Title page 1

Contents 8

Foreword 4

Acknowledgements 6

Reader's guide 13

Acronyms and abbreviations 17

Executive summary 21

Kosovo: SME definition and data coverage 23

Kosovo: SME sector overview 27

1. Assessment findings by policy dimension 34

2. Creating an enabling environment for SMEs and entrepreneurs 96

2.1. Promoting an SME-friendly policy and institutional design 97

2.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support 97

2.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs 100

2.2. Levelling the playing field for SMEs 103

2.2.1. Tackling informality for a more competitive business environment 104

2.2.2. Protecting and monitoring fair market competition 105

2.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms 107

2.3. Facilitating access to finance for SMEs' operations and growth 109

2.3.1. Facilitating bank lending to SMEs 110

2.3.2. Providing alternatives to bank finance 113

2.3.3. Providing direct financial support to SMEs' operations and growth 114

2.4. Providing services essential to SMEs' operations and growth 118

2.4.1. Foundational SME business support services 119

2.4.2. Support services for SMEs' expansion and growth 120

References 124

3. Fostering SME sustainability and resilience 132

3.1. Harnessing SME agility to navigate global market trends 133

3.1.1. Smoothing SME pathways to a green economy 133

3.1.2. Boosting SME competitiveness in sustainable value chains 136

3.2. Building robust mechanisms for SMEs to prevent and manage crises 139

3.2.1. Enhancing crisis-resilient strategies to prevent SME bankruptcies 140

3.2.2. Increasing SME recovery capacity and second-chance opportunities 141

3.3. Enabling SMEs by providing them with access to sustainable financing solutions 145

3.3.1. Supporting SMEs in an evolving sustainable finance framework 145

3.3.2. Increasing SME access to sustainable (bank and alternative) financing 148

3.4. Strengthening SME support systems and networks for sustainable growth 151

3.4.1. Scaling up public non-financial support for SMEs in a green and resilient economy 151

3.4.2. Exploiting the power of networks for the sustainable growth of SMEs 153

3.5. Accelerating research and innovation to future-proof SMEs 156

3.5.1. Advancing strategic innovation for a green and resilient economy 157

3.5.2. Capitalising on knowledge networks for driving SME innovation 159

Annex 3.A. Methodology 163

References 163

4. Supporting the digital transformation of SMEs in Kosovo 171

4.1. Strengthening SMEs' readiness for digital transformation 172

4.1.1. Strengthening policy and financial support for SME digital transformation 172

4.1.2. Assessing the digital maturity of SMEs in Kosovo 176

4.1.3. Enhancing digital skills and capacities 179

4.2. Increasing SME productivity through digitalisation 184

4.2.1. Leveraging the use of e-commerce and online platforms to drive SME growth 185

4.2.2. Fostering innovation and collaboration for SME productivity 187

4.3. Establishing a trustworthy and safe business environment 193

4.3.1. Adapting data protection to evolving digital threats 194

4.3.2. Strengthening SME cybersecurity resilience 196

4.4. Supporting the sustainable uptake of advanced technologies 199

4.4.1. Encouraging SME adoption of artificial intelligence and emerging technologies 200

4.4.2. Promoting a sustainable digital transformation 203

References 209

5. Harnessing human and social capital for SME development in Kosovo 216

5.1. Building foundational human capital for SME competitiveness 217

5.1.1. Fostering entrepreneurial skills and mindsets through education 217

5.1.2. Bridging the divide between education and training systems and SMEs 220

5.2. Developing SME workforce knowledge and skills 225

5.2.1. Understanding and anticipating skills needs 226

5.2.2. Addressing skills needs of SMEs through adult education 229

5.2.3. Upskilling to support artificial intelligence (AI) adoption and use 232

5.2.4. Improving talent availability by empowering women entrepreneurs 234

5.3. Strengthening social capital by advancing social entrepreneurship 239

5.3.1. Mapping the social enterprise landscape 240

5.3.2. Creating an enabling environment for social enterprises 241

References 244

Annex A. Methodology 256

Annex B. Western Balkans Business Survey - Navigating the Digital and Green Transition 263

Table 1. Definition of micro, small and medium sized enterprises in Kosovo 23

Table 2. Core statistical sources for the SME sector overview, Kosovo 24

Table 3. Statistical data coverage by thematic area, Kosovo 25

Table 4. Sectoral profile of Kosovo business economy, selected sectors, 2023 29

Table 5. Enterprise investment by size class in Kosovo, 2023 30

Table 1.1. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 1, Sub-dimension 1.1 37

Table 1.2. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 1, Sub-dimension 1.2 39

Table 1.3. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.1 41

Table 1.4. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.2 42

Table 1.5. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 2, Sub-dimension 2.3 43

Table 1.6. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.1 45

Table 1.7. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.2 47

Table 1.8. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 3, Sub-dimension 3.3 47

Table 1.9. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.1 49

Table 1.10. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.3 51

Table 1.11. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 4, Sub-dimension 4.4 52

Table 1.12. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 5a, Sub-dimension 5a.1 55

Table 1.13. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 5a, Sub-dimension 5a.2 57

Table 1.14. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 5b 59

Table 1.15. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 6, Sub-dimension 6.1 62

Table 1.16. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 6, Sub-dimension 6.3 64

Table 1.17. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 7, Sub dimension 7.2 67

Table 1.18. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 7, Sub dimension 7.3 68

Table 1.19. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 8a 71

Table 1.20. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 8b, Sub-Dimension 8b.1 73

Table 1.21. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 8b, Sub-Dimension 8b.3 74

Table 1.22. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 9, Sub-dimension 9.1 77

Table 1.23. Kosovo's implementation of the SME Policy Index's 2022 recommendations for Dimension 9, Sub-dimension 9.2 79

Table 1.24. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 10, Sub-dimension 10.2 82

Table 1.25. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 10, Sub-dimension 10.2 83

Table 1.26. Kosovo's implementation of the SME Policy Index's 2022 recommendation for Dimension 10, Sub-dimension 3 84

Table 2.1. Kosovo Credit Guarantee Fund (KCGF) guarantee windows, 2024 111

Table 2.2. List of main non-KCGF credit guarantee schemes supporting SMEs' access to bank finance in Kosovo, 2024 112

Table 2.3. Overview of main active programmes providing targeted funding to SMEs in Kosovo 116

Table 2.4. Institutional non-financial SME internationalisation support instruments in Kosovo 122

Table 3.1. Kosovo's strategic and policy frameworks for SME greening 134

Table 4.1. Kosovo's strategic and policy frameworks relevant for SME digitalisation and digital transformation 173

Table 4.2. Overview of Kosovo's financial instruments for SME digital transformation 175

Table 4.3. Kosovo's strategic and policy frameworks considering SMEs and their uptake of emerging technologies 200

Table 5.1. Frameworks covering entrepreneurial learning in Kosovo 218

Table 5.2. Progression of entrepreneurial skills in compulsory education in Kosovo 219

Table 5.3. Key provisions of the "Operational guidelines for implementation of work-based learning" 222

Table 5.4. Comparison of in-company training in Kosovo and Austria 223

Table 5.5. Overview of strategic approaches to skills intelligence in Kosovo 226

Table 5.6. Selected upskilling programmes for AI in Kosovo 232

Table 5.7. Key strategic documents promoting women entrepreneurship in Kosovo 235

Table 5.8. Selected access to finance programmes for women entrepreneurs in Kosovo 236

Table 5.9. Social enterprise regulatory framework in Kosovo 241

Table 5.10. Likely capacity challenges faced by social enterprises in meeting registration and reporting requirements 242

Table 5.11. Selected training programmes available to youth social entrepreneurs in Kosovo 243

Boxes 11

Box 1.1. Spotlight: Kosovo Credit Guarantee Fund's "Women in Business" Window 38

Box 1.2. Spotlight: The Machinery and Production Technology Grant Scheme: Kosovo's flagship upgrading instrument 55

Box 1.3. Spotlight: Monitoring, control and analytical activities in Kosovo 60

Box 1.4. Spotlight: Green Credit Guarantees in Kosovo 78

Box 1.5. Spotlight: Strengthening SME Internationalisation through Targeted Export Promotion support 82

Box 1.6. Spotlight: Accelerating green innovation and sustainable business models for SMEs with the BOOST x Kosovo initiative 89

Box 2.1. Good practice example: "Hub and Spoke" model for data-informed policymaking 103

Box 2.2. Good practice example: Performance assessment of policies supporting SME access to credit- the Canada Small Business Financing Program (CSBFP) 118

Box 2.3. Good practice example: Institutionalising non-financial SME support: Denmark's Growth House (Business Hubs) system 123

Box 3.1. Good practice example: Aligning budget with climate goals - learning from the experience in Korea 139

Box 3.2. Good practice example: Guiding investments for climate resilience - the OECD Climate Adaptation Investment Framework 145

Box 3.3. Spotlight: Encouraging green investments - the Law on Sustainable Investments of Kosovo 147

Box 3.4. Good practice example: Carbon Footprint Calculator for SMEs in the United Kingdom 156

Box 3.5. Spotlight: Boost x Kosovo - Driving SMEs' green recovery through innovation 158

Box 3.6. Spotlight: The Green Innovation Lab at Kosovo's University of Prizren 161

Box 4.1. Spotlight: ICT for Kosovo's Growth: A flagship programme for advanced digital skills development 182

Box 4.2. Good practice example: Supporting employer-led skills development through co-ordinated training incentives in Latvia 184

Box 4.3. Spotlight: ITP Prizren: A flagship multi-actor innovation hub supporting digital transformation and SME innovation in Kosovo 189

Box 4.4. Good practice example: Strengthening SME e-commerce capabilities through structured advisory support: France's E-commerce Support Initiative 192

Box 4.5. Good practice example: European Union: The Small Business Act Scoreboard as a monitoring tool for SME policy 193

Box 4.6. Good practice example: Supporting SME data protection compliance through cybersecurity support in the United States 199

Box 4.7. Spotlight: Accelerating green innovation and sustainable business models for SMEs with the BOOST x Kosovo initiative 205

Box 4.8. Good practice example: Spain's National Artificial Intelligence Strategy: Integrating responsible and sustainable adoption of artificial intelligence 208

Box 4.9. Good practice example: Ireland's Climate Toolkit 4 Business for SME green and digital transition 209

Box 5.1. Spotlight: Entrepreneurial learning in Kosovo's University for Business and Technology 219

Box 5.2. Good practice example: Entrepreneurship education as part of the Basic Education Curriculum in Finland 225

Box 5.3. Strengthening skills assessment and anticipation: Kosovo's study on skills gaps in its industrial sector 228

Box 5.4. Good practice example: Integrating microcredentials into the VET system in Ireland 239

Box 5.5. Spotlight: Promoting environmental protection and sustainability through social entrepreneurship in Kosovo 241

Box 5.6. Good practice example: Recognising multiple social missions beyond work integration in France 244

Table A A.1. Changes to the weights of thematic blocks 260

Table A A.2. Clusters and constituent policy dimensions 261

Table A B.1. SME target population in Western Balkans and Türkiye, 2025 263

Table A B.2. Western Balkans Business Survey: Navigating the Digital and Green Transition - Sections and subsections 264

Table A B.3. SME respondent sample in the Western Balkans and Türkiye, 2025 265