How can we fix ‘DIS’ system? Approaches to the Demand, Intermediation and Supply Nexus of Youth Employment Projects

HELVETAS Swiss Intercooperation

Part 1: Why project implementers should move to the backseat and let their partners take the wheel: an example from Bosnia’s IT sector 

Introduction

In today’s blog we will talk about the potential growth of the Information Technology (IT) sector in the Balkans focusing on the initial achievements of HUB 387, the first IT Cluster in Bosnia. The story of HUB 387 will illustrate how a Market System Development[1] project can help facilitate improvements in the job market and contribute to sustainable systemic changes by choosing the right partners and by fostering their strengths and capacities.

This is the first in a series of three blogs concerning Youth Employment projects in the Balkans. We will discuss the potential of the HELVETAS[2] Market System Development approaches to strengthen the labour markets of Bosnia, Albania and Kosovo. Each story will focus on a different, yet interconnected, aspect of the labour market system: today’s story focuses on the interventions that can help to strengthen the Demand side of the labour market.   

MarketMakers, funded by the Swiss Agency for Development and Cooperation (SDC), was created in June 2012 to encourage new employment for youth in the private sector. To achieve this, the project is working with a variety of partners to unlock the unrealised growth potential of the IT, food production and processing and tourism sectors of Bosnia. The project identified two private sector-led initiatives, HUB387 (the focus of this blog) and BIT Alliance, as its main partners to improve the IT system, encourage service providers to make market linkages and support the promotion of training services.

How was HUB 387 created?

Like other countries in the Balkans, the IT sector in Bosnia is growing, but not as quickly as it could.  Most IT companies have more business than they can handle, but they face important problems from expanding their business and hiring new employees. Moreover, IT businesses find it difficult to attract and retain skilled workers.

To help companies deal with the challenges that hinder the growth of the IT sector in Bosnia, MarketMakers cooperated with Mr. Edin Saracevic, a Bosnian-American technology entrepreneur who dreamed of creating Bosnia’s first IT hub. After having worked eighteen years in the dot.com-industry in the US, Mr Sarecevic decided to return to his birth-country in 2012 as he was concerned about the brain-drain of many young talented people from Sarajevo. He observed that there was not a strong IT community in Bosnia; the few IT businesses that did exist were scattered across the country and hardly any interaction happened between them. The sector had simply formed organically with no strategic thinking behind it. Mr Saracevic, instead, wanted to put the companies and people together and create a vibrant ICT community, something he likes to call ‘IT Disneyland’.

When Mr Saracevic pitched his story MarketMakers took the opportunity and provided Mr Saracevic with business planning support and small seed money that was needed to mobilize companies and funding to create his venture. While not all IT companies in Bosnia have moved their offices, HUB 387 has a pretty impressive track record: so far Hub 387 has brought 16 companies together in one place and created close to 70 high quality jobs.

IT companies who are members of HUB 387 are motivated to relocate their business in order to:

·         Reduce brain drain by providing a pleasant and stimulating work environment

·         Stimulate faster transfer of knowledge to keep key workers current on emerging technologies

·         Ignite an entrepreneurial spirit to drive growth and creation of a “start up culture”

·         Create a critical mass to raise awareness about the IT sector, support innovation and attract higher value work

How did HUB 387 manage to bring about changes in Bosnia’s IT sector and beyond?

High satisfaction and faster growth of IT companies in HUB 387’s Sarajevo location are sure signs of the intervention’s success. Even more important, however, is the interest from outside of Sarajevo as entrepreneurs and investors throughout the region start to take notice.  After one year of operation, HUB 387 has expanded its IT training program to Mostar, an important IT centre in Herzegovina and has inspired a similar but smaller hub to open in Banja Luka. And with the support of HUB 387, the IT Company Mistral Technologies is in the process of creating a mini-hub in the town of Cazin.

Also from abroad there is much interest in the IT model from Sarajevo. Private investors from Croatia recently signed a franchising agreement to open “HUB 385” in Zagreb, while Belgrade (Serbia) is interested to start something similar next year.

Slowly but surely the government is also taking notice. So far ICT has not been regarded as an ‘official’ sector by the government. Instead, it is treated as a crosscutting sector. This, however, seems to be changing. The canton of Sarajevo is developing a sectorial ICT strategy and identified ICT as one of its three strategic sectors. HUB 387 as well as MarketMakers’ co-facilitator SERDA (the Regional Development Agency for Sarajevo) are both members of the committee responsible for drafting the ICT strategy and ideally positioned to help catapult the sector to the forefront of economic development in Sarajevo.

What others can learn from MarketMakers and HUB 387?

As an MSD project you sometimes have to act more like a business and seize an opportunity when it arises. You have to be willing to take some risks and not get constrained by research and assessments, i.e. the feared paralysis by analysis.

When you think about project inputs it is not only about money. The actual investments we made were less than 50,000 EUR. But we also provided support by strengthening the business model and promoting the model to potential partners and donors. We helped with finding a place for the hub 387, in getting the agreement signed with the landowner and in convincing IT companies to join the hub. A year after the establishment of HUB 387 the bulk of the work has been completed and, with regard to this part of the intervention, the project has now moved towards mostly a networking mode; new partners and investors approach us - or more often, and preferably, HUB 387 itself - and we primarily need to connect them to the right people. Of course, as HUB 387 was ‘only’ a starting point, other parts of the IT intervention, for example the creation and promotion of IT training facilities, the development of partnerships with universities and the government and the replication of the IT business model, will necessitate further attention from the MarketMakers project. 

As a Market System Development project it is important that you respect your role as a facilitator. This means that at some point you need to step back from the intervention as much as possible, so that the existing market actors (and government) can flourish and take full ownership of the process without becoming unnecessarily dependent on donor funds or other inputs. It goes without saying that the success of the intervention heavily depends on the business partner(s) you choose. In other words, finding a partner with a clear vision and willingness (and capacity) to take the lead is of crucial importance!



[1] Market System Development: Improving the lives of the poor or disadvantaged requires a transformation of the systems (including rules and functions) around them. Market systems development recognises this reality and provides a coherent, rigorous approach to understanding and intervening in market systems so that they function more beneficially and sustainably for poor or disadvantaged women and men. Adapted from the Operational Guide for the Making Markets Work for the Poor (M4P) Approach, 2014

[2] HELVETAS Swiss Intercooperation is a politically and denominationally neutral development organisation, which is supported by around 100,000 members and patrons, as well as 12 regional volunteer groups.