Kosovo: Diaspora Remittances Sustain Families, Economy
By Muhamet Brajshori
A study released by the Institute for Advanced Studies (GAP) on Wednesday (November 23rd) shows that more than 2,200 Kosovars currently work for foreign contractors and international organisations in Afghanistan send contribute 42m euros in remittances annually.
The diaspora, mainly in Western Europe, according to experts, continue to be a major source of income for many Kosovo families.
Edita Krasniqi, an economist, told SETimes that the diaspora community does not focus on the broader national economy for the moment.
“Their primary objective is to support their families in Kosovo, which [in turn] contributes to a lower level of poverty [in the country],” says Krasniqi.
She says Kosovo lacks an investment fund focusing on diaspora investments.
“Many countries, like Armenia, created investment funds, as a means of concentrating on investment resources from Kosovars living abroad, which would increase the state investments overall, and guarantee concrete Kosovo policies for its people living abroad,” says Krasniqi.
Seb Bytyci, executive director of the Balkans Policy Institute (IPOL), told SETimes that around 15% of the country’s GDP depends on remittances.
“Without remittances it would be impossible for Kosovars to maintain their lifestyle, which is higher than their income and GDP per capita, as statistics suggest,” says Bytyci.
He adds that the financial crisis had an impact on the remittances, but adds better days are coming for those living in countries that are no longer by the crisis.
“The global financial crisis did have an impact on remittances, but that is now over. Its impact was stronger in the immediate aftermath when construction sectors were hit in countries where Kosovo diaspora live. Countries like Germany, Switzerland and Austria are now doing well, so the level of remittances has increased after the dip,” Bytyci said.
Leke Gjonaj, head of the Kosovar-German Economic Association, told SETimes that many living abroad are eager to invest in Kosovo, but cannot find an adequate business environment.
“I hear many complaints from those wanting to invest in Kosovo, that when they go and plan their investment, due to bureaucratic procedures, are unable. It takes months to open a business in Kosovo; people do not have the time,” says Gjonaj.
He adds that the government needs to adopt policies that would attract diaspora investment.
“If they make better policies which would enable faster procedures, I am sure many will invest. It is in our interest to invest there [in Kosovo], because money is sent to our unemployed families. If someone invests money in a sector, we can employ our family members and others, and they will earn an income,” says Gjonaj.
Bytyci says that there are many means by which the diaspora can be attracted to invest.
“The remittances sent to Kosovo are used for consumption. Kosovo needs to create incentives to use the remittances for investment. Several things can be done. Central and local governments can create ‘matching funds’, for example, to match the amount of money the diaspora sends for development projects, such as schools, water and roads,” Bytyci says.
He point out the need for a national strategy in dealing with diaspora money, and for local authorities to be more proactive.
“Kosovo needs a national strategy, but given that the government has none so far, it is time for local governments to take the initiative. Diaspora can also be a primary source for Greenfield Foreign Direct Investment. For this, Kosovo must improve the investment legal framework, rule of law, and infrastructure [especially electricity],” says Bytyci.
Kosovo Central Bank data indicates that diaspora remittances for the first three months of 2011 increased by about 4%, compared to the same period in 2010. According to the Bank, Kosovars living abroad send more than 500m euros to their families in Kosovo annually.
Sokol Havolli, an economist at the Central Bank, told Koha that in the first quarter of this year, remittances reached 111.3m euros, compared to 103m euros in the same period last year.