Startup businesses in the face of COVID-19 pandemic in Kosovo (Research and Recommendations)

Innovation Center Kosovo (ICK) invites the Government of Kosovo, the Assembly of the Republic, other local institutions and donors to have a special focus on existing startup businesses, as well creating facilitation mechanisms in helping entrepreneurship in the country.

Innovation Center Kosovo (ICK), in cooperation with the research company “Pyper” have developed a questionnaire about the impact of COVID-19 on the community of startup businesses in Kosovo, as well as the necessary and urgent measures that should be taken in order to support entrepreneurs and start-ups.

218 startup businesses operating in the sector of information and communication technology in Kosovo participated in this research. Respondent companies represent a structure out of which 65.6% operate in the local market, 23.3% in both the international and local market, and 11% only in the international market.

Most of the businesses participating in the research are self-financed and in the early stages of development, where 57.7% of them have 1-4 employees.

These businesses cover various areas of the ICT sector, including e-commerce, digital marketing, software development, cyber security, artificial intelligence, etc.

As for the concern regarding the situation created as a result of the spread of COVID-19, from the questionnaire conducted, 61% of startup businesses are very concerned with the economic situation created as a result of the pandemic, 43.5% of them have encountered changes in their activity, while 30.2% expect changes in the future of their business.

The biggest concern is revenue, where 74.53% of surveyed businesses reported loss of income, while 47.8% did not have the ability to keep employees on payroll. Also, 36% have emergency payments to pay similar to government taxes or fees, while 32.1% of them are planning to reduce the number of employees by 2020.
How to help startups?

After identifying problems for startup businesses, the focus has shifted to the proper type of support to save these businesses. Of the 218 businesses that answered the questionnaire, 79.36% think that a financial package dedicated to startup businesses would help to overcome the situation, 31% state the importance of fiscal facilities and 42.2% tax incentives. In this regard, 63.76% of businesses think that financial assistance for workers’ salaries would be the most necessary to help cope with the situation.

In conclusion, the data from this questionnaire shows not only significant concern, but also the impact that COVID-19 has already had on these businesses.
New businesses (startups) are critical to the economic development and overall social development, bringing innovation to products and services, improving the well-being of citizens, contributing to the development of digital skills for young people and creating new jobs.

Looking at the socio-economic situation created after the outbreak of the COVID-19 pandemic, Innovation Center Kosovo joins the concern of the community of startup businesses, and as a center that deals with the promotion of entrepreneurship, the establishment and assistance of startup businesses with emphasis on the ICT sector, calls up on the Government of Kosovo, the Assembly, other local institutions and donors, to have a special focus on helping startup businesses, but also finding other ways to stimulate entrepreneurship in the country.

As ICK, we ask the Government to include in the government stimulus package:

– Direct financial assistance for startup businesses, to cope with the current crisis, but also to enable the further development of new businesses, post COVID-19. This package could include salary subsidies, operating expenses, assistance in opening up to new international markets, training to increase the skills of young people in new fields and connecting with the employment market, etc.

– Packages of fiscal and tax facilities, which would release startup businesses for a 2-year term from all tax liabilities, which would also stimulate entrepreneurship in the country.

At the same time, Innovation Center Kosovo remains committed to providing the necessary support and expertise for the Government of Kosovo, local institutions and donors, to identify appropriate measures for startup businesses, but to also provide a network of international partners to overcome this challenge.

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