NMAC: Modernisation project


The most persistent bottleneck in North Macedonia’s economic development is the low  productivity  of  businesses resulting in their limited capacity to offer decent jobs. Switzerland, through its Modernisation Project  (MP) will  tackle  this  by  supporting  the  development  of  an  ecosystem  for  businesses  to modernize.  Using business  diagnostics  to  identify  productivity  bottlenecks  will  enable  businesses  to  invest  strategically  in modernisation, leading to increased productivity, improved environmental efficiency and decent jobs. 

Country/region Topic Period Budget
North Macedonia
Employment & economic development
SME development
Business support & economic inclusion
01.04.2022 - 31.10.2028
CHF  3’593’195
Background North Macedonia currently stands at 42% of EU27 GDP  per  capita  (EUR 6`620) and with  the  current  growth pace it will need decades to reach European standard. The key  structural  barrier  for  growth  of  the  economy  is low productivity of the businesses, which in return are unable to offer  decent jobs  leaving  1/3  of  the  population  at  risk  of poverty. Both the lack of know-how and expertise of SMEs, coupled  with  lack  of  experts  offering  proper business diagnostics to effectively identify the bottlenecks prevent an increasing  productivity.  The  increased  outmigration  due  to lack of decent jobs puts an additional pressure to businesses that struggle for workforce. With such stalemate situation, the full potential of the private sector to boost growth and create decent jobs remains locked in. 
Objectives Modernised businesses, by enhancing productivity and supporting green transformation, contribute to more sustainable economic growth and creation of decent jobs. 
Target groups MP will work through businesses, consultancies, anchor  companies  and business  associations. The  primary  target  group  that will  benefit  from the interventions of the project are the small and medium  sized  businesses  with  potential  for growth.  The  end  beneficiaries  of  the MP, who will  ultimately  benefit  from  generating  decent employment  opportunities,  are  the  employees with  focus  on  women  and  youth,  especially outside of the capital. 
Medium-term outcomes

Outcome 1: Businesses strategically invest to increase  their  productivity  and improve environmental efficiency. 

Outcome 2: Strong and responsive business associations engage with consultancies and businesses to enhance modernization. 

Results

Expected results:  

  • Consultancies have the capacities and tools to diagnose businesses and offer tailored and comprehensive services and solutions.  
  • Businesses have access to resources for business modernisation. 
  • Business associations proactively support consultancies and businesses to enhance the uptake of consultancy services.  
  • Businesses associations proactively engage with consultancies and businesses to enhance the uptake of financial products for modernization. 


Results from previous phases:   Decent employment remains a significant challenge and low productivity  is one of the key factors  limiting  the creation of decent  jobs.  Low  productivity  of  businesses  is  primarily  a result  of  obsolete  technology  and  weak management practices,  further  hampered  by  shrinking  workforce. Businesses lack capabilities to properly identify and prioritize their bottlenecks (business diagnostics), which often results with  ineffective  investments.  Ultimately  the  findings  of  the pilot  intervention  on  business  diagnostics  show  that MP should  focus  on  educating  the  market,  building  local consultancies’ capacity, ensuring competitive pricing, and establishing  robust  follow-up mechanisms.  With  these elements  in  place,  business  diagnostics  could become  a powerful  tool  for  driving  sustainable  growth  and transformation of the businesses in North Macedonia. 


Directorate/federal office responsible SDC
Project partners Contract partner
International or foreign NGO
Swiss Non-profit Organisation
  • Other international or foreign NGO North
  • Swisscontact

Implementing partner
SwissContact

Coordination with other projects and actors

SDC: Increasing Market Employability, Education for Employment, Groundwater Management Use and Protection Programme, Parliament Support Programme.  

SECO: SIPPO, SwissEP, Light Manufacturing 

Other: USAID, EU Delegation, SIDA, EBRD, The World Bank Group, Fund for Innovation and Technological Development, Development Bank of North Macedonia;  

Budget Current phase Swiss budget CHF    3’593’195 Swiss disbursement to date CHF    905’917 Total project since first phase Swiss budget CHF   704’658 Budget inclusive project partner CHF   12’193’195