USAID Business Survey Finds Slightly Improved Business Environment Burdened by Administrative Procedures and Lack of Capital

USAID Business Survey Finds Slightly Improved Business Environment Burdened by Administrative Procedures and Lack of Capital
Presentation of Business Survey results
USAID Serbia

For Immediate Release

Friday, November 21, 2014

Belgrade – USAID’S fourth annual survey of 1,000 Serbian businesses found that Serbian executives believe the business environment in Serbia has improved slightly during 2014, though lengthy and expensive regulatory procedures and reduced access to bank finance continue to harm their companies' competitiveness. 

Introducing the report, Ambassador Michael D. Kirby noted some positive findings:  approximately 17 percent of businesses in the last two years reported that corruption has a large impact on their business, down from 41 percent in 2011 and 33 percent in 2012.  Ambassador Kirby also highlighted the reduced burden of dealing with inspections.  Respondents said that the time their businesses dedicated to inspections dropped to an average of 12 hours in 2014 from 70 hours in 2011, and that the number of inspector visits continued to drop, averaging 1.6 visits in 2014, compared with 6 visits in 2011. 

The USAID Business Enabling Project survey allows business leaders to rate the impact of regulations, economic policies, and access to finance on their competitiveness and growth prospects.  Many said they continued to face the same problems as in previous years in critical areas such as para-fiscal charges, wage taxes and contributions, VAT, exchange rate volatility, tax administration, and administrative procedures.

It is clear that Serbian businesses lack access to adequate financial products that would allow them to expand.  The survey results show that 65 percent of the companies do not use any external source of finance – not banks, not even family and friends.  Even those that do borrow from external sources use banks for only 25 percent of their finance, with most finance still coming from their own funds.  Business executives complained of several obstacles to borrowing:  91 percent said high interest rates and fees stymied borrowing and 77 percent cited collateral requirements.

The survey also found that just 8 percent of Serbian companies’ products or services are exported.  Most focus on domestic markets, with 70 percent of sales in their home municipality.  This not only demonstrates a lack of appetite for risk or ability to expand, but also that the low level of exports is a major factor in the lack of economic growth in Serbia.

Looking ahead, businesses continue to be more and more optimistic about the future.  During the last three years we have seen increases in the percentage of businesses that expect to make profits (from 34 percent in 2012, to 43 percent in 2014) and that plan to hire more workers (from 19 percent in 2012, to 26 percent in 2014).