As CIPE celebrates its 25 years this year, I look back at my time as CIPE Project Manager in Montenegro from November 2001 to February 2006. One of the most successful projects I had the opportunity to work on was the creation of the Montenegro Business Alliance (MBA). It was established in 2001 as the first private, voluntary business umbrella organization with membership open to entrepreneurs, companies, and business associations. MBA had just ten founding members at its very first organizational assembly meeting in September 2001; by 2006, it gained 450 dues-paying members that represented 15,000 employees and created 1,800 jobs.
This rapid growth was a clear indicator that MBA became Montenegro’s most powerful independent voice for advocating business and market reforms. It managed to accomplish that by working on the issues of high relevance to the business community. MBA organized numerous business forums and seminars on topics such as Company Organization Law or Accounting Law and educated companies on the importance of ethical conduct. MBA’s efforts brought about visible business benefits to its members. Montenegro Leasing and Finance (MLF), later bought by Hypo Bank of Austria, was privately funded by a small group of MBA board members and a few other investors both inside and outside of Montenegro. They raised a total of €225,000 in private capital and leased €226,088 worth of equipment to 33 independently owned companies.
But probably the most successful aspect of MBA’s activities, which spurred the greatest increase in membership because of the media coverage, was the 2004 campaign “10 percent for Montenegro.” As a result of this MBA’s advocacy effort with the Finance Commissioner and other Ministers, the employer tax was reduced by 10 percent for the first time in 25 years. What is more, MBA’s recommendation submitted to the Commission on Economic Freedom for the reduction of corporate tax was accepted, resulting in a reduction from 20 percent (the highest in the Balkans) to 9 percent (the lowest in Europe). Thanks to this reform, companies began to report their actual profits and the business environment in Montenegro greatly improved.
MBA has had an immense impact on existing and new businesses in Montenegro in terms of job creation, taxation, legislation and regulation, and investment. It helped advance the recovery of the middle class and create from the bottom up a new class of entrepreneurs. It increased training and education of entrepreneurs and mid-level managers. It improved SME financing through leasing, it succeeded in moving Montenegro toward regional economic cooperation. And most importantly, it helped young people see the opportunity and hope to stay in their country.
All of this has been accomplished by starting with a clear mission statement:
- The Mission of the MBA is to improve the quality of life for all Montenegrin citizens through economic growth and prosperity. To partner with the public and private sectors as well as international groups and individuals to help bring about stability and sustainability into the economy of Montenegro.
Everything flowed from that mission. MBA developed a strategy and tactics to reach its goals and objectives. As a strategic alliance among Montenegrin businesses, MBA managed to create channels of communication among governmental and non-governmental organizations to help ensure the quality and competitiveness of both government programs and laws and improve the country’s image. This communication among non-government business organizations helped ensure the synergy and quality of the Montenegrin business community.
MBA’s success carries a valuable lesson: business people and organizations that represent them must become engaged in shaping the institutional environment in their countries or someone else will create the future for them above their heads. To do this, it is important to have the local knowledge, to understand what is driving a country like Montenegro, what works and what doesn’t. It is important for Montenegrins to design their own future. As donors, we can provide assistance, and help with capacity building and a roadmap, but donors will not create the future, Montenegrins will. This is the key lesson that CIPE has learned early on and has been applying in its work around the world.
This post is part of a blog series celebrating 25 of years of CIPE’s work by looking back at important moments in CIPE history, hallmarks of our achievements, and our successes today. Look for blog posts with tagged with “CIPE @ 25” to follow this series throughout our 25th anniversary year.
Published Date: September 23, 2009