LED importance and its critical role in decentralization process in Macedonia; priority both from citizens and from all governmental levels

Recent public opinion research by the OSCE in Macedonia and the frequently expressed opinion of public officials indicates that economic growth is one of the most urgent issues in the country. Logically, local economic development (LED) is a crucial part of the equation to achieve increase economic growth. However, stimulating economic development is a multidimensional and complex process requiring the attention and efforts of all the stakeholders responsible for implementation. Over the intermediate term future, local economic development can also play an important role in improving municipal creditworthiness. This, improvement in creditworthiness is achieved by helping to increase own source revenues of municipalities and by reducing certain social expenditures as a greater proportion of the population moves into the ranks of the gainfully employed.

Within the general legal framework of Macedonia, including the recent decentralization legislation, municipal officials have the authority to establish partnerships with the private and civil society sectors using widely recognized tools for implementing LED activities. Given that LED is complex and multidimensional process and as such is enabled in a growing range of various legislation acts, by-laws, policies and similar, knowledge of and good access to all of these tools is important.

From another side, some municipal governments have no formally planned economic development strategy despite the high priority of this function. Increased environmental uncertainty and complexity requires municipalities to manage strategically as never before. Local government strategic planning is a sound and logical response to rapid change in their operating environment and complexity in their governance. Economic development decision-making most often operates in a complex and uncertain environment that requires municipal governments to act strategically to overcome information asymmetry and relative economic isolation.

Development programs can help strengthen and diversify the economies of communities, enhance the local tax base, and generate additional “own-source” financial resources. Design and implementation of local economic development programs is a complex undertaking. Increasingly, public-private partnerships are often involved as key strategic elements. To deal with these complexities, local governments need good planning and management such planning is considered by leading experts as one of the most important determinants of success in promoting local economic growth.
Strategic planning has been widely adopted among local governments to manage the complex entities and networks required to implement local economic development policy.

Strategic planning has been successfully adapted by local government agencies to deal with policy formation and implementation. The linkage of economic development implementation and strategic planning appears to be working well in those communities where it has been implemented.

Strategic planning has contributed to local economic development policy outcomes. Most importantly, the LED strategy and action plans must be carefully assessed against the staff resource capacity needed to carry them out, as well as the budgetary constraints.  Ultimately, the strategy's action plans should be incorporated into the budgetary program of the local government, and appropriate elements taken on by other stakeholders (business associations, utilities, educational institutions, etc.).  The overall aim is to leverage strengths, overcome weaknesses, exploit opportunities and deal with threats. The “bottom line” is that the public sector should use strategic planning to make better use of public funds and other resources (land etc) for local economic growth.

Results to Date

The MLGA LED program for Year 1 was designed to respond both to macroeconomic requirements as well as to specific local needs of municipalities. The three MLGA LED programs that were implemented in Year 1 were in direct response to municipal needs for economic development. Those programs are:

1. LED Legislation Review – Handbook on Macedonian Laws Related to Local Economic Development;
2. LED strategic planning; and
3. LED grants.

The following provides an overview of Year 1 activities in the three programs.

LED Legislation Review – Handbook on Macedonian Laws Related to Local Economic Development

LED is a complex and multidimensional process affecting a growing range of various legislation acts, by-laws, and policies. Unfortunately, relatively few practitioners in Macedonia have full knowledge of all laws and policies related to LED. For example, there was no comprehensive, easily accessible “single source” that referenced the myriad laws, regulations, official policy statements, etc. available to those responsible for LED. MLGA recognized a real need for such a resource for LED practitioners and developed a Handbook on Macedonian Laws Related to Local Economic Development.

This publication will serve primarily local government practitioners and policy makers, mayors and councilors, LED officers, business people, and attorneys and enable them to more effectively utilize all the applicable legal and policy tools. Such a practical practitioners’ handbook will provide very useful assistance and guidance for better LED in Macedonia. The handbook will also prove very useful for analysis of the related legislation in terms of barriers and obstacles for business entities in their growth.

LED Strategic Planning

In Year 1, MLGA delivered an initial joint seminar for the representatives of all the cooperating municipalities. This workshop was followed by direct technical assistance to each municipality separately, resulting in the development of Municipal Profiles.

The first seminar on LED Strategic Planning was delivered to a total of 22 representatives from nine of the ten MLGA Year 1 cooperating municipalities in this component. Main topics covered were basic principles of LED, legislation, role of mayors and LED directors, municipal profiles, business attitude survey, and inter-municipal cooperation. Several successful LED practices and tools such as business incubator, public lighting through public-private partnership (PPP) and document management in joint administration bodies were also presented.

As a follow-up, MLGA initiated direct technical assistance to ten cooperating municipalities (Chucer Sandevo, Chaska, Debarca, Demir Hisar, Mogila, Rankovce , Staro Nagoricane, Vinica, Gostivar, Tetovo, Debar , Valandovo, and  Vevchani) to develop their Municipal Profiles and LED Strategic Plans. All these municipalities collected the available information according to the Municipal Profile template provided by MLGA to the municipal LED coordinators. The process of preparation of the Municipal Profiles was facilitated by the local contracted consulting company, Urban Rural Consulting (URC). As a result, all ten municipalities developed their respective Municipal Profiles, which will be used as a starting point for development of the LED Strategic Plans.

A comprehensive Strategic Plans for LED were developed in eight partner municipalities (Chucer Sandevo, Chaska, Debarca, Demir Hisar, Mogila, Rankovce , Staro Nagoricane, Gostivar, Tetovo, Debar , and  Vevchani) through participatory process of the whole community. Process was completed in December 2008 with Municipal Council adoption of all Strategic plans for LED.

LED Grants

MLGA awarded three grants for implementation of advanced LED tools to three municipalities (Gazi Baba, Sveti Nikole, and Probistip), and initiated work with the Municipality of Strumica.

Gazi Baba – CISCO Entrepreneur Institute. One strategic priority of the Municipality of Gazi Baba is to address the very high unemployment rates amongst the younger population. Therefore, the goal of this project is to improve the community’s business environment by providing opportunities for young entrepreneurs in the emerging sector of information and communication technology (ICT). In Year 1, the project implementer, Foundation YES, translated and customized the first program of the CISCO Entrepreneur Institute: Starting a Business. It is expected that approximately 60 young people will attend and successfully complete this course and improve their qualifications for ICT opportunities in Macedonia. 

Sveti Nikole – Foundation for Rebuilding and Development of Ovce Pole (FOROP) Small Farmers Business Development. The training program on registering entrepreneurship in agriculture will make farmers aware of the need to function as a registered business, and will be necessary to qualify for government agricultural support programs and grants provided by the European Funds. The implementing partner for the Sveti Nikole LED grant is the Foundation FOROP. As the preparatory phase of the Small Farmers Business Development project, an informational brochure—Legalized Farmer: The Road to a More Secure Future—was developed and published. All workshops and seminars were implemented by AGRO FOROP, the Center for Education and Research, which is the first school in Macedonia for continuing education of farmers. The objective of the workshops was to inform farmers on the legalization of businesses and availability of financial resources and credit for legal agricultural business interests. Workshops were conducted in Sveti Nikole and neighboring villages, and were attended by more than 400 farmers.

Probistip – PPPs for Construction of Green Market Feasibility Study. MLGA supports the development of a feasibility study for a PPP for construction and maintenance of the green market and administrative-business building through an LED grant to Probistip nongovernmental organization (NGO) Civil Perspective. In Year 1, most of the planned activities were completed, including the preparation of the public procurement for a consultant company, selection of a consulting company, and a business survey measuring the level of interest for establishing a PPP for green market.