process with
all contact details, forum for questions, the possibility of submitting complaint forms about
the actions of institutions/individuals and the like. It would be necessary to promote this
web portal continuously until it becomes a focal point for information and communication
with users of services institution. The research has identied several portals that have
the potential to grow into a single, national portal for business procedures (e.g. UNCTAD
initiative within the eRegistrations project, or eGovernment website). This is especially
important for young people who are accustomed to the use of information technology in
everyday life but who are often discouraged if they fail the see the end of the process, or at
least know the next several steps of the process.
50
This web portal should allow communication with users, leaving comments and evaluating.
Information about available training for entrepreneurs could also be available on this portal
or promoted there, while information that is more detailed would be available on some other
webpage. In addition, such a portal should contain the stories about successful (young)
entrepreneurs, and it would also be benecial to include a motivational part61.
In the context of the No Barriers! So Business Doesn’t Wait62 campaign, business beginners
have repeatedly reported to the barrier63 related to the fact that there is no clear information
about what awaits them, or what are the costs during the rst year of operation. A special
problem presents the fact that they are not acquainted with numerous taxes to be paid at
the local level. Based on the above, in the Report for 201764, it was recommended to prepare
information on the minimum operating costs for the entrepreneurs and newly founded
companies for the three most frequent business activities at the local level in accordance
with applicable legislation. This can be an interim solution until the creation of a single
portal, which certainly requires the involvement of local administrations.
13. Transparent presentation of available incentives for the development of entrepreneurship.
The research has indicated that young entrepreneurs are usually not informed about the
available business development incentives (especially at the local level). The information
also tends to be available selectively. Similar to the issue of procedures, it is necessary to
create a single searchable online source with updated information on available incentives
at national and local levels.
14. Opening institutions to communicate with young people as service users. Research
has shown that young people often have a negative comment regarding the work of the
institutions, partly because they are not fully aware of the scope of their work, and partly
based on personal impression of communication which is said to be “demotivating“ and
“discouraging“ when it comes to the topic of starting own business. Given the feedback
from young entrepreneurs related to their experience in communication with competent
institutions, it is necessary to think about organizing training programs for the representatives
of such institutions who are in charge of communication with service users.
Also, these institutions should provide the opportunity to receive feedback from service
users about the satisfaction with the services provided, as well as to involve them in the
planning of their activities, so that programs and activities are based on the real needs
of the users (especially if these are nancial support programs, training or advisory
services).
61 There is a good example on the portal of the Union of Young Entrepreneurs of Montenegro www.umpcg.me as well as
on the web portal www.zenski-biznis.com developed in the context of the program for support to women entrepreneur-
ship realized by the Ministry for Human and Minority Rights and UNDP, nancially supported by the Delegation of the
European Union to Montenegro.
62 Part of the project “Administration Tailored to the Needs of Citizens and Businesses”, implemented by the UNDP Ofce
in Montenegro in cooperation with the Ministry of Finance, with the support of the British Embassy in Podgorica and
other partners. More information is available at www.bezbarijera.me.
63 www.bezbarijera.me/smanjenje-taksi-za-novoosnovane-rme
64 www.bezbarijera.me/sumirane-su-barijere-prijavljene-u-periodu-od-aprila-2016-marta-2017-godine/
51
In the context of the above said, in relation to informal education of young entrepreneurs,
it is proposed to organize “open days of entrepreneurship“ which would include visits to
institutions and/or representatives of the institutions delivering lectures. The research has
also identied individual initiatives in this domain, but given their individual and isolated
nature, a more systematic approach is still missing.
15. Intensifying cooperation and communication between institutions that provide services to
young people (entrepreneurs). In practice, there is a lack of cooperation between institutions,
and there is an overlap of activities or they are being realized in isolation, which leads to the
loss of a synergistic effect. The lack of coordination and cooperation results in individual
and ad hoc activities, without systemic approach and support for young people thinking
about their own entrepreneurial venture. Institutions must co-operate in the planning and
implementation of their activities. For example, the IDF should not only be invited to deliver
presentations on the nancial support programs it offers, but should actively participate
in proposing and creating training programs organized by other institutions, based on
the experience related to the difculties encountered by entrepreneurs (especially young
ones) when they start a business and get nancial means. Better co-operation and linking
of institutions both horizontally (at national and local level), as well as vertically (between
national and local levels) could help solve the problems of the discontinuity of the existing
support programs, the fragmentation of programs (individual and ad hoc initiatives) and
their accessibility.
In order to implement these activities, it is necessary to involve the Ministry of Finance and
competent authorities (Tax Administration and the Administration for Inspection Affairs),
Ministry of Public Administration and local governments, IDF, Directorate for the development of
SMEs, National Employment Agency, and the Center for Vocational Education. The Ministry of
Education and Montenegrin employers’ associations could also play important roles. Proposed
activities should be implemented in the short and medium term perspective, and most of them
require continuous activity.
AVAILABLE FUNDS WITH ADVISORY AND MENTORING SUPPORT
16. Combining existing of nancial support programs with mandatory advisory and/ or
mentoring support. Available funding programs for youth and university graduates who are
unemployed are very favorable. Interest-free loans with long grace periods and relatively
low interest rates, seem to be accessible and attractive. However, in practice, there is a
relatively small number of loans, and ideas that are supported are rather non-innovative.
In addition, practice has shown that nancial support programs which were accompanied
with counseling support, training programs to develop business skills and/or mentoring
assistance were successful – there was a large number of approved projects in relation to
the number of participants in the program, compared to initiatives when available programs
were presented to a bigger number of (potentially) interested participants. For this reason,
it is necessary to combine advisory and mentoring support in obtaining funding, while
creditors (in this case IDF) should be involved in creating training programs or suggest
interventions regarding frequently lacking skills that increase the risk of realization of
business.
52
17. Provision of grants and/or guarantees with mandatory mentoring support. Regardless
of rather favorable nancing conditions, there will always be young people with good ideas
who do not have the necessary assets that could be pledged as collateral for loans taken
or able to nd endorsers. In this respect, we should consider the introduction of a pilot
project that would include nancial support in the form of grants or a specic guarantee
mechanism that would allow these young people to obtain necessary funds. This type
of nancial support would be conditioned on mentoring support, or even share in the
ownership. A similar model was developed at the Faculty of Economics in Rijeka, where
students whose ideas are perceived as promising, receive funds, along with a share in the
company and mentoring services provided by their teachers.
An interesting model is the one in which the role of the guarantor for the nancial institution
is assumed by the local government or the municipality. This model of cooperation has been
discussed by the municipality of Rožaje and the in the context of measures for support for the
development of women entrepreneurship on the territory of this municipality.
In order to implement above mentioned activities, it is necessary to include IDF, Directorate for
Development of Small and Medium-Sized Enterprises, National Employment Agency, Center
for Vocational Education, other institutions providing advisory services (consulting services
centers) and business associations, whose members as mentors to young entrepreneurs
would work pro bono or for a symbolic fee. The proposed action needs to be implemented in
the short and medium term perspective, and it requires continuous activity.
DEVELOPED ENTREPRENEURIAL INFRASTRUCTURE
18. Improving existing entrepreneurial infrastructure and supporting new initiatives. The resea-
rch recognizes several forms of entrepreneurial infrastructure available to young
entrepreneurs, both at national and local levels. While business incubators and
entrepreneurial centers record greater or lesser success in their operation or have not yet had
enough time to evaluate their work, the need for such support to be improved is evident. It is
especially important to provide a similar infrastructure within higher education institutions
and other institutions so that, with active advisory and mentoring assistance, young people
during their studies will also be encouraged to materialize their business ideas. Through a
public call involving the provision of nancial resources, higher education institutions, local
governments or other interested organizations can be motivated to develop the concept
of business incubators, coworking spaces or resource centers to support students/young
people who want to realize their business ideas. Here it is advisable to take an evolutionary
approach and start with less demanding activities both nancially and spatially (for
example, providing coworking space and resource centers, only after that establishing a
business incubator). In addition to providing space for work and mentoring to interested
young people, such initiatives contribute to the creation of a necessary “community“
in which young people are encouraged to persevere in their entrepreneurial ventures, to
exchange experiences and, eventually, to act together on the market.
19. Supporting and developing startup entrepreneurship in Montenegro. The development
of entrepreneurial infrastructure, primarily coworking space, is one of the factors for the
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development of startup entrepreneurship/community in Montenegro. It is necessary to
educate the relevant state institutions and general public about the startup concept, its
specicities and benets that the whole company brings to the entrepreneur itself. An
important analysis of regional experiences (such as Eleven and LauncHub in Bulgaria or
Enterprise Ireland in Ireland) and creating an environment for the development of “local“
(launched in Montenegro) and attracting international startups can be signicant. Improving
e-commerce can signicantly contribute to the development of startup community. Also, all
measures aimed at building and promoting entrepreneurial culture and new technologies
directly contribute to the development of startup community in Montenegro, by improving
the existing conditions for business development.
In order to implement above mentioned activities, it is necessary to involve the Ministry
of Finance, competent administration (starting with the Tax Administration), local self-
government units and employers’ associations. The proposed activities need to be
implemented in the short and medium terms, and most of them require continuous activity.
IMPROVING THE BUSINESS ENVIRONMENT
20. Continuous monitoring, improving and simplifying the procedures for registration and
running a business. Despite progress in the business environment, it is necessary to
continuously improve the procedure for registration and running a business. In recent years,
Montenegro has been experiencing a decline in global rating lists which is not necessarily
a result of poor work of the administration and the institutions in general, but often a result
of a progress made by other countries. Careful analysis of the results leads to concrete
activities whose implementation is supposed to simplify business operation. Special
attention should be paid to the consistent implementation of adopted legislation, which is
often a problem, but also to the training of ofcials who are in direct communication with
the end users of institutional services.
21. Introducing electronic procedures whenever it is possible. There has been a lot of
discussion regarding the introduction of electronic procedures in the past. Certain level of
progress has been achieved which is evidenced by the fact that over 200 procedures can
be performed through the eGovernment web portal. However, the fact is that most of these
procedures are related to natural person and not legal entities. Introduction of electronic
procedures includes linking public administration institutions into a single system and to a
large extent upgrades the outdated one-stop-shop concept.
22. Analysis of the existing incentives and linking them to the status of an entrepreneur
instead linking them to the location. The largest number of incentives for the development
of entrepreneurship are related to the status of development of local self-government or to
various categories of vulnerable groups. Research has shown that young entrepreneurs tend
to be discouraged with the obligation to pay taxes and social security contributions, because
at the same time, there is no guarantee that their business will succeed. In a situation like
this, young people often give up or decide to work in the gray zone. Consideration should be
given to the possibility of linking existing incentives to the status of the entrepreneurs (e.g.
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entrepreneurs who are younger than 30 and who belong to the category of young people
according to the law), and not to the location. Also, research shows that the rst three years
are critical to the success of young entrepreneurs. In this context, it is necessary to consider
the possibility of exemption from payment of taxes and social security contributions for the
rst three years, and dene qualication criteria that will ensure that there is no misuse of
funds.
23. Considering the possibilities for the legal regulation of social/family entrepreneurship.
Currently, there is no regulatory framework for the establishment of social enterprises
in Montenegro, while there is a need for such a regulation in practice. A number of non-
governmental organizations, including youth organizations and organizations working for
the benet of the youth, within their scope of their work and activities, offer the possibility
of developing specic skills (crafts, creative industry, etc.). Although we commonly refer to
persons with disabilities, Roma and Egyptians as vulnerable groups, given the high rate of
unemployment, young people can also be considered a vulnerable group. The possibility
to found social enterprises would allow schools to fully valorize part of the activities/
products of the educational process through entrepreneurial clubs. Revenue which would
be collected could be reinvested in the further development of social enterprises.
In order to implement above mentioned activities, it is necessary to involve the Ministry of
Finance, competent administration (starting with the Tax Administration), Ministry of Public
Admistration and local self-government units. Important role can be played by the Ministry of
Education and employers’ associations. The proposed activities need to be implemented in the
short and medium terms, and most of them require continuous activity.
CREATING A POSITIVE ATTITUDE OF THE SOCIETY TOWARDS
ENTREPRENEURSHIP
24. Establishing national GEN (Global Entrepreneurship Network) oce in order to join
the global movement present in more than 165 countries, with the aim of celebrating
entrepreneurship throughout the year. As part of this initiative, which would include the
mobilization of all relevant stakeholders from the public, private, and non-governmental
sectors, throughout the year, in accordance with the predened events calendar, there
would be carried out planned activities, competitions, promotions etc.
25. Creating positive campaigns to promote entrepreneurship. In cooperation with all
abovementioned partners, the public broadcasting service could launch a campaign to
promote successful entrepreneurs. IDF already has a solid base of stories of success which
could be used for this purpose. Promotional program could vary in form and length, but it
would be of greatest importance to focus on the entrepreneur rather than on promoting
institution, which viewers often nd repulsive and which proves to be counter-productive.
Such a campaign must have a well thought gender perspective, and use social networks as
a powerful means of communication.
26. Supporting the work of the association of young entrepreneurs. This is the activity that
should be initiated by the very target group, and aimed at creating a single voice of young
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entrepreneurs who wish promote their success as well as point to the challenges they
encounter. Such associations can be local, national, general or sectoral.. An initiative of this
kind has already been launched and it should be supported - Union of Young Entrepreneurs
of Montenegro65. Such an organization aims to represent the interests of its members, as
well as to provide mutual support. In that sense, the peer mentoring project of can further
contribute to promoting entrepreneurship among young people and encouraging those
who have the intention to start their own business. Existing young entrepreneurs would
provide possibility for professional practice for a limited period of time for interested young
people as mentors who would also advise and enable them to acquire practical knowledge
and provide support. Alternative may also be organizing workshops that would be delivered
by successful young entrepreneurs to their peers with similar aspirations.
In order to implement above mentioned activities, it is necessary to include IDF, Directorate
for Development of Small and Medium-sized Enterprises, Ministry of Education, Montenegrin
Employers Federation and the public broadcasting service, but also other media interested in
cooperation. Establishing national GEN ofce is a part of a broader concept and entails necessary
inclusion of non-governmental sector, educational institutions, relevant ministries (e.g. Ministry
of Finance and Ministry of Economy) and others.
65 For more details see www.umpcg.me.
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8. CONCLUSION
Research shows that young people in Montenegro are interested in entrepreneurship. However,
statistics tells that a signicantly smaller number of them actually choose it as a career. The
reason for this may be numerous restrictions they encounter primarily in the design phase, and
later in the realization of their business ideas.
The economic crisis and high unemployment rate of young people, who become unused economic
resource, have drawn the attention of policy and imposed the topic of youth entrepreneurship
as a part of the solution to increasing unemployment. It is clear that youth entrepreneurship
cannot completely eliminate the problem of unemployment, but it can be an important part of
the solution.
Current policies are focusing on the development of entrepreneurship, primarily small and
medium enterprises, instead of focusing on entrepreneurship related to certain target groups
such as young people or women. If the intention is to encourage entrepreneurship in youth, it
is necessary to think about the major social development shift, whose result will be a society
based on developing entrepreneurial culture and value system, and not only on solving the
current problem of youth unemployment.
The most common global practice of providing a relatively large number of initiatives aimed
at promoting entrepreneurship and supporting start-up businesses is present in Montenegro.
However, these initiatives are often isolated, relatively small, ad hoc and discontinuous in their
nature and fail to be part of a broader and more comprehensive policy to support the development
of youth entrepreneurship. It is precisely for this reason, that the scope of such initiatives is
limited.
Although there are no valid evaluations of implemented initiatives, intuitively, and based on the
experience of developed countries, we can conclude that: 1) the success of a policies depends on
the selection process of individuals who are involved these initiatives. In other words, available
limited resources should be directed towards those who are most likely to succeed because it is
certain that not everyone can be an entrepreneur; 2) if we wish to be successful, then we need to
more generously support young entrepreneurs in all areas; 3) development of entrepreneurship
among young people requires an integrated policy approach and cooperation of institutions,
openness to service users and continuous encouragement and support.
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