The Agder Report and Review of BIP's Projects in Croatia

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Executive summary

The review

Business Innovation Programs (BIP) is a private foundation, which runs projects in several areas in former Yugoslavia. This review covers all BIP projects in Croatia as well as one project, which has been conducted among Eastern Slavonians residing in Norway (a total of 7 projects).

The main purpose of this report is to present a review of the progress and the results achieved so far. The focus is on the sustainability of the projects, both financially and institutionally. During the initial meetings with NORAD it was also emphasised that the review had to be seen in the light of the present international political context as well as of the official Norwegian aid policy for the Balkans.

The BIP Concept

BIP focuses on private sector and business development. The foundation is geared at competence building and initiation of activities for the promotion of economic self-sufficiency. The projects cover educational aspects as well as financing, the latter primarily by providing initial capital.

The projects are largely complementary and to some extent they might be seen as a sequence of projects building on each other. Whereas some of the projects are finalised, others are still in an early stage. A review of some of BIP's activities may thus come fairly early in the project cycle. This must be taken into consideration in the evaluation of the projects.

The overall objective of BIP's activity is stated as the following:

	To carry out projects that may contribute to the stabilisation of the social and economic situation in Eastern Slavonia and bring quick results.

BIP has operationalised the overall objective in a more practical (strategic) manner. According to BIP's regulations the activities are:

	... to contribute to sustainable and self-sufficient economic growth by focusing on private sector development and job creation

The idea is that unless the difficult employment situation is alleviated, both social and economic stabilisation will be very hard to accomplish. The primary target groups for BIP's activities are supposed to be entrepreneurs, innovators and small and medium scale businesses.

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Overall assessment, concerns and recommendations

The overall assessment of BIP's engagement in Eastern Slavonia is positive. All projects are considered highly relevant to the situation in the region and seem to be well in line with general Norwegian principles of donor assistance. The reasons for this overall positive conclusion are as follows:

• BIP turned to the university in the region, regional and local authorities in its search for relevant partners.

• Relevant agents in the region were involved in the planning of the projects, which is probably one major reason why the local ownership of the projects seem good and the content of the projects is well rooted in actual needs in the region.

• BIP's partners, individuals as well as institutions and organisations, are generally highly competent and accommodating, and capable of combining social commitment and business skills.

• Local partners have wide networks including authorities, NGOs and educational institutions outside as well as inside the region.

• The local partners also have good knowledge of and relations with the target groups in the projects.

• BIP's approach is concrete, result oriented and open to partners' needs. BIP consultants are adaptive to local conditions.

• Consultants are paid by the hour. Thus, costs are not frozen and reallocation of funds is possible.

• Several projects have brought about voluntary contributions from locally involved persons. This may be seen as prove of the projects' relevance and of the local partners' positive judgement of the projects, as well as of BIP.

Despite the overall positive conclusion, we have some questions and concerns and, based on these, also some recommendations for future activities:

• More thorough planning: We feel that some of the obstacles that BIP has encountered in their projects could have been avoided if the foundation had invested more effort in the planning of the projects. This applies to the mobilisation of a larger number of participants in some of the projects, but even more important to the overcoming of formal constraints. Development agents must be trusted to be able to take the necessary precautions, perform thorough base line studies and planning. Before involving aid agencies, donors, partners and not to mention recipi-

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ents, one should be well aware of the laws, regulations and other strings that may limit or otherwise have adversely affect on the projects. BIP has not paid enough attention to this aspect. BIP to some extent blames the delays in the projects on late incoming allocations from NOR-AD. There is little doubt that this aspect creates an unpredictable situation, which may contribute to the undermining of partners' and participants' confidence in the project. Furthermore it is likely that small NGOs with few other sources of income, such as BIP, will be particularly adversely affected. Although this is not an ideal situation, at the same time it is an established practice that all NGOs are facing. Thus, it should not come as a total surprise to BIP and the organisation should take it into account when planning their activities.

• Avoid unrealistic expectations among participants: In some instances participants have acquired expectations that have not been fulfilled. Many of the participants are people in dire straits, probably willing to grasp every gleam of hope, maybe even "reading to much" out of an opportunity. Working in a war-ridden area BIP should have been prepared for this. The decisive factor is not what BIP intended to communicate, but what the participants were lead to believe or actually believed. Being the provider of aid and hope, one should take every necessary precaution not to promise too much.

• Careful selection of participants: Recruiting "correct" participants to projects implies that many concerns must be taken. The re-definition of target groups that BIP has done may seem reasonable all eventualities considered. But as concluded above, it can also be a result of poor planning. The geographical focus on Osijek as opposed to for instance Vukovar in some of the projects may be questionable in a poverty / most-in-need perspective, but reasonable from a business perspective. Furthermore, the focus on fairly well functioning companies as opposed to more vulnerable ones may be subjected to the same type of considerations. Whereas we do not judge BIP's approach as correct or incorrect, we feel that the applied focus and its implications should have been debated properly with NORAD prior to project start-up.

With respect to the selection of participants in the project plans BIP also emphasises the multi-ethnic aspect of the projects. This is however another consideration, which as far as we are able to judge, has received less attention than anticipated. Our general impression is that whereas both communities are represented in the totality of projects, within each project one community tends to dominate. Asking for people's ethnicity is difficult and something that might even contribute to the cementing of differences. Nevertheless, in the reconciliation process it is important to

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create situations where the two communities actually meet and relate to each other in a constructive manner. Business development projects such as the ones that BIP is engaged in should play a role in this respect. Furthermore, local co-ordinators do have a fairly good overview when it comes to people's ethnic background. Thus, we feel that it would have been both desirable and possible to promote a more active multi-ethnic recruitment process. However, we recognise that this is a highly sensitive and problematic issue.
• *Targets should be realistic with respect to project period (or the other way round):* Working in a war-ridden area, unforeseen incidents should be expected. Thus, it should not come as a surprise that it takes longer to accomplish goals than what would be expected if working in for instance Norway. Furthermore, successful business development and private sector job creation in the area imply that well-established structures must be changed. This requires a long term perspective. On this background BIP seems to have been a bit too ambitious with respect to what may be accomplished within the planned project period. As far as we are able to judge, to become financially and institutionally sustainable, most projects need further assistance beyond the originally planned project period. The projects, which have been started, need to be finalised in a proper manner despite the delays and obstacles. Participants in the projects are generally in a very difficult situation and many of them rely on the projects for a better future. If BIP's involvement is phased out before financial and institutional sustainability is secured, vulnerable participants will be the suffering party.

Concluding remarks

Despite some critical remarks, we find BIP an important partner in development work. They are open-minded and sensitive to local partners and needs, and they offer relevant, concrete and result-oriented assistance. BIP can be seen as a change agent that initiates ideas and concepts, and encourages local partners as well as project participants to further development.

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List of Contents

EXECUTIVE SUMMARY

LIST OF CONTENTS.

ART I: BACKGROUND AND INTRODUCTION TO THE REVIEW

1 INTRODUCTION .

1.1 Work schedule and methodology

2 SOCIO-POLITICAL FRAMEWORK

2.1 Croatia

2.2 Eastern Slavonia.

2.3 Mentality in post-war areas .

3 OBJECTIVES AND PERFORMANCE MEASUREMENTS .

PART II: CONCEPT AND PARTNERS

4 THE BIP CONCEPT . . DEVELOPMENT PARTNERS
5.1 Norwegian policy makers - NORAD, the Ministry of

Foreign Affairs and the Norwegian Directorate of Immigration

PART III: RESU L T ANAL YSIS 1 I

PROJECTS - OBJECTIVES AND RESULTS
Slavonia staying in Norway .
6.2 Project 2: Capacity building for business counselling in

Eastern Slavonia..
Project 3: Contribute to the creation of small craft businesses

6.4 Project 4: The establishment of a micro credit fund
6.5 Project 5: Capacity building for the support of Youth Com anies
6.6 Project 6: Access to the Norwegian market for companies

from Eastern Slavonia .

16.7 Project 7: Re-employment of war causalities and other handicapped people

7 OVERALL ASSESSMENT AND RECOMMENDATIONS

7.2 Concerns and recommendations.

7.3 Concluding remarks . .
5 ANNEX: LIST OF PEOPLE WHO HAVE BEEN INTERVIEWED
5 RESEARCH AND DEVELOPMENT INFORMATION

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Part I:

Background and introduction to the review 1 Introduction

Norwegian assistance to the Balkans has a somewhat unique profile and is being implemented in a very different cultural setting compared to traditional development projects. The assistance to the Balkans is of a short-term nature and is continually up for review. It is therefore important to carry out early assessments of the sustainability of the projects and to review existing phase-out plans. On this background Agder Research Foundation (ARF) has been asked to carry out assessments of several development efforts by private Norwegian agencies in the Balkans. One of these agencies is Business Innovation Programs (BIP), which will be the focus of this report. The terms of reference for the assessment were worked out following consultative meetings with both BIP and NORAD.

Business Innovation Programs (BIP) is a private foundation, which was established on January 6^th1999. The foundation has its roots in "The Bosniaproject based on the Ostfold-model", which started as a co-operation between Ostfold Business Counselling and the Norwegian Refugee Council. For the sake of simplicity we will use the abbreviation BIP when referring to the foundation throughout of this report.

In Croatia BIP focuses on private sector and business development in the area of Eastern Slavonia. The foundation is geared at competence building and initiation of activities for the promotion of economic self-sufficiency. The projects cover educational aspects as well as financing, the latter primarily by providing initial capital.

The initial BIP- project was carried out in Norway in 1999 and was targeted at motivating and preparing refugees from Eastern Slavonia to establish private businesses when returning home. All other BIP projects have been located in the Osijek-Borovo-Vukovar axis in Eastern Slavonia. The projects are largely complementary and to some extent they might be seen as a sequence of projects building on each other. The review covers all projects in Croatia as well as the project, which has been conducted among Eastern Slavonians residing in Norway.

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Whereas some of the projects are finalised, others are still in an early stage. A review of some of BIP's activities may thus come fairly early in the project cycle. This must be taken into consideration in the evaluation of the projects. The main purpose of the assignment is to provide a review of the progress of the projects and the results achieved so far. The focus will be on the sustainability of the projects, both financially and institutionally. During the initial meetings with NORAD it was also emphasised that the review had to be seen in the light of the present international political context as well as of the official Norwegian aid policy for the Balkans.

1.1 Work schedule and methodology
A review shall determine the relevance and results related to objectives as they are stated in the project documents. A review will be less scientific in the approach compared to an evaluation, but basically uses the same methods; a combination of document studies, expert knowledge and interviews as well as more informal discussions and observations in the field. These approaches have also been the most important sources of information for this particular review. Upon collecting the data, these have been valued according to scientific standards. Original plans of using questionnaires were left due to the fact that the number of potential respondents in the relevant projects turned out to be relatively few.

The fieldwork in Croatia was carried out in March 2001. Prior to the fieldwork, ARF had meetings with the BIP management in Moss as well as in Kristiansand. Telephone interviews were also conducted with NORAD in Oslo. Upon returning to Norway a telephone interview was also conducted with the Norwegian Export Council in Zagreb.

In Croatia the most essential source of information for the review has been qualitative interviews with the various stakeholders in the actual projects. This included both the partner institutions and persons who have participated in the co-ordination and carrying out of the various project tasks as well as the actual target groups of the various projects. Several of the projects were also inspected visually, and informal interviews were conducted with participants who were present at the time of the visit. Additionally, in Croatia the team met with representatives of the Norwegian Embassy in Zagreb.

Prior to the interviews a cheque list of various topics to be investigated during the interview process was developed. However, emphasis was put on adapting a flexible approach, opening up for changes and additional questions to be asked depending on the situation and the person interviewed. All

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meetings included people that are either deeply involved in the projects or through their work engaged in the development processes in their region. Thus, topics related to the contextual framework of the project were also discussed in these settings. As some of the respondents were comfortable with conducting the interview in English, this was the chosen tongue for some of the interviews. Most interviews, however, were carried out in the local language with an interpreter from ARF. The ARF interpreter is originally from the former Yugoslavia. Having both language skills, thorough knowledge of the region as well as experience from applied research, the interpreter was also of great value when it came to interpreting the contextual framework of the interviews and the projects more generally.

Upon returning to Norway several telephone interviews were conducted with the Norwegian project leaders in BIP. A complete list of all the persons interviewed during the fieldwork as well as the BIP representatives, with which telephone interviews have been conducted, is attached in annex 1 at the end of the report.

As a final comment with respect to methodology, we would like to emphasise that any review will have to draw a line for the data collection. Thus the review necessarily represents a historic picture of the situation. The main part of the data collection for this review was conducted in March/ early April. This implies that developments that have taken place after this point will not be accounted for.

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2 Socio-political framework 2.1 Croatia

After the war, Croatia was confronted with a complicated legacy of problems from the socialist past, regional destruction as a result of the war, and the reintegration and reconciliation in the former Serb-controlled areas. However, Croatia was in a better position damage-wise than other countries in the region and has developed more rapidly after the war. From 1992 to 1997 the average annual economic growth was more than 5%. In 1998 the positive growth period turned negative and a serious bank crisis developed. The GDP per capita was in 1999 still as high as US$ 4.200, but with a negative growth of -2.0%.

Still, Croatia is one of the countries most affected by the pre-Dayton displacements. The election of a new president and parliament in early 2000 signalised the start of a new campaign to try to solve Croatia's most serious problem - the resettlement of thousands of refugees and displaced persons. When President Stipe Mesic took power, he announced that a major priority of his government would be to promote the return of all people to their homes. Croatia and Republika Srpska underlined their commitment to this pledge on March 9^th 2000, by signing a Joint Declaration on the return of 4,000 refugees to and from Bosnia and Croatia. This has proven to be difficult, especially for returning Croats to the Republika Srpska. The return process has been faster in Croatia than in Bosnia, but figures are uncertain, as Croats from neighbouring regions primarily want to resettle in Croatia.

The successful return of displaced persons will depend not only on wide ranging political reforms, but also on the economic revitalisation of the country's fragile economy. Although about 1.3 mill of the total population of 4.6 million is registered as "employed", the real unemployment rate is still more than 20%. 2000 of the 30.000 state enterprises are technically bankrupt and destined to die. A major challenge is to maintain employment while Croatian manufacturing industries and public services are taken through a severe privatisation programme. Signs of slower growth in the manufacturing industries are already visible. While the economy is being prepared for a future EU-membership, the social structures and legal frameworks will have to be carefully monitored in order to reduce as much as possible the expected negative effects of an industrial modernisation programme.

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Croatia has committed itself to reintegrate refugees and displaced persons into a Croat nation regardless of ethnicity. By signing the Stability Pact for South Eastern Europe in 1999 Croatia committed itself to concentrate on democratisation, economic reconstruction, development and co-operation and security in the region. A critical component is to find durable solutions for hundreds of thousands of people who have been displaced and ensure safe and free return of all refugees and displaced persons to their homes.

2.2 Eastern Slavonia

Eastern Slavonia is one of the areas in Croatia, which traditionally had a quite large Serb community. During the war the area was also partly under the control of the Serb occupation army. At the termination of the war the area was set under UN administration. In 1995 representatives of the Serb and Croat communities signed the ERDUT-agreement, which committed the Serb and Croat parties to non-violation of the peace and provided guidelines for the reintegration of Eastern Slavonia into Croatia. Following the 1997/98 reintegration of the Eastern Slavonia into Croatia the OSCE replaced the UN, but only as an observatory force and as such with limited responsibilities in the area. During this period Eastern Slavonia experienced a flux of Serbs to other areas in the former Yugoslavia as well as to other parts of the world.

Eastern Slavonia was severely damaged during the war and huge investments have been made to reconstruct the area to the pre-war condition. The reconstruction process is however far from completed and a large part of the region is still in a poor state when it comes to physical, economic and social infrastructure.

The area is both an agricultural and industrial province. The potentials for agriculture in Eastern Slavonia are very good, having one of the most arable lands in Europe. Before the war there were several large industries in the area employing a vast number of people. These included food products, building material products (abundant deposits of clay and sand), wood processing, textiles, leather and footwear, metalworking products etc. Today the capacity utilisation in these factories is less than 10% Many companies have been subjected to severe rationalisation in the work force, whereas others have suffered from severe damages during the war or both. The result is that one large shoe factory in the Borovo area, which is said to have employed more than 20 000 people before the war, now only has a work force of about 600 people. The collapse of the industry in the area affects all inhabitants. This applies particularly to the Vukovar-Borovo area, where unemployment

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is reported to exceed 80%. Alternative jobs are virtually non-existent, and even if some people may have access to agricultural land, their farming capabilities are poor due to lack of capital.

With poor prospects of any immediate employment in the area, a major goal of BIP's activities in Croatia is to assist in creating sustainable employment for the inhabitants. There is no doubt that job creation is one of the main challenges in the area and that BIP as such have directed their efforts at core problem in Eastern Slavonia. Furthermore, a large part of the Croatian refugees presently staying in Norway is from Eastern Slavonia. From a Norwegian point of view, supporting this area will also facilitate a possible return for this group. Thus, BIP emphasis on a two-tier assistance policy directed both at refugees in Norway as well as the conditions in the refugee's home country falls well in line with official Norwegian policies. s

2.3 Mentality in post-war areas

Multitudes of studies have been made on in-war and post-war traumas. This report will not go into this aspect, but it is necessary to underline that wars create both physical and mental destruction. It is understandable that the return to a post-war scene severely influences whatever initiative people may have had. A major challenge for any development project in the initial postwar phase is thus to create a sense of security and a minimum of faith in a positive future.

As in other areas tormented by war, as soon as the war in Croatia was over, donors entered the stage. Donor assistance has in many areas in the post-war Balkan, created a situation where grants and free gifts are taken as the normal condition. Emergency assistance may quickly create donor dependency and changes in the conditions for assistance may be very difficult to enforce. Both cases - fatigue with regard to initiative, and free gift expectations - are conditions that any donor must expect to face in a post-emergency area. It is such common problems that they must be considered in the initial stages of preparing the project plan and should not come as a surprise when the situation actually springs open in a project.

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3 Objectives and performance measurements

The overall objective of BIP's activity is stated as the following:

	To carry out projects that may contribute to the stabilisation of the social and economic situation in Eastern Slavonia and bring quick results.

In one sense this is a very ambitious objective, particularly when it comes to the ambition of attaining quick results. On the other hand "to contribute" is a very broad term which implies that, the situation in the area taken into account, almost any effort, small or big, may be said to be relevant. Thus, this objective is very hard for any review to relate to.

BIP has operationalised the overall objective in a more practical (strategic) manner. According to BIP's regulations the activities are:

	... to contribute to sustainable and self-sufficient economic growth by focusing on private sector development and job creation.

The idea is that unless the difficult employment situation is alleviated, both social and economic stabilisation will be very hard to accomplish. The primary target groups for BIP's activities are supposed to be entrepreneurs, innovators and small and medium scale businesses. The foundation has committed itself to emphasise the following three tasks (cf. BIP's regulations):

1. Capacity building with respect to business development (institutionally and individually)

2. Credits promoting competence building

3. Access to international markets

In the rest of the review we will take the operationalised version of BIP's overall objective as starting point. However, these development targets are also complex and as such difficult to assess. Assessments have to be made both on general impressions of the work and progress and on quantitative calculations. It is our opinion that the review should be seen as a tool for establishing strengths and weaknesses in the ongoing projects, and as such a way of gaining insight into potential areas of improvement.
The time span of the projects and the scope of the review does not allow for in-depth studies of the wider social and economic impacts. Such changes are of a long-term nature and in this context the BIP-projects are all fairly new. Assessing wider social and economic impacts of the projects would also require other and more time consuming approaches. Therefore, the team has

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limited the review to a study of the actual projects, particularly aspects of financial and institutional sustainability, including effects on partners, participants and the over all situation in the region. This is also in accordance with the overall goals of BIP's activities as stated by BIP itself (cf. above). Whereas for all BIP initiated projects there is a separate project objective, all projects are supposed to contribute to the overall goal of private sector development and job creation. Thus, in assessing the results of the projects both the degree of fulfilment of project objectives as well as their relation to the over all goals must be considered. To sum up, the team has focused the assessment of BIP's projects on the following:

1. How do the project relate to the main objective of contributing to private sector development and job creation?

2. The relevance of the project: Are the objectives of the projects in line with actual needs and are the problems addressed in a suitable manner?

3. How are the results compared to targets?

4. Is the project financially and institutionally sustainable?

For a detailed assessment of the various projects, reference is made to Part III: Result Analysis, whereas the overall assessment and conclusions are presented in the last chapter.

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Part II:

Concept and partners 4 The BIP concept

As mentioned earlier BIP's activities in Croatia have their roots in BIP's predecessors, "Business development according to the Ostfold model", experiences in Bosnia. As in Croatia, the activities directed towards Bosnia also covered a broad spectre of areas, primarily in the field of business development. Among others the activities included business training of Bosnian refugees staying in Norway, a comparable project to the one that BIP later carried out with Serbo-croatian refugees in Norway, a project more thoroughly described below.

BIP is still involved in projects in Bosnia. The foundation considers the results accomplished in there as well as among Bosnian refugees in Norway as a contributing factor when it was decided that BIP was to be granted support for activities in Eastern Slavonia.

The organisation of BIP and their projects may in general be described as shown in figure 1 below. The executive committee is the superior body in BIP. It consists of minimum four members with one joint substitute. The executive committee is responsible for administering the funds that are made available for the foundation. BIP does not have formal responsibilities as an employer in Norway. The executive committee, however, appoints a secretariat and an administrative manager. The administrative manager is secretary for the executive committee and responsible for the daily supervising of BIP's activities. At present one self-employed person is working full time as administrative manager for BIP. Additionally, another person is working at the secretariat on a more part time basis, the amount of work fluctuating according to specific needs.

Apart from the secretariat the foundation hires resource persons in Norway as well as in Croatia for the practical managing of the various projects. In Croatia BIP covers up to one third of the monthly salaries of two full time employees, one person at Center for Peace in Vukovar and one person at Center for Entrepreneurship in Osijek. Their main task is to supervise and co-ordinate the activities in Eastern Slavonia. However, both of these local contacts are employed on hourly basis and only get paid for the amount of work which is reported to BIP. Additionally, the various BIP projects in

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volve a number of people working on a more voluntary basis. Thus, although formally the roles of project leaders are on Norwegian hands, in practical terms these persons mostly function as a pool of competence whereas the local co-ordinators and partners cater for the day to day management of the projects. As with the Croatian personnel Norwegian project leaders and eventual Norwegian consultants are paid on hourly basis. A brief sketch of the formal organisation of BIP is presented in figure 3 below.

Due to Croatian legislation a Croatian branch of BIP has been created in order to cater for the management of payment to temporary hired local personnel. Local personnel are mostly hired on an hourly basis, except for the counsellors who are trained and employed through project 2, described below. BIP pays these counsellors a modest, but fixed sum, for their business counselling. Details of this particular arrangement will however be more thoroughly discussed in sub-chapter 6.2.

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5 Development partners

Having no permanent staff and relying on hiring resource personnel for the operation of the various projects, BIP strongly emphasises their relationship with both Norwegian and Croatian partners. Being involved in a number of different projects with different objectives and target groups, the partners also to some extent varies between the projects. The reliance on local partners is in line with stated goals of recipient participation and influence in Norwegian development assistance. Additionally, BIP draws on a number of public and private partners in Norway.

In the following section we will briefly present the relevant information about BIP's main partners. The specific links between the partners and the BIP-projects will be more closely described when, in the next chapter, we will focus upon assessing the various projects in question. The presentation is not exhaustive in the sense that all partners are presented. Thus, to the extent that other partners are involved these will be mentioned in relation to the description of the specific project in question.

5.1 Norwegian policy makers - NORAD, the Ministry of Foreign Affairs and the Norwegian Directorate of Immigration

The main basis for assistance to Balkans is laid down in white paper (St.meld.) No. 13 (1999-2000). Further clarification of how Norwegian assistance should be implemented is given in the annual bill before the Storting (St.prp.) No. 1. The 1999-2000 proposition clearly indicates that the priorities and implementation of Norwegian assistance to Balkans should be based on the Stability Pact, and that Norwegian assistance should be part of a total, and co-ordinated international attempt to ensure a best possible effect of the total assistance to Balkan.

White paper No. 13 underlines the principle of co-ordinating Norwegian assistance with the other donor countries. It also states that there is a need to accept a certain level of flexibility in project design and implementation as the humanitarian and political situation in the region is still unstable and unsettled. This flexibility is partly politically motivated and may in some cases clash with long-term development targets. Country strategies have so far not been worked out for the area. Until the political needs of flexibility, and the developments needs of long-term predictability is sorted out, a major task -

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and challenge - for all Norwegian assistance will be to work under a flexible Norwegian policy within the co-ordinated international network.

Norwegian assistance to Balkans follows traditional poverty orientations. It is a priority area for Norwegian assistance to provide food, shelter and security as an initial support, and continue with development programs. However, business development has also received increased attention in official development policies and this is also reflected in the stated goals of Norwegian development assistance to the Balkans. It is official Norwegian policy to follow the recommendations/ decisions of the Madrid meeting in 1998 where participating countries - including Norway - agreed that international assistance should emphasise the alleviation of minority discrimination.

The Norwegian Directorate of Immigration (UDI) is a central agent in the repatriation of refugees from the former Yugoslavia in general and as such also from Croatia and East Slavonia. A major aim of the directorate is to assist in the development of activities, which are targeted at preparing refugees for their repatriation to their home country. The directorate emphasises information about the conditions in the home country, counselling with respect to the repatriation, promoting ethnic reconciliation and capacity building for the restoration of the country in question. Thus, in aiming at preparing East Slavonian refugees staying in Norway for their repatriation as well as providing follow-up activities in East Slavonia, BIP's projects also relates to the responsibilities of the Norwegian Directorate of Immigration. Consequently, the financing of BIP projects is provided for by a combination of funds from NORAD and the Directorate of Immigration.

Having its roots in the 0stfold business counselling and being based in the county of Ostfold, BIP has drawn upon this network when selecting Norwegian partners for the various projects in Eastern Slavonia. This means that the Norwegian partners to some extent also have their basis in the Ostfold county. Other Norwegian partners, such as the Norwegian Industrial and Regional Development Fund (SND), are however recruited on a more national basis.

5.2 Local partners

5.2.1 Joint Council of Municipalities (JCM)

JCM is a registered NGO and advisory body, which represents members of the Serbian ethnic community from the territory of Eastern Slavonia, Baranja and Western Srijem. JMC is located in Borovo in Eastern Slavonia and has

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its roots in the ERDUT-agreement, which provided a temporary administration in the area at the end of the war and provided guidelines for the reintegration of Eastern Slavonia into Croatia. The ERDUT-agreement allowed for the Serbs to organise themselves in an interest organisation and on these grounds the JMC was founded. The main financial basis of the organisation consists of governmental grants (approximately 95%). Donations and projects from a variety of NGOs with which JMC co-operates cover the rest of the JCM budget.

JCM analyses the human rights situation and educational/cultural autonomy and co-ordinates the interests of Serbs. The council consists of 40 Serb counsellors, which have been elected from each of the municipalities in the region. The JCM administration has gradually been cut back due to excess capacity. Today sixteen professionals constitute the JCM staff. Financially the council depends on the Croatian government, member municipalities and private donors. JCM is well recognised for its role in promoting minority rights and reconciliation.

5.2.2 Center for Entrepreneurship

Center for Entrepreneurship is located in Osijek and was founded in 1997 by a group of professors at the University of Osijek's Faculty of Economics. The centre is registered as a legal NGO in Croatia. Originally the main financial source of the centre was grants from the Soros foundation in Croatia. Today the Soros Foundation contributes approximately 30-40 percent of the financial basis, other donor organisations contributes approximately the same, where as payment by clients and participants in courses provided by the centre covers the rest of the centre's budget. Additionally the Osijek municipality has given the centre the right to rent the premises free of charge.

Center for Entrepreneurship has specialised in the training and counselling of small and medium sized businesses, both start-ups and established. As part of the effort to strengthen the capacity in counselling, the centre also provides training of counsellors. Participant fees for counselling and training are not on an actual cost basis, but geared at establishing a commitment among the participants in the counselling, courses and seminars. The centre co-operates with local and district authorities as well as NGOs such as JCM and Center for Peace and seems to have good relations with the national authorities. The centre employs 3 people on a full time basis. Additionally it employs about 25 counsellors on contract basis. The centre is the only one of the kind in the area.

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5.2.3 NOA

NOA is a micro-credit institution. The institution was founded in 1996 as a joint project of local people and a US based NGO called Opportunity International. The capital stock was provided by USAID (3 million USD) and the Soros foundation (400 000 USD). The primary goal of the institution is to grant loans on a soft basis to people who have few or no alternative sources of credit either because they cannot provide the sufficient collateral or because their projects are too small for standard commercial banks to be interested. The institution focuses on vulnerable groups of the population, such as unemployed, who want to start up their own businesses as well as small businesses which need financial help in their expansion.

Originally NOA focused its activities on Eastern Croatia, but gradually they have been broadened to other parts of the country through the opening of 4 branch offices. NOA has 11 employees, whose capability in micro-credit activities was built through specially organised training. The organisation has a strategic partnership with Center for Entrepreneurship, which provides counselling and training of potential and actual NOA clients in order to reduce the risk of bad business planning.

5.2.4 Center for Peace

Center for Peace is a non-governmental, non-political and non-profit humanitarian organisation located in the city of Vukovar. Previously the organisation directed its efforts towards legal advice and psychosocial assistance. Today, however the latter element has been omitted and the effort has been focused on the legal advice and related activities. The primary objectives of the centre is to promote democracy, tolerance and human rights, contribute to the elimination of the consequences of war and the rebuilding of society in general. The target group of the centre is broad and covers refugees and returnees as well as the domicile population in the Vukovar area regardless of ethnicity or other possible criteria of demarcation.

Financially the centre relies upon donor assistance from various national and international organisations such as Oxfam, American Development Fund, the Soros-foundation. The centre co-operates closely with similar organisations elsewhere in Croatia as well as with other NGOs such as the JCM and to some extent Center for Entreprrneurship. The centre has little contact with local authorities. It does not receive grants from the local government and has no other local sources of finance. Center for Peace has a permanent staff of 4 people. Additionally the centre employs several people on a short term or voluntary basis.

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	Agderforskning

5.2.5 Center for Rehabilitation, Osijek

Center for Rehabilitation co-operates is a public institution, which cooperates with BIP with respect to one of the projects initiated in Croatia, namely the project concerning re-employment of war causalities and other handicapped people in craft production. The centre offers psychosocial assistance, various types of therapeutic counselling and physical rehabilitation programmes in addition to its engagement in re-employment and job training. The centre employs a total number of 18 professionals in addition to necessary administrative personnel.

5.2.6 Junior Achievement Croatia / Junior Achievement Central and Eastern Europe

Junior Achievement Croatia (JAC) is the national branch of Junior Achievement Central and Eastern Europe (JACEE), which in its turn is the regional branch of Junior Achievement International. In the project regarding Youth Companies BIP has co-operated with both JAC and JACEE. BIP sees JAC as the natural partner to secure institutional sustainability for the Youth Company project in the long run. The JAC is also an important partner in securing necessary contact with relevant national authorities, particularly Ministry of Education. However, presently BIP does not find JAC capable of sustaining the Youth Company project on its own. Thus, BIP has found it necessary to relate to JACEE to promote this aspect. The Junior Achievement concept emphasises the implementation of economic education programs for young people through partnership between business and education. Currently more than 135 000 students throughout 15 member nations participate in courses designed by JACEE.

Agderforskning

Part III:

Result analysis

6 Projects - objectives and results

BIP's activity in the Eastern Slavonia is divided into 7 different sub-projects. These projects are to some extent inter-connected, i.e. they are presented as parts of one main effort to realise the main objectives mentioned in chapter 3. According to BIP representatives the projects may more or less be seen as different phases in the sense that the activities to some extent overlap each other in time.

In the following section each project will be presented as follows: • technical data about the project

• details about the objectives

• strategies applied

• target groups specified

• partners of the project

• assessment of the project with respect to over all as well as specific project objectives.

The description of the projects will not be exhaustive as emphasis is on the findings and assessments. Furthermore, before we go on to describing the projects a comment on the identification and formulation of the projects is needed. Before planning and specifying the various projects in detail, BIP contacted local authorities and involved potential partners in discussions on actual needs and relevant approaches. Thus, the final project plans are results of co-operation and do not only represent the ideas of BIP. As far as we can see, this has been important in order to root the projects locally and we want to praise BIP for applying this approach.

Agderforskning

6.1 Project 1: Capacity building among persons from East Slavonia staying in Norway

Project 1

Capacity building among refugees from Eastern Slavonia in Norway

Project intentions

Prepare refugees for repatriation, business development in the region

Project conents

Course in business among refugees in Norway, follow-up training on how to start business in Croatia

Intentional target group

Particular professional categories of refugees from Eastern Slavonia in Norway

Actual participants

Refugees from Eastern Slavonia in Norway, regardless of professional category

Number of particiants

18 were offered to join, where as 10 actually participated

Partner(s)

UDI

Operator

BIP

6.1.1 Project objectives

The overall objective of this project is to enable Eastern Slavonian refugees to create a safe future when returning to Eastern Slavonia. Several secondary objectives have also been identified. Some of these are very broad in the sense that they are said to "contribute" to repatriation and stabilisation. Other so-called secondary objectives, however, rather resemble strategies related to the various stages in the project, than objectives in their own right.

In their project report BIP sums up their stated secondary objectives as follows:

• Ensure that information about the training is made available to a broad section of potential participants.

• Ensure a good selection process of participants.

• Individually adapted training, based on the experiences from the earlier mentioned similar project targeted at Bosnian refugees.

• Increase the competence of the individual participants.

• Contribute to repatriation.

• Contribute to the stabilisation of the economic and social situation in Eastern Slavonia.

	Agderforskning

6.1.2 Strategies

Apart from the fact that some of the so-called secondary objectives might be seen as strategies, the project was to consist of three consecutive phases with which various tasks were associated. In line with the two tier strategy described earlier, two of the phases were to take place in Norway whereas the third was to be accomplished in Croatia. Start up for the project was in June 1999. The three phases are described below:

• Identify and motivate people in Norway who wish to go back to OsijekBorovo-Vukovar area and create their own jobs.

• Qualifying the people identified in phase one to accomplish their projects.

• Follow-up course to give the participants more in-depth knowledge of how to start business in Croatia, including procedures for the registering of firms, legislation regarding start-up and management of businesses as well as tax legislation

The two initial phases were finalised during the fall of 1999. The last phase was finalised in Eastern Slavonia during the spring 2000 when 7 of the participants had returned to Eastern Slavonia. This phase provides close links with project 3. The rest of this section will concentrate on the first two phases, whereas the third phase will be more closely described when going into project 3 later in the report.

6.1.3 Target group

The target group of the project was initially specified as people planning on returning to Eastern Slavonia and belonging to the professional categories which were identified as the main target groups of the other projects to take place in East Slavonia, namely project 2, 3, 5 and 7 below. Thus, the project was originally to mobilise such professional categories as pedagogues, economists, health workers, mechanics, welders and the like. However, where as initially the target group was to be people with particular professions, in practical terms the recruitment process was broadened to cover all possible returnees to East Slavonia.

6.1.4 Partners

The main partner in this project has been the Norwegian Directorate of Immigration (UDI) (central and regional offices). The actual participants were drawn from 5 different governmental reception camps. The largest numbers of the participants were based at Stord. Furthermore, BIP felt that the man

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	Agderforskning

agement at Stord responded very positively to the project and the camp at Stord also had the necessary facilities for staging a training program for the group in question. Thus, for practical reasons participants form other camps were transferred to this camp for the training. In co-operation with the Ministry of Justice, UDI guaranteed that the refugees would be granted permission to stay until the training period was accomplished.

6.1.5 Findings and assessments

As far as the objectives and strategies of the project are concerned, participants, public authorities, partners and other local agents find the project highly relevant. The participants were in a desperate situation. The unemployment rate in the Vukovar region, which was the home region of most of the participants, is assumed to be up to 80 - 90 % Thus, the likelihood of achieving a position in either public or private businesses in the area upon returning was very slim. In this situation the objective of enabling returnees to set up their own business seems to be well founded and fully in line with the over all objective of BIP's activities. There is little doubt that for the participants as individuals as well as for the region as a whole, job creation is the primary goal.

In practice it turned out to be more difficult than BIP had expected to mobilise and motivate potential candidates. According to BIP this was due both to practical matters related to the communication between the regional offices of UDI and the relevant refugee camps, as well as more psycho-social reasons related to the state of the refugees and their unwillingness to return to Eastern Slavonia. Altogether 30 candidates were screened for possible participation in the course. 18 were defined as qualified and offered to participate. Of these 18 candidates, 8 did not take the opportunity. BIP claims that these candidates had left for Great Britain, been given false hopes by their lawyers that they might be allowed to stay in Norway, or had decided that under no circumstances would they return to Eastern Slavonia. In the end the total number of participants summed up to 10 and so far 7 of the participants have returned to Eastern Slavonia.

What ever reason, recruiting participants turned out to be more complicated than expected, and BIP were not able to choose between potential candidates, as they had planned. BIP claims that they had expected a larger number of participants and returnees, but the responsibility is to a large extent contributed to factors over which BIP has little or no control. We do not see the broadening of the target group as problematic, but more as a result of a realistic adaptation to the situation. We must, however, adhere to BIP's conclusion that the number of actual participants and returnees is fairly low.

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	Agderforskning

There is little doubt that some of the practical aspects affecting the recruitment of participants have been out of hand of BIP. Furthermore, there is little doubt that the group in question was a labile group of people and that this posed a number challenges. Nevertheless, we feel that the problems and time-consuming aspects of mobilising and motivating a highly labile group of people such as refugees should not come as a surprise to any organisation preoccupied with refugee work and repatriation processes. More effort and time should probably have been spent on the planning-, information- and recruitment processes. It is our opinion that BIP could have ensured more focused strategies and consequently a better mobilisation of potential participants, by drawing on key persons among the Croatian refugees in these processes.

When it comes to the contents of the course the feed back from the actual participants is fairly good. At the end of the sessions in Norway the participants were asked to fill in a questionnaire. The response was that in general the participants found the course relevant and motivating. This impression is to some extent supported by the impression from the interviews with participants that have returned to Eastern Slavonia, although some of the returnees that were interviewed pointed out that the content of the course was fairly well known to them beforehand. Furthermore, it is important to bear in mind that those who actually joined the course conducted the evaluation. Thus, it cannot be taken into account for the entire group of potential participants. Lack of relevance might be one reason for lack of response from potential candidates. Interviewing potential candidates who did not join the course was however outside the scope of this review. Thus, we are not in the position to judge whether or not this is actually the case. Nevertheless, a stronger emphasis on involving resource persons among the refugees in the framing of the actual contents of the course could have contributed to the mobilisation of a larger number of potential candidates.

One thing is the immediate response upon completing the course. Another is the assessment of the course in a longer perspective linked to the actual transformation of the business ideas and plans into actual businesses. The persons we interviewed in Croatia are generally satisfied with the follow-up course that they were offered at Center for Entrepreneurship (described in project 3). It is, however, also claimed that they feel that the expectations, which were created through the course in Norway, have not been fulfilled in the period that has elapsed since they returned to Eastern Slavonia.

The critique is particularly linked to expectations regarding possibilities of attaining credits for the realisation of their business plans. BIP points out that

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	Agderforskning

repeated delays with respect to allocations from NORAD also delayed the disbursement of loans to the projects even though several of the business plans were considered as viable. Furthermore, Norwegian as well as local representatives of BIP claims that none of the participants were promised loans at this point. This might be the case. The decisive factor is however not what BIP intended to communicate, but what the participants actually believed or was lead to believe. They were (and to a large extent still are) people in a desperate situation, probably willing to grasp every gleam of hope, maybe even "reading to much" out of an opportunity. Being the provider of aid and hope, one should take every necessary precaution not to promise too much. It is of utmost importance to ensure that what is said and done is not interpreted in a manner, which may create unrealistic expectations.

Whether or not the project could be said to have fulfilled the primary target of enabling the participants to create a safe future upon returning to Eastern Slavonia is so far hard to say. Rather few people actually joined the course and even fewer in fact returned. Thus, although the project has contributed to repatriation of refugees as stated in one of the secondary objectives, there is no doubt that the contribution is rather limited. Regarding the secondary objective of contributing to the stabilisation in the area, any effort, which may help alleviating the difficult employment situation in the area is positive. The objective is however so broad that trying to assess the actual contribution of this particular project would be a futile exercise.

Regarding the main objective however a more important aspect is that although more than a year has elapsed since their return to Croatia, the participants, whom we have spoken to, are still in the process of starting up their businesses. It seems likely that in the future they will be able to run their own business and that the contacts with BIP have contributed to this. So far, however, several claim that upon returning to East Slavonia they have been in a desperate situation with few sources of income. It is understandable that it is not possible to foresee all possible obstacles that might occur. However, by better planning and by going more closely into possible obstacles, some of the problems that the returnees encountered upon returning to Croatia probably could have been reduced. It is likely that the participants would have been able to engage in their businesses sooner or at least would have been better prepared for the delay that they encountered.

To conclude, the project regarding capacity building among persons from Eastern Slavonia staying in Norway is, as far as we can see, a highly relevant project. By focusing on the repatriation process and the creation of job opportunities in the war tormented areas of Eastern Slavonia, the project is both

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Agderforskning

in line with official UDI and NORAD policies. It is, however, our impression that more time and effort should have been directed at the initial planning-, information- and recruitment processes, as well as the planning of the actual return phase of the refugees. Thus, whereas there is little doubt that the project may provide a basis for developing similar initiatives for other groups of refugees, we do recommend that for eventual future projects more attention be paid to these factors.

We find that:

• The project is highly relevant, both with respect to the needs in the region and development objectives.

• Implementation of the project proved more complicated than foreseen.

• The number of actual participants was limited.

• Participant's plans, hopes and expectations are still unfulfilled.

• Most business start ups are still in the planning process

6.2 Project 2: Capacity building for business counselling in Eastern Slavonia

Project 2

Capacity building for business counselling

Project intentions

To build a competent environment for business

counselling in East Slavonia

Project components

Training of business counsellors, FRAM course

and follow-up counselling of SMEs.

Intentional

Professors, students and newly educated econo

target group

mists and the like, owners and managers of SMEs

Actual participants

Professors, students and newly educated econo

mists and the like, owners and managers of SMEs

Number of

20 counsellors and 12 companies

partici ants

Partners

SND, University of Osijek, Center of Entrepre

neurship

Operator

BIP, Center of Entrepreneurship

	Agderforskning

6.2.1 Project objectives

The objective of the project is basically stated by the name of the project: To build a competent environment for business counselling in Eastern Slavonia. The project concerns capacity building among potential counsellors as well as the actual training and counselling of SMEs. The intention is that through the counselling the project shall strengthen the capacity of the managers of small and medium scale businesses in the region, and thus contribute to making the businesses more competitive and profitable.

6.2.2 Strategies

BIP is or has been involved in both main phases of the project. The contents of the phases may briefly be described as follows:

1. Theoretical capacity building among future business counsellors (fall 1999/winter 2000): For the purpose of training of counsellors, BIP was allowed to use and adapt the FRAM-concept developed by the Norwegian Industrial and Regional Development Fund (SND). The training has been carried out in two workshops of two days each, supervised by Norwegian resource personnel.
2. Training and counselling of a group of SMEs (ongoing): In this phase the FRAM concept has formed the basis of the counsellor's training and counselling of the participant SMEs. In the project proposal BIP has stated that the environment for business counselling shall build on four pillars:

• Business leadership based on democratic principles.

• Strategies to ensure long term and focused business development.

• Quality in general and systems for quality control in the production of food in particular.

• Focus on health, environment and safety in the businesses according to Scandinavian principles.

The training takes the form of seminars and on the job training and counselling. The FRAM program will cover a period of 1,5 years. So far two of the scheduled six seminars (2 days/12 hours each) and ten of a total of hundred hours of on the job counselling have been completed. The focus of the latter has been on a situation analysis of the companies. Norwegian resource personnel have been responsible for the actual seminars but the counsellors have been granted an important role in translating and adapting the course to the local circumstances.

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	Agderforskning

Apart from providing the link to FRAM BIP's involvement in the project has been twofold: providing and financing resource personnel for the training of the counsellors and subsidising the training and counselling of the participant SMEs. Thus the participants have been charged a fee amounting to 4000 Hrk. BIP covers the remaining cost of 4000 Hrk through BIP Croatia. Thus, the counsellors receive a fixed salary of 8000 Hrk for their counselling. The idea has been to prevent the small businesses from withdrawing from the program due to high participant fees. Furthermore, it is believed that if participants in the first course see this as a success, other businesses will find it worth while to join the course on a non-subsidised basis.

6.2.3 Target group

The initial target group of the project consisted of masters' degree students and newly educated economists and other suitable professions, Ph.D. students and teachers connected to the Faculty of economics at the University of Osijek, as well as university teachers and economists presently staying in Norway. The primary target group of the project, however, consists of managers and owners of small and medium sized enterprises in the region. An essential condition for their participation being, according to the project plan, that they are obliged to participate in concrete activities in order to create multi-ethnic job environments in the firm.

6.2.4 Partners

As stated above, SND with its FRAM program has been an important partner in developing the contents of this particular project. SND has participated in the training and qualifying of counsellors and has made the FRAM materials available to the counsellors in their work with the actual firms. The contract between BIP and SND also states that BIP's network and knowledge of firms shall be made available to FRAM businesses in Norway, which seeks international partners.

Other important partners in this project have been the Economic Faculty at the University of Osijek and Center for Entrepreneurship. The Economic Faculty has been the base for recruitment of candidates to join the FRAM program as counsellors. Resource personnel at the faculty have recommended people for the course and included aspect of FRAM in the graduate program. The Economic Faculty has co-operated with the Center of Entrepreneuship, which has the administrative responsibility for the carrying out of the project.

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	Agderforskning

6.2.5 Findings and assessments

Eastern Slavonia is an area that for a long time has been dominated by large state owned companies. Thus, there has been very little encouragement of entrepreneurial spirit and there is no strong tradition for privately run small and medium sized businesses in the region. Many of the state owned companies are however now in the process of being privatised and/or are subjected to severe cutbacks in the workforce. The war has added to the problems by destroying production units and infrastructure and thus setting back production. In the future it is very likely that employment as well as value production to a large extent must take place in up-coming small and medium sized enterprises. In this perspective supporting the development of SMEs is a very important task. Thus, as far as we see it the project relates to the overall objective of BIP's activities and is highly relevant with respect to the overall conditions in region.

Evaluating the contents of the FRAM-concept is outside the scope of this review. Both resource personnel at Center for Entrepreneurship and the Faculty of Economics, as well as counsellors and actual participant SMEs, however, describe the adapted FRAM concept, which has been used in this project as relevant to the needs of the businesses. As the companies are still in an early phase of the program it is however too early to assess its actual effect upon the participant companies.

Counsellor training

About twenty people participated in the training of counsellors. Among these twenty, twelve have been engaged as counsellors for actual companies, whereas the rest participated in the training on a more observational basis. Whereas the latter group mainly has consisted of professors and other professionals at the university, the counsellors have mainly been recruited among graduate and newly graduated students, which is also in line with the stated goal. None of the counsellors have been recruited among refugees in Norway, the reason being the problems regarding the recruitment process described earlier and the fact that potential participants needed specific competence.
As the counsellors are fairly inexperienced, pairs of counsellors have been formed when working with the actual companies. This seems to be a wise decision because it enables the counsellors to exchange experiences and discuss concrete problems that may arise. Furthermore, by involving graduate and post-graduate students as well as building on existing institutions like the Faculty of Economics and Center for Entrepreneurship, the project has strengthened the links between the more theoretical and practical aspects of

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	Agderforskning

business development. By focusing on Center for Entrepreneurship for the carrying out of the training and counselling rather than developing and administering these aspects themselves, BIP has added a new aspect to the centre's activities and contributed to the strengthening the institution.

Whether or not Center for Entrepreneurship is capable of running all aspect of the FRAM-program without assistance of Norwegian resource personnel is questionable.
There is little doubt that the counsellors are interested and committed to their job. On the other hand they are young and have little practical experience from private companies. So far it seems as if the counselling works out quite well. It is however too early give an over all judgement of this aspect. We believe that the local partners may be capable of passing on the knowledge, which have been attained through the ongoing program. However, to ensure the continuos development of the program, the training of new counsellors should preferably be carried out by someone with a higher level of theoretical and practical experience than the actual level of teaching.

Whereas there is little doubt that the Faculty of Economics is theoretically competent, the practical component is still fairly weak. As far as we are able to judge, the Center of Entrepreneurship also lacks the type of senior person with sufficient practical and theoretical experience to ensure the continuos development the program. Thus, whereas there little doubt that both partners have benefited from the program and that they are capable of sustaining several of its activities, we feel that for all aspects of the program to be institutionally sustainable the senior counselling role has to be further strengthened. This can be achieved by various strategies and does not necessarily have to involve BIP. In this project BIP has introduced an approach and a set of tools for business development. In the future these aspects may be developed in co-operation with other Research and development institutes in Croatia and abroad.

Participating companies

The total number of participant companies in the FRAM training is 12. Originally between 30 and 40 companies were offered to come to the first meeting to learn about the program. 15 showed up and 12 took the opportunity to join. Many of these companies claim to have been motivated by the prospect of attaining business partners in Norway. Each company has been linked to one pair of counsellors, each pair of counsellors being responsible for two companies. The companies vary from 6 to 120 employees and from fairly newly established companies to companies which have been running for up to 12 years. All participant companies have their basis in the Osijek

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	Agderforskning

area and they cover a broad spectre of trades. Having no previous companies to refer to the number of participant companies seems to be in line with BIP's expectations. With respect to links with potential partners in Norway, these have however yet not materialised. The companies still hope for partners, but claim that they find the program relevant anyway.

When starting up a new and subsidised program it is important to get companies to join to produce results and to "sell in" the concept to potential regular participants.
This means that it might be necessary to accept that not all of these first companies are ideal for the program. At the same time, however, it is necessary to point out some questionable aspects in this respect:

• First, we question that FRAM-counsellors also participate in the program as managers of firms. So far this has happened on one occasion. There is no doubt that the participant in question is a young and interested person and as such has been a valuable contribution to the group of participants. However, this creates blurred demarcations between the various roles in the program and it also represents an untimely priority of limited resources. By being trained as a counsellor, the company in question should have been able to receive the necessary capacity building, without additional resources being spent on participating in the program. Thus, whereas this only concerns one counsellor/company in the project, this is a situation, which should be avoided altogether in the future.

• Second, one of the participants in the project is actually a state owned Natural park. Although some of the aspects of the FRAM program undoubtedly are relevant to public companies, the main focus of the program is on private companies and the main challenge in the area is to develop the private sector. BIP claims that the main motivation for including this company into the group of participants is to develop the park as an engine in the growth of tourism related private companies. Whereas this might be the case in the future there is little doubt that one still has a long way to go in this respect. We are not convinced that training the natural park manager in the FRAM-concept is the most efficient way of enabling small tourist related companies to develop. Thus, although we recognise the potential positive side effects for the private sector if the park develops, we question that the park is part of what should be the main target group of the FRAM-project.

• Third, it is always hard to judge whether one should direct ones effort towards the fairly successful companies or companies that are strug

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		Agderforskning

	gling. In the first case the potential for additional success is probably the largest, also when it comes to employment growth, whereas the companies in the second case are probably in even more need of professional assistance in order to survive. Our impression is that most of the companies in this project belongs to the first category. Furthermore, as they are all located in Osjiek, and thus not directly in the most war tormented area, they are all in a far better position than for instance companies in the Vukovar area. There is little doubt that business development in for instance in Vukovar, is a difficult task and that it may be hard to find companies which may have a fair chance of completing the FRAM program and of becoming success stories. Thus, it might have been wise to start out with companies in Osjiek, in order to get experience as well as establishing some "good examples" to motivate new potential participants.

• On the other hand companies in the Vukovar area are in even greater need of professional assistance. Whether or not the geographical focus on Osijek is correct depends on the perspective. From a business development perspective focusing on Osijek seems reasonable. From a perspective of helping the most needed, directing the effort towards Vukovar would probably be more correct. At the same time there is no doubt that this will reduce the chances of getting success stories and adversely affect the possibility of collecting participant fees. Thus, such a change of geographical focus will also affect the chances of ensuring financial sustainability and the project is thus most likely to depend on public assistance or assistance from other donors in the future.

To conclude, we find the focus of the project to be highly relevant in the sense that it focuses on the desperate need of strengthening the private sector as a source of employment as well as source of value production. The project has succeeded in qualifying a number of counsellors as well as mobilising companies for the participation in the program. Whether or not the project is financially sustainable in the sense that companies will be willing to pay the full cost of the training is too early to assess. Most likely it will to a large extent depend on the results accomplished with the first group of companies.

The institutional sustainability of the project is to some extent ensured by the Center for Entrepreneuship and their links to the Faculty of Economics at University of Osijek. It is however questionable if the local partners are fully capable of taking care of further development of particularly the training of the counsellors without additional assistant from senior personnel with both practical and theoretical competence.

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We also to some extent question the selection of companies. With respect to the type of participants we recommend a more careful selection process. With respect to the actual geographical focus this project illustrates the tension between what seems most efficient from a business development perspective and general principles of directing Norwegian development efforts towards the areas with the greatest needs. Whereas it is important to point to this potential conflict, it is outside the scope of this review to judge which strategy should be preferred.

We find that:

• The project is highly relevant to the situation.

• The participants and partners are positive and satisfied with the program.

• One has succeeded in qualifying counsellors.

• The project might be financially sustainable. The running of the ordinary FRAM training seems to be sustainable, but support is needed for the training of new counsellors.

6.3 Project 3: Contribute to the creation of small craft businesses

Project 3

Contribute to the creation of small craft businesses

Project intentions

Theoretical and practical capacity building,

Project compo-

Courses, access to credits and provision of equip

nents

ment and working capital, links to Norwegian trade

organisations

Intentional

Participants in project 1, and people of the same pro

target group

fessions in Eastern Slavonia

Actual

Participants in project 1, and people of the same pro

participants

fessions in Eastern Slavonia

Number of

9 selected by JCM + 7 returnees who also partici

articiants

pated in project 1

Partners

JCM, Center of Entrepreneurship

6.3.1 Project objectives

The primary objective of this project is to contribute to the creation of small craft businesses. The project description also states that the focus shall be on providing theoretical and practical capacity building and assisting the busi

	Agderforskning

nesses with equipment and working capital. Furthermore, it is stated that the intention is to contribute to the transfer of competence from trade organisations in Norway to similar organisations in Eastern Slavonia. The focus of this part of the project is to be on establishing professional competence, organisational development and the implementation of European standards.

6.3.2 Strategies

This project builds on project 1 regarding capacity building among persons from Eastern Slavonia staying in Norway, in the sense that the project in practice covers the third phase of project 1, regarding follow-up courses for the returning refugees. For this particular project BIP's project plan includes various activities and financial solutions at various stages in the project:

• In 1999 plans and materials for the training were to be developed in cooperation between the local training offices for the various professions and Buskerud University College (Hogskolen i Buskerud) in Norway. One seminar for each profession was to be held in Vukovar in cooperation with Joint Council of Municipalities (JCM) and the associated Norwegian trade associations and their local counterparts. The intention was that participants who had received the necessary training and who had completed the necessary formalities through the training period, should be allowed to apply for start up and working capital from the micro credit fund (project 4), which will be described in the next paragraph.

• In 2000 training plans and materials for the remaining four professional groups were to be developed, a similar seminar for each group was to be held and the qualified participants were supposed to be given the right to apply for loans from the micro credit fund. Additionally, a follow-up seminar for the professional groups, which received training in 1999, was to be held.

• In 2001 a follow-up seminar for the four last professional groups is to be held. Additionally Norwegian professional organisations are to be financially supported in order to enable them to continue the professional support and organisational development of local groups in Eastern Slavonia.

• In 2002 the support to Norwegian professional organisations is to be stepped down, and from 2003 the project is to be carried on without external financial support.

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6.3.3 Target group

As the project is linked with project 1, so is the target group. Thus, originally the target groups were to be returned refugees of particular professions as well as people from the same professions who already live in the area. Thus, in the original description of the project the focus was particularly on opticians, glaziers, tinsmiths, mechanics, electricians and plumbers. The project proposal also states that the participant should preferably be involved in a trade organisation. However, as the target group of project 1 was re-defined, so was the target group of this project. Thus, in practical terms the target group of this project too, was limited, and to a large extent came to be any potential entrepreneur with a viable business idea.

6.3.4 Partners

By being the institution that has taken care of the actual training of the potential start-ups (among the returned refugees as well as the domicile population) Center for Entrepreneurship has been granted an important role in this project. Joint Council of Municipalities (JCM) is another important partner. JCMs close link with the municipalities gives the organisation an advantage in the search of good candidates for the training, particularly among the Serb community. JCM has also provided the premises and taken care of practical matters regarding the training.

As stated above the intention in the project was that relevant training offices and trade organisations in Norway as well as the Buskerud College were to be important partners. Local trade organisations in Eastern Slavonia were also to be included in the project. So far Ostfold Motor Trade Association has been involved as a partner in the project in the sense that the organisation has been granted a role in the provision of trade specific training for car mechanics. Except for this partner however, as far as we have been able to establish, none of the other partnerships have actually materialised.

6.3.5 Findings and assessments

Due to the difficult employment situation in Eastern Slavonia and the Vukovar-Borovo area in particular it is an important task not only to assist already existing SMEs, but also to encourage the establishment of new ones. Thus, any effort that may assist returning refugees as well as the domicile population in starting up their own businesses is very welcomed and relevant. The intentions of the project are also well funded in the overall objective of business development and job creation.
So far in the project a follow-up course focusing among others, on accounting and tax legislation for the returned refugees and other potential entrepre

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neurs has been conducted. JCM interviewed twenty-five potential participants with various business ideas and nine were offered to participate. Of these four were in car mechanics and related professions and there was one participant in each of the following professions: accounting, chicken farming, milk-, honey-, and shoe production. Additionally seven refugees who had also participated in project 1 in Norway participated. Thus, as with the formerly described projects, the target group of this project seems to have been re-defined from the intended craft professions. Thus, rather than focusing on original plans, recruitment has been based on actual interest among potential participants.

The participants with whom we have spoken, seem to judge the course as quite relevant. Furthermore, by completing the course the participants have also fulfilled one of the conditions for receiving credits from the micro credit fund, which will be the focus of the next paragraph. This seems to have be an important motivation for the participants, in addition to the prospects of receiving equipment from Norwegian trade associations.

Apart from the course described above four of the participants, and to some extent their families, have been enrolled in a course, which focuses on car mechanics and related professions. This course was conducted in March 2001 in co-operation with Ostfold Motor Trade Association. The association has volunteered to contribute in the collection of used equipment, which is to be donated to the actual start-ups. The participants in the course have described it as useful. So far they are still in the process of starting up. Two of them have been granted loans from the micro credit fund described below. Whether or not they will actually succeed in establishing a sustainable company, is yet to be proved. At this point however, there is reason to underline that all of them put a lot of faith in what they see as a promise of donation of equipment. We fear that this can be another occasion on which there could be a gap between realities and expectations and we recommend that remedial action be taken to avoid this from happening.

With respect to the other participants in project 3, none of these have so far actually established businesses. One of them, an accountant has been offered occasional jobs for BIP and expects to be able to do accounting for some of the car mechanics and hopefully also for other recipients of micro credits. She relies however on more honorary work to be able to establish her own business.

To conclude, except for the activities and results described above none of the originally planned activities have been accomplished. Thus, it is our general

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impression that progress has been made at a slower pace than anticipated and with respect to the actual results of the project these seem so far scarce. The activities that have actually been accomplished seem to be relevant and receive fairly good evaluations by the participants. The actual number of participants is however low. One reason for this is, as BIP points out, that the solvency of the local market is very poor. This makes it difficult for any one with a business idea to find a ready market. The low number of participants may also relate a widespread attitude that donor assistance should be free of obligations. On this background BIP's focus on following up those who have actually proven willing to engage in capacity building activities seems reasonable. However, at this point it is still hard to judge to what extent they will actually be able to establish sustainable businesses.

We find that:

• The project is highly relevant to the general situation in the area.

• The actual number of participants is fairly limited so far.

• Great expectations with respect to anticipated results, but too early to assess.

• The original plans have yet not been accomplished.

6.4 Project 4: The establishment of a micro credit fund

Project 4

The establishment of a micro-credit fund

Project intentions

Assist the development of small craft enterprises

with few alternative sources of credit

Project components

Establishment of a fund, providing access to credits

on soft terms

Intentional

target group

Participants in project one and two (compulsory

training of recipients of credits)

Actual participants

Participants in project one and two

Number of

recipients

4 loans are granted of which 3 have been disbursed
and 1 lacks sufficient mortgage. 1 borrower is still

under appraisal.

Partners

NOA, Centre for Entrepreneurship

Operator

NOA

	Agderforskning

6.4.1 Project objectives

The main objective of this project is to establish a business development fund, which is to be spent on micro credits to companies in the OsijekBorovo-Vukovar area. The aim is both to create profitable enterprises as well as to ensure the viability of the fund.

6.4.2 Strategies

In order to ensure both profitable enterprises as well as the viability of the fund, capacity building among the recipients of loans is emphasised. Thus, the kind of theoretical and practical training described in project 3 is a precondition for attaining credits. Furthermore, the strategy is on the one hand to make the conditions for the loans soft with respect to repayment and interest rates. On the other it is to ensure security for the debt and make sure that proper routines for supervising the borrower are established. The intention is to gradually increase the funds in order to achieve a minimum level of NOK 2 millions over a three years period. In 1999 the strategy was to distribute loans to a minimum of 8 to 10 enterprises.

6.4.3 Target group

Craftsmen, who lived in Norway and joined the training described in the first project, are to be given primacy. However, local craftsmen who have gone through the necessary training locally, may also receive loans. On the other hand, in the project proposal it is stated that these craft businesses should represent a possibility for several employees in order to receive micro credits. The last group of possible recipients is small local businesses in which the managers have received training and in which the micro credits may represent a possibility for an increase in number of jobs in a multi-ethnic environment.

6.4.4 Partners

The Bosnia project according to the Ostfold-model was a central agent in the establishment of a similar fund for micro credits in Bosnia called "the Loan Fund Foundation for business development in former Yugoslavia". Although the fund in Croatia is judicially completely detached from the fund in Bosnia, the two funds co-operate closely.

Since there are many formal constraints in the process of becoming a credit institution in Croatia, one decided to let an already approved institution cater for the practical matters concerning credits and repayments. Since NOA already had experience in the field of micro-credits this institution was chosen

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as the main partner for BIP's micro-credit project. The Loan Fund Foundation for business development in former Yugoslavia was on the other hand given the responsibility for the establishment of criteria for repayment and supervision.

6.4.5 Findings and assessments

Finding sources of credits is very hard for the type of entrepreneurs that the micro-credit fund is directed at. On the one hand this is due to the conditions set for loans to be granted. On the other, it is due to the conditions regarding interest rates and repayment, which usually is outside the scope of small and vulnerable start-ups. Thus, whereas capacity building among potential entrepreneurs is of great importance, there is little doubt that access to credit is a precondition for being able to realise business ideas. In this context the emphasis on establishing a micro-credit fund seems well founded.

Using NOA as an already established micro-credit institution seems also to be a very reasonable strategy in order to overcome formal obstacles. There is little doubt that NOA is an experienced institution in the field and as such quite capable of handling the micro-credits for BIP. Furthermore, as NOA already had links with Center for Entrepreneurship as a provider of training of NOAs beneficiaries, involving NOA in this project has been a way of building on and strengthening an already established relationship.

According to BIP the opening up for applicants to apply for loans from the micro credit fund was somewhat delayed mainly due to delays in the actual allocation of grants from NORAD. Instead of starting up in 1999 as originally planned, start up was postponed to the autumn 2000. Since then a total number of four persons have been granted loan from BIP through NOA. The actual disbursement of the loan to one of these has been delayed due to lack of mortgage. Additionally one application for loan is handled at the moment. Three of the five persons that have been granted or are in the process of being granted loans from the fund are returnees from Norway. Thus, the progress with respect to disbursement of loans seems to be a little behind BIP's original targets.

The maximum amount of credit granted is 24 000 Hrk, the average loan being about 12 000 Hrk. BIP has succeeded in making the terms on their loans softer than for other loans administered by NOA. Thus, for BIP loans the interest rate is set as 10 per cent, there is a 6-month grace period and a 3-year repayment period, and there is a demand for either mortgage or guarantor.

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	Agderforskning

The recipients that we have spoken to, generally find the terms on which they have been granted a loan to be though, but acceptable. Furthermore, they are fully aware that getting loans is hard and that the chance of getting better terms elsewhere is very slim. Several recipients claim that they are in a desperate situation and that they have very little option other than accepting the terms and try to make the best out of it.

It is obvious that in order to make the fund sustainable in the long run it is important to avoid an expectation of the loans as a free gift or grant to develop. However, although the conditions attached to the loans are among the best available, when taking the situation in the area and the vulnerability of the credit seekers into account, the terms attached to the loans seems though. Apart from the fact that one of the returnees have had problems fulfilling the condition of mortgage or guarantor, among those who have received loans most of them see the repayment period as the hardest condition to accomplish. Several respondents are afraid that they might not be able to fulfil this obligation. Whether this fear is well founded or not, is too early to say as most of the borrowers are still in the process of starting up. Only to a limited degree have they started to repay their loans.

The first years of operating a company are in general the least profitable both due to investment costs as well as access to markets. Experience indicates that it often takes more than five years before a company is fairly economically solid, the period increasing when operating under difficult general conditions. The respondents who are involved in running the micro-credit fund, claim that they are well informed with respect to companies and people who are granted loans. On this basis they are capable of making exceptions from the terms if they see that a normally conscious borrower has problems with the monthly repayment. Thus, for practical reasons the problem of repayment period might not be so grave. It seems, however, that formalising a longer repayment period would have been advisable in order to alleviate the difficult start up period.

Thus, to conclude this section, we do find the micro-credit project to be an important contribution to business development in the area. The building up of the fund seems to be progressing fairly well in line with the intentions in the project. Today the size of the fund amounts to 1 420 000 NOK. The fund is in practice a five-year deposit free of interests. The board of the Loan Fund will decide what will happen with the fund upon BIP's withdrawal from the region. Taking into account the professional management of the fund provided by NOA, it is however our impression that the fund should also be sustainable in the long run.

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Today BIP covers the fund's administrative costs. Whether or not it will be possible to keep the same terms with respect to the credits when BIP withdraws is unclear. Furthermore, as the recipients of the loans are still in the process of starting up their businesses it is too early to assess whether or not the objective of creating profitable enterprises will be reached. Our impression is however that NOAs knowledge of the potentials of the various borrowers is good. Thus, when connected to the provision of business training and follow-up counselling, we feel that there is a fair chance that the persons who have managed to fulfil the terms for receiving loans will succeed in establishing sustainable companies, despite what might seem as rather though conditions of repayment.

We find that:

• The project is highly relevant.

• The fund is operated by a competent institution.

• The terms on which the loans are granted are among the best available, but still tough for its recipients.

• It is likely that the project will be institutionally sustainable, whether it will be financially sustainable will depend on the borrowers' ability to repay.

6.5 Project 5: Capacity building for the support of Youth Companies

Project 5

Capacity building for the support of Youth Compa

nies

Project intentions

Supporting the establishment of Youth Companies

Project content

Training of teachers in the Youth Company pro

gram. Implementing the concept in secondary

schools in the area.

Intentional target-

Teachers and pupils

group

Actual participants

Teachers and pupils

Number of partici-

10 teachers and approx. 60 students

ants

Partners

Center for Peace, Secondary schools, JAC, JACEE

Operator

Technical support: Center for Peace, training of

teachers: Norwegian partner

	Agderforskning

6.5.1 Project objectives

According to BIP's description of the project the aim is to develop a milieu, which may function as a pool of competence and encouragement for teachers and pupils in secondary schools in the establishment of Youth Companies. It is also a stated goal to increase competence in modern information and communication technology as well as to establish links between new and established youth companies and schools both regionally and in Norway.

6.5.2 Strategies

To reach the stated goals the intention is to build on, and locally adapt experiences with youth companies in Norway. Thus, materials for use in the training was supposed to be translated and adapted for Croatian purposes. Furthermore, BIP emphasised the building up of available technical infrastructure to conduct computer training. This training was to take place in a designated place available for all potential participants in the program.

Training of teachers was to take place prior to the start up of the program. One school was to be enrolled in the project in 1999. The intention was to broaden the project with one more school in 2000. From the year 2001 the intention is that several schools shall apply for the Youth Company program. It is expected that the schools will communicate, exchange experiences and trade with each other and with other European youth enterprises, without financial assistance of BIP.

6.5.3 Target group

The target group consists on the one hand of teachers who have been refugees in Norway as well as teachers in secondary schools in Eastern Slavonia, and on the other pupils in the secondary schools in the area.

6.5.4 Partners

Center for Peace in Vukovar is granted the role of co-ordinator for the project. The centre also provides the premises for the initial training. BIP has provided links with the founder of the Young enterprise concept, who has been responsible for the actual training of the teachers. Other partners in this project are the Association of Youth Companies in 0stfold and the Junior Achievement program in Croatia. The latter is seen as the natural partner to promote the concept as part of its general work when BIP pulls out of the area. However, as previously mentioned, BIP does not trust that JAC is fully capable of sustaining the activities at the moment and thus BIP has involved

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JAC's mother organisation, JACEE, as a partner in the program. Additionally, the involved secondary schools are of course important partners.

6.5.5 Findings and assessments

Changing attitudes among the grown up population is generally considered more difficult and time consuming than among the younger sections. Thus, in an area where for a long time there has been very little focus on entrepreneurship, it is important to mobilise young people. In this context the focus on teachers and students that is applied in the Youth Company program is important. Furthermore, the unemployment situation implies that upon finishing secondary school in one or two years time, many of these youngsters will have to be self-employed. Thus, by giving young people a basis for starting their own companies the intentions of the project also supports the overall goal of business development and job creation.

So far six teachers have participated in a two-day seminar in which they have been trained in the Youth Company program in Vukovar and another seminar has recently been conducted with the same number of teachers in Osijek. Two teachers and the co-ordinator at Center for peace have also participated in a seminar regarding the Youth Company concept in Zagreb. The teachers we have spoken to claim that they found the training provided by BIP interesting and that they are eager to adapt the program. Two schools in Vukovar, one technical and one focusing on service professions, have been enrolled in the program. Another two schools from Osijek are to be enrolled from the beginning of the next school year.

So far, however, the ideas in the concept have not been fully implemented and the training of students has not yet become a part of the ordinary school activities. The main reason is that the agreement between JAC and the Ministry of Education with respect to the program has not yet been signed and the schools do not want to adapt the program unless the formalities have been sorted out. Furthermore, the translation and adaptation of the written materials to be applied in the program have not yet been finalised. BIP expects to overcome these obstacles and implement the entire Youth concept program in the schools next school year. Up to now, however, the training has primarily focused on the initial phase of developing ideas for companies and students as well as teachers participating in the program have been doing this as an additional and voluntary activity outside the regular school hours. Some students, however, have also started developing prototypes and producing actual products and one Student Company participated in the international Youth Company fair in Stavanger earlier this winter.

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	Agderforskning

Computer classes have been the most important tool in the initial phase of the project, all Youth Company activities being carried out by applying modern information and communication technology. Thus, attaining computer skills is an integrated part of the Youth Company training. The actual computers and furniture has been provided by BIP, and BIP also pays the computer teachers on an hourly basis. Competent teachers have be engaged locally, and is paid on hourly basis. Up to now about 60 students have been involved in the computer based training.

The training has been covered in a three-week period and the students generally assess the program as interesting and useful. They also claim that they are eager to go on with the program. A major problem is however to coordinate the training with ordinary schoolwork. The students participating in the program have different school hours and not all students who would have liked to are able to attend. Furthermore, as the program is still not regarded as a school activity, computer classes have to be held at Center for Peace. This implies that both students and teachers have to travel a fair distance to attend the classes.

As an intended side effect of the Youth Company computer training, a general computer course directed towards grown-up participants from the area has been developed and offered on a non-profit basis. Teachers are the same as mentioned above. Originally the course was not a part of the project plan. Approximately fifty students have either accomplished or are in the process of accomplishing this course and there is a long waiting list of people who are eager to join the course. As far as we see it, this is a very reasonable utilisation of available personnel and computer resources, although considered a minimum solution by the teachers. The project gives the inhabitants an opportunity to acquire necessary computer skills for present or future needs, as well as giving them a meaningful and relevant activity to engage in. Despite the ideal being a more in-depth course, at this point it seems reasonable to offer a basic course to a broad spectre of participants rather than providing a more thorough training for a smaller number of recipients.

Despite the achievements described above, the project regarding Youth Companies have not progressed as anticipated. One has not been able to complete the adaptation of the program or to try out the full contents of the Youth Company concept. Only two schools have been enrolled in the program so far and the anticipated co-operation with Norwegian schools, through the association of Youth Companies in Ostfold County, is yet to be established. It seems as if one will be able to run the whole program, using Croatian material, inside the approved Youth Company schools from the be

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		Agderforskning

ginning of the next school year. Thus, the expansion of the program with respect to number of schools and activities to be included is expected to materialise. Nevertheless, the project is roughly estimated between half a year and one year behind schedule.

The problems with respect to the progress in the project have to some extent have been outside BIP's control. It is, however, our opinion that by investing more time in the planning process some of the obstacles could have been revealed at an earlier point and remedial action could have been taken. The actual computers applied in the training are owned by BIP. Our experience with Center for Peace indicates that the centre is institutionally capable of running the computer courses if they get access to these computers. People with knowledge of computer training are available locally. The problems when BIP pulls out might, however, relate to the ability to pay the teachers. The entire Youth Company program seems neither to be institutionally nor financially sustainable at this point. At this point JAC does not seem capable to run the project on its own. Thus, the project still relies upon BIP assistance as well as assistance from JACEE. The BIP project leader emphasises the need for follow-up assistance and the establishment of a local network of schools, but is confident that the project will be sustainable in the long run. Whether or not this will actually be the case is, however, too early to assess.

	We find that:

	• The project is relevant to the needs in the area.

	• The project is about one year delayed compared to original plans.

	• Partners, teachers and participating pupils, assess the project positively.

	• Computer classes for ordinary people are an important and highly relevant spin-off from the project.

6.6 Project 6: Access to the Norwegian market for companies from Eastern Slavonia

This project was originally planned as part of the BIP project portfolio. Focus was supposed to be on the opening up of international markets for Eastern Slavonian companies. The idea was to create linkages between enterprises in Eastern Slavonia and Norway or other Scandinavian countries in

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	Agderforskning

particular. In 1999 the project was to finance visits of Croatian companies to Norway and the participation of two Norwegian companies on a business trip to Eastern Slavonia. In July 2000, however, the Norwegian Export Council opened up an office in Zagreb. On this background BIP decided in accordance with NORAD that the contact between Norwegian and Croatian companies was also to be catered for by the Export Council. It was decided that the contact between a Norwegian orthopaedic shoo company and a small shoe producing company in Borovo was to be taken care of by project three above. So far contact has been established, but no formal agreement has been signed. Thus, whether or not this relationship will materialise in an actual contracts is too early to judge.

It was also decided that companies participating in the FRAM program (project two above), which might were interesting partners for Norwegian FRAM-companies, were to be forwarded to the Export Council. The prospect of business partners in Norway was also an important motivation for the companies, which joined the program. Up to now, however, no such contact has been established. Other contacts between Eastern Slavonian and Norwegian companies are linked to the entrepreneurial training of start ups catered for by Center for Entrepreneurship, but these are few and are all in a very early and informal phase.

To conclude, the original strategy to promote Eastern Slavonian companies' access to Norwegian markets, was abandoned and the project targets were sought through other channels. So far however, although contact between a few Eastern Slavonian and Norwegian companies has been established, as far as we have been able to uncover, the general aim of this project is yet to be accomplished.

6.7 Project 7: Re-employment of war causalities and other handicapped people

In accordance with NORAD and co-operation with local partners, the contents and arrangement of this project has been reduced compared to the original plans. In this review we will focus on the revised project. Upon the completion of our fieldwork BIP initiated another activity under this project, namely BIP Optika. As this activity was not operating at the time when we visited Croatia we have omitted it from the review beneath.

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Agderforskning

Project 7

Re-employment of war causalities and other

handicapped people

Project goal

Training and re-employment

Project content

Training in video production and ceramics

Intentional

target group

War causalities and other handicapped

Actual participants

War causalities and other handicapped

Number of

partici ants

9 (video production) + 8 (ceramic production)

Partners

Center for Rehabilitation, the Slavonian Museum

in Osijek and the County Labour Administration

Operator

I Center for Rehabilitation

6.7.1 Project objectives

The overall goal of the project is to engage in re-employment of people suffering from physical injuries and mental traumas due to the war, as well as other handicapped people. On a short time basis the intention is to offer them a more active and rewarding life through adapted training programs.

6.7.2 Strategies

The main strategy of the project is to provide adapted training, including the provision of equipment. Building on local competence and the interests of the recipients, it was decided to focus on two particular professions. Originally the project was more extensive, but in relation to the plans for the year 2000 it was decided in accordance with NORAD to reduce the project, focus on a limited number of activities and emphasis phase out plans. Thus, one focus of the training is on production and sales of ethnic souvenirs and handicrafts based on traditional production methods, particularly ceramics. The other is on video production and sales.

Handicraft production as a strategy was chosen due to its long tradition in the area, an expected increased demand for this type of products and the assumption that an increased number of tourists will open up new markets for these products. Video production, on the other hand, was chosen as a strategy due to an anticipated demand for more professional video productions of various occasions such as weddings, baptising etc. BIP's main role in the project is to provide the project with a professional video camera and equipment for ceramic production. For the video production BIP has also provided professional assistance from Norway. Furthermore, according to the revised plans, the ceramic as well as the video production was to be linked to professional business training at the Center for Entrepreneurship.

	Agderforskning

6.7.3 Target group

The target group of this project is as stated in the objective, handicapped, maltreated and war injured people, refugees, persons suffering from mental illness etc.

6.7.4 Partners

The main partner in the re-employment project is Center for Rehabilitation in Osijek, which is a well-established institution in the field of medical and mental rehabilitation and re-employment, and as such has a professional foundation on which to build the project. The centre has the local responsibility for the management of the project. For the ceramic production the Slavonian Museum in Osijek is an important partner when it comes to providing drawings and description of old traditional handicrafts and the development of traditional production techniques.

6.7.5 Findings and assessments

There is no doubt that there are many people who suffer from physical injuries as well as mental traumas as a consequence of the war. The reintegration of people into the workforce may contribute to the recovery process. Due to the employment situation in the area reintegration into previous jobs is likely to be very difficult. In this context it is understandable that emphasis is on re-employment into new jobs. Thus, as far as we can see the objective of the project is relevant to the general situation in the area. The objective also relates to the general objective of business development and job creation. The link, however, seems to be less direct than for most of the other BIP projects. This is due to the fact that the participants also need general rehabilitation and that they are trained in professions that for the most part are new to them.

So far nine persons have been involved in the video production. These persons were selected among a total of thirteen applicants on the basis of genuine interest and competence. Most of the participants had some practical experience in the field prior to the training program. The group has participated in a practical course in video production supervised by Norwegian resource personnel. It is a general opinion among the involved persons that local resource personnel are not available for this type of training. The training has been arranged as two workshops of seven days each. Additionally, three persons from the group have participated in the business training at Center for Entrepereneurship.

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	Agderforskning

With respect to the ceramic production 8 persons are participating in the program. A local professional has been hired on an hourly basis to conduct the training. The course is to be covered in a five-month period and consists of three hours of training twice a week, the total number of hours being about 120. At the time of our visit the program was in its third month. As opposed to the video production, none of the participants in the ceramic productions have so far participated in the business-training program.

Professional video and ceramic production are complicated and demanding tasks that, in addition to practical and theoretical skills, also require a certain amount of talent in order to become successful. Furthermore, our general impression is that the training proposed is far from sufficient when it comes to providing the participants with the video production or ceramic skills needed to make a profession from it.

At the time of the fieldwork we judge the problems with respect to the quality to be a little less grave for the video than for the ceramic production. This is due to the fact that on the one hand some of the participants have some experience in the field. On the other private families is emphasised as one of the potential markets for the video services and there is a chance that this market is less demanding than for instance television or film production when it comes to quality. With respect to both video and ceramic production the extensive network between the various BIP partners and contacts has ensured a certain interest for the products. To us, however, there seem to be a long way to go before skills meet the necessary level of quality to make the products saleable on a larger scale on a competitive market. It is outside the scope of this review to say something about market potential for the products. However, there is little doubt that getting access to larger markets will also require a certain amount of marketing skills and investments.

Although we question the ability to create sustainable companies on the basis of the project, there is no doubt that the activities have contributed to a more meaningful and active life for the participants. Thus, the intentions of the project are to some extent fulfilled. Future video and ceramic production, even on a non-professional basis, will however depend on the transfer of equipment ownership from BIP to local partners. Provided this transfer is done we assess the Center for Rehabilitation as a competent partner to cater for the non-professional, therapeutic training in video and ceramic production. But as far as professional training is concerned, training exceeding the planned five months is needed.

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		Agderforskning

We find that:

• Re-employment of war victims is desperately needed in the area.

• The project has been a success with respect to activating a vulnerable section of the population.

• The training is insufficient to make the participants professionals. We question the chances of establishing sustainable companies, particularly among the ceramic producers due to insufficient production skills.

• The project is neither financially nor institutionally sustainable today. Future sustainability depends on further training and assistance in both production and marketing skills

	Agderforskning

7 Overall assessment and recommendations

The overall assessment of BIP's engagement in Eastern Slavonia is positive. The reasons for this conclusion are as follows:

• BIP turned to the university in the region, regional and local authorities in their search for relevant partners.

• Relevant agents in the region were involved in the planning of the projects, which is probably one major reason why the local ownership of the projects seem good and the content of the projects is well rooted in actual needs in the region.

• BIP's partners, individuals as well as institutions and organisations, are generally highly competent and accommodating, and capable of combining social commitment and business skills.

• Local partners have wide networks including authorities, NGOs and educational institutions outside as well as inside the region.

• The local partners also have good knowledge of and relations with the target groups in the projects.

• BIP's approach is concrete, result oriented and open to partners' needs. BIP consultants are adaptive to local conditions.

• Consultants are paid by the hour. Thus, costs are not frozen and reallocation of funds is possible.

• Several projects have brought about voluntary contributions from locally involved persons. This may be seen as prove of the projects' relevance and of the local partners' positive judgement of the projects, as well as of BIP.

7.1 Partners' assessment of BIP

Partners who have decided to co-operate will most probably judge each other favourably. Furthermore, one may expect that partners depending on donations from the other will be even more positive. Despite this we find partners positive assessment of BIP to be well funded and thus also valid. BIP's approach is claimed to be straightforward and accurate, and partners feel that the foundation keeps it promises.

Traditional assistance to the region has focused on humanitarian aid and several partners point to the need for an expansion of this perspective in order to

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	Agderforskning

promote a self-sufficient and sustainable development in the region. It is emphasised that the difficult unemployment situation in the area implies that private sector development and job creation are crucial both as means to economic development and ethnic reconciliation. On this background partners consider the contents of BIP's projects, as well as the fact that many of BIP's consultants are businessmen, as favourable and adding a new dimension to the development efforts in the region. Furthermore, partners point to the fact that after the war the region flooded with international NGOs that came to investigate possible needs and asked for help in planning projects. BIP is judged as one of a rather limited number of organisations that actually listened to their recommendations and returned to implement the ideas that had been discussed.

7.2 Concerns and recommendations

Despite the overall positive conclusion, we have some questions and concerns and, based on these, also some recommendations for future activities:

• More thorough planning: We feel that some of the obstacles that BIP has encountered in their projects could have been avoided if the foundation had invested more effort in the planning of the projects. This applies to the mobilisation of a larger number of participants in some of the projects, but even more important to the overcoming of formal constraints. Development agents must be trusted to be able to take the necessary precautions, perform thorough base line studies and planning. Before involving aid agencies, donors, partners and not to mention recipients, one should be well aware of the laws, regulations and other strings that may limit or otherwise have adversely affect on the projects. BIP has not paid enough attention to this aspect. BIP to some extent blames the delays in the projects on late incoming allocations from NORAD. There is little doubt that this aspect creates an unpredictable situation, which may contribute to the undermining of partners' and participants' confidence in the project. Furthermore it is likely that small NGOs with few other sources of income, such as BIP, will be particularly adversely affected. Although this is not an ideal situation, at the same time it is an established practice that all NGOs are facing. Thus, it should not come as a total surprise to BIP and the organisation should take it into account when planning their activities.

• Avoid unrealistic expectations among participants: In some instances participants have acquired expectations that have not been fulfilled. Many of the participants are people in dire straits, probably willing to

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	grasp every gleam of hope, maybe even "reading to much" out of an opportunity. Working in a war-ridden area BIP should have been prepared for this. The decisive factor is not what BIP intended to communicate, but what the participants were lead to believe or actually believed. Being the provider of aid and hope, one should take every necessary precaution not to promise too much.
• *Careful selection of participants:* Recruiting "correct" participants to projects implies that many concerns must be taken. The re-definition of target groups that BIP has done may seem reasonable all eventualities considered. But as concluded above, it can also be a result of poor planning. The geographical focus on Osijek as opposed to for instance Vukovar in some of the projects may be questionable in a poverty / most-in-need perspective, but reasonable from a business perspective. Furthermore, the focus on fairly well functioning companies as opposed to more vulnerable ones may be subjected to the same type of considerations. Whereas we do not judge BIP's approach as correct or incorrect, we feel that the applied focus and its implications should have been debated properly with NOR-AD prior to project start-up.

	With respect to the selection of participants in the project plans BIP also emphasises the multi-ethnic aspect of the projects. This is however another consideration, which as far as we are able to judge, has received less attention than anticipated. Our general impression is that whereas both communities are represented in the totality of projects, within each project one community tends to dominate. Asking for people's ethnicity is difficult and something that might even contribute to the cementing of differences. Nevertheless, in the reconciliation process it is important to create situations where the two communities actually meet and relate to each other in a constructive manner. Business development projects such as the ones that BIP is engaged in should play a role in this respect. Furthermore, local co-ordinators do have a fairly good overview when it comes to people's ethnic background. Thus, we feel that it would have been both desirable and possible to promote a more active multi-ethnic recruitment process. However, we recognise that this is a highly sensitive and problematic issue.
• *Targets should be realistic with respect to project period (or the other way round):* Working in a war-ridden area, unforeseen incidents should be expected. Thus, it should not come as a surprise that it takes longer to accomplish goals than what would be expected if working in for instance Norway. Furthermore, successful business development and private sector job creation in the area imply that well-established structures must be changed. This requires a long term perspective. On this background

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		Agderforskning

	BIP seems to have been a bit too ambitious with respect to what may be accomplished within the planned project period. As far as we are able to judge, to become financially and institutionally sustainable, most projects need further assistance beyond the originally planned project period. The projects, which have been started, need to be finalised in a proper manner despite the delays and obstacles. Participants in the projects are generally in a very difficult situation and many of them rely on the projects for a better future. If BIP's involvement is phased out before financial and institutional sustainability is secured, vulnerable participants will be the suffering party.

7.3 Concluding remarks

Despite our critical remarks, we find BIP an important partner in development work. They are open-minded and sensitive to local partners and needs, and they offer relevant, concrete and result-oriented assistance. BIP can be seen as a change agent that initiates ideas and concepts, and encourages local partners as well as project participants to further development.

Agderforskning

Annex: List of people who have been interviewed

Name

Institution / participant

ion Steinar OstgArd

BIP

Per War Lid

Royal Norwegian Embassy

Oddbjorn Pettersen

Norwegian Export Council

Arne Pran

Wiggo Andersen

Ostfold Motor Trade Association

Christer Engstrom

The Association of Youth Companies

Ole Hald

FRAM

Wiggo Slaattsveen

Private consultant

Oyvind Henanger

OSCE

OSCE-representative in Vukovar

OSCE

Giggi Langfeldt

Privat konsulent

Jagoda Bilic

Indre Osfold Industries a/s

Ljubomir Mikic

Center for Peace

Boris Lane

Center for

Entrepreneurs hip/participant

Suncica Oberman

Center for Entre reneurshi / artici ant

Slavica Singer

Faculty of Economics, University of Osijek

Milos Vo'novic

Joint Council of Municipalities

Gordana Marinkovic

Joint Council of Municipalities

Ivan Sudar

Count Labour Administration

Damir Junusic

Center for Rehabilitation

L'erka Tonkovic

Center for Rehabilitation

Mladen Radic

Slavonian Museum

Vlasta Sabic

Slavonian Museum

D'okic Dusan

Participant

Stankovic Bozidar

Participant

Dra un Jovica

Participant

Gordana Marinkovic

Participant

Slobodan Stojinovic

Participant

Gordana Ditko

Participant

Gordana Rakic

Participant

Miroslav Karan

Participant

Milenko SIjukic

Participant

Damir Ivanovic

Participant

Larisa Medic

Participant

Ismet Mehicic

Participant

Zeljko Cernic

Participant

Melita Mihajlovic

Participant

Participants in the Youth Company Project and in the computer classes

	Agderforskning

Research and Development Information

Title Review of Business Innovation Programs' projects in Croatia

Project number 23000136

Assignment title Review of Business Innovation Programs' projects in Croatia

Project Manager Anne Halvorsen

Authors Anne Kirsti Ryntveit and Anne Halvorsen

Employer Business Innovation Programs

Report type Project report

Report number 27/2001 ISSN-number 0808-5544 Accessibility of report Open

Keywords Review, Business Innovation Programs, private sector development, Croatia

Summary:

The report presents a review of Business Innovation Programs' (BIP) projects in Croatia. Areas of improvement are identified and recommendations for future adjustments provided. The over all assessment is positive and the report concludes that BIP is an important development partner in the area of Eastern Slavonia in Croatia.

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Title Review of Business Innovation Programs' projects in Croatia

Authors Anne Kirsti Ryntveit and Anne Halvorsen Report Project report no. 27/2001 ISSN-number 0808-5544

Printing Office Edgar Hogfeldt, 4626 Kristiansand

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Project report no. 27/2001

Review of Business Innovation Programs' projects in Croatia

Anne Kirsti Ryntveit and Anne Halvorsen