Welcome to the Western Balkans, where they’re forging a new future and a new way of doing business.
The countries of the former Yugoslavia and Albania are hardly famous for their entrepreneurial spirit. But travel around and you soon find a surprising number of new companies dotted throughout the Western Balkans that are already setting their sights beyond smaller domestic markets and looking to Europe, and the world.
At the Innovation Center in Kosovo—an incubator in Pristina sponsored by the Norwegian government—they’re breeding new ICT companies ready to go head-to-head with the titans of Silicon Valley. The ICT sector in Kosovo and its neighboring countries is developing very fast. It needs to if it’s going to provide the jobs that the next generation will require.
As countries here transition from the old Yugoslavia to the new knowledge economy, the region is facing many of the same issues that other transitioning and developed countries face: The old industrial structure is for all intents and purposes gone. And there’s an acute need for jobs.
The numbers are staggering. In Kosovo 30 percent of the population is below the age of 16, and a full 70 percent of the population is under the age of 30.
Not all the countries of the region have such young populations. But talented young people throughout the region—and there are plenty of them—need jobs, and opportunities.
Private sector development may hold the key to creating those jobs. Small and medium enterprises are forging ahead, particularly in newer sectors like ICT, robotics, marine biology, and nanotechnology—sectors that nobody had even thought about ten years’ ago.
The Outlook is Global
Meet just a few of the entrepreneurs, researchers, and business people who are shaking things up, and it’s hard not to catch some of their infectious enthusiasm for what this region can do on the world stage.
An old dentists’ office in Maksimir, Zagreb is an unlikely place for making your mark on the world. But when your business is IT development, it doesn’t much matter where you sit.
UX Passion, an IT development firm that specializes in user experience, is probably best known for the Wall of Tweets—a Twitter product for events used by the World Economic Forum, and other international players. The product played a key role in the 2012 US Presidential debate, when it set a record with 10.3 million tweets during the 90-minute debate. Events like these have enabled UX Passion to position itself as a serious player on the global stage:
“Ninety percent of our customers and 95 percent of our revenues come from outside Croatia,” says Vibor Cipan, Co-founder and CEO of UX Passion. “It doesn’t make a lot of difference sitting here or Berlin or somewhere in Silicon Valley. We are a worldwide company by mentality.”
It’s a sentiment shared by Miloš Milisavljević: “All you need is one computer to build an empire,” says the CEO of two-year-old Serbian start-up Strawberry Energy.
Milisavljević was a student when he invented the world’s first public solar charging station. Today he’s turned it into a ten-person company whose mission is to bring clean energies into people’s everyday lives, and where the average age is 25. By the end of the year, Strawberry Energy will be in three countries in Europe. Then next year they plan to enter the US market.
Going global, regionally
There’s good reason for optimism. Geographically, the region is part of Europe. The countries have tremendous natural resources. And the population is well-educated. On top of the technical knowledge, there’s also a creativity and approach to problem solving that makes this a great place to start a business, according to Sava Marinkovich, COO of TeleSkin, a Serbian start-up that has created an app for the early analysis of skin cancer and melanoma.
Another reason for optimism is the regional co-operation agreement Ministers from every country in the region signed in Zagreb last month.
Regional co-operation will be key for the development of the Western Balkans. With so much shared culture, history, and even language, regional co-operation is a natural advantage for innovators looking to conquer world markets. “If we want to compete in the outside world, in the huge markets and onto the world scene, we have to co-operate,” says Strawberry Energy’s Milisavljević.
We’ve been filming a story about reaching the last mile in southwest Oaxaca.
Santiago Nuyoó, population 2000, is in the Sierra Mixteca. (See our photo album on Facebook.) It’s a two-hour drive over dirt roads to the nearest town, Tlaxiaco, with the nearest bank, and cellphone coverage.
Nearly 30 million people—a quarter of the Mexican population—live in rural communities, most with no access to cell phone coverage, or formal financial services. The low population density, remoteness, and a hilly topography that makes these areas hard to reach means that private network operators haven’t extended their networks to these areas, and aren’t likely to anytime soon. At one point, we were thinking of calling our film “Waiting for Carlos Slim.”
On the margins, with no basic infrastructure, communities like Santiago Nuyoó are almost entirely left out of Mexico’s economic growth and progress. The people here are mostly indigenous, and although most speak Spanish, many also speak their native language, Mixteco.
Breaking the equation with local voice
Telecomm, the state-run telegraph agency, thinks that with its network of 1600 rural branches they can create a new model that will bring basic mobile services and bank accounts into the hands of rural inhabitants.
By charging market rates for local voice and basic banking services, Telecomm believes they can offer a viable business that will spur economic development in these rural communities.
And they see Santiago Nuyoó as the chance to prove their case.
In this short clip, Hernán Garza, Director of Basic Financial Services for Telecomm, explains how a combination of satellite for SMS, and cellular for local voice promises to make it possible to provide both local voice and mobile banking services sustainably.
Telecomm needs to prove not only that the technology will work, but also that the people will adopt the service–and that they will pay for it.
We talked to many people in the town and in the surrounding areas, and one thing is clear: they find the service very convenient and they are prepared to pay for it.
There are a number of distinct use cases (CGAP research identified six different user-types). For merchants like Claudia Santiago who runs a gift store in town it means her customers can pay her using person-to-person payments. She no longer displays a list of debtors in her store—people who haven’t paid her simply because of the lack of cash moving around in the area. Today they transfer money using their cellphone and pay a 3 pesos charge (about 23 cents) per transaction. “For me, it’s very practical,” says Claudia.
Mario Santiago is a local entrepreneur. He cooks rotisserie chicken at home that he then sells in the settlements dotted throughout the countryside around Santiago Nuyoó. He told us the new service helps his business, and means he doesn’t have to deal with finding change.
Reyna López, who lives a two-and-a-half-hour walk from Santiago Nuyoó in Plan de Zaragoza, said: “I spend less because I don’t have to pay my transportation, or lose the whole day walking.” She’s a single mother, and she uses the service to send money to her daughter who lives with relatives in Santiago Nuyoó during the week to go to school.
Others use the mobile service less frequently, but still find it useful for saving, depositing cash into their accounts at the Telecomm office in Santiago Nuyoó.
Eighteen months into the pilot, 80% of families are using the phones, and over half are using the payment service regularly—a very high number by international standards. “Now we can’t imagine our lives without a phone,” said Claudia.
The pilot in Santiago Nuyoó has proven usage. Next, Telecomm needs to prove the business case so they can replicate it in other rural communities.
They recently started offering bill payments for services like satellite TV that cost anywhere between 3 and 8 pesos, or about 60 cents. They’ve also started charging a 100 pesos monthly fee for local voice calls. None of the locals seem to have any qualms about paying these rates for the services. They are clear about the value proposition, and know that even with those fees the service saves them a considerable amount of time and money.
The Last Mile
In the end, we decided to call our film “The Last Mile.” But this is far from the end of the story.
The possibilities are enormous. Hernán Garza, who is leading this project for Telecomm, has big ambitions—ambitions to extend this service to 4,000 similar communities in rural Mexico–about 19 million people, and to extend its social impact, for example by using the phones to deliver health messages for pregnant women, vaccination messages, education announcements, and other public service messages.
Watch the 8-minute film, The Last Mile: going mobile in rural Mexico.