72016724RFI00001.pdf

Subject: Economic Reform Activity

Reference Number: Request for Information No.72016724RFI00001

Issuance Date: Thursday, September 19, 2024

Closing Date: Monday, October 7, 2024

Closing Time: 10:00 am Central European Time

Responses to: Urime Abdyli at uabdyli@usaid.gov

Dear Interested Parties:

The United States Government, represented by the U.S. Agency for International Development

(USAID) Regional Office of Acquisition and Assistance, is seeking input from interested organizations and individuals who may provide comments, opinions and recommendations in response to the questions outlined in this Request for Information (RFI) announcement.

This is a Request for Information (RFI) issued solely for information and planning purposes. This is not a Request for Proposals (RFP) and is not to be construed as a commitment by the U.S. Government

(USG) to issue a solicitation or ultimately award a contract, or to pay for any information voluntarily submitted as a result of this RFI. The Draft Statement of Objectives (Annex B) is not a final document.

It may change significantly before any solicitation is issued or may not result in a solicitation at all.

Updated information will be included in the USAID Business Forecast.

Responses to this RFI shall not be portrayed as proposals and will not be accepted by the United

States Government (USG) to form a binding contract or agreement. Responders are solely responsible for all expenses associated with responding to this RFI. It should be noted that responding to or providing comment on this RFI will not give any advantage to any organization in any subsequent procurement or funding.

Submission is strictly voluntary. USAID will not provide feedback or responses to questions submitted in response to this RFI and no proposals or resumes will be accepted or considered. Respondents are not required to respond to all questions but may choose to do so.

Thank you for your feedback.

Annexes: Annex A - Section I - Request for Information

Section II - Response Submission Instructions

Annex B - Draft of the Statement of Objectives (SOO)

Annex A:

Section I - Request for Information

Request for feedback

Within the Economic Reform Activity, USAID/Kosovo is interested in responses to the following questions:

Technical:

1. Do you have any general feedback or recommendations on the Annex B - Draft of the

Statement of Objectives (SOO) as a whole?

2. Is the information provided sufficient for the potential bidders to come up with creative and innovative ideas to achieve the objectives of the activity? If not, what additional information is needed?

3. Are the illustrative results as described in the Annex B appropriate for the objectives as articulated? Do these illustrative results seem reasonable, ambitious yet achievable? What changes or additional illustrative results would you propose?

4. In addition to the core objectives identified in Annex B, are there additional objectives that should be included to strengthen Kosovo’s economic governance and advance its Euro -

Atlantic integration?

5. To achieve the objectives identified in Annex B should a small grants component be included in the activity?

6. What would the grants’ mechanism be used for?

Section II - Response Submission Instructions

All comments must be submitted electronically in English to Urime Abdyli via email uabdyli@usaid.gov with the subject line: “RFI No.72016724RFI00001 Economic Reform Activity” by the date listed on the cover letter.

Please strictly limit any response to the questions included in this RFI and to comments/suggestions about the document. To expedite USAID’s review and be considerate of respondents’ time, responses should be kept to no more than five (5) pages in length.

Interested parties are encouraged to submit organizational information / Capability statements that demonstrate that your organization's vision and mission are directly aligned to the purpose and objectives of the goals that the proposed activity seeks to accomplish or that you have successfully implemented awards that had a similar purpose and objectives. Please strictly limit organizational information to no more than two (2) pages in length (as an Annex - that will not be counted towards the 5 page limit).

Respondents are not required to answer all questions but are encouraged to respond to any and all question(s) for which they have knowledge, experience, or ideas. Please number your responses to correspond with the questions in this RFI.

The submitted response must include the following information:

Reference: RFI # 72016724RFI00001

Date:

Affiliation/ Organization (if any):

Entity’s Address:

Representative Name / Email Address / Telephone Number:

Size and type of organization, including U.S. small businesses or other status if applicable (optional, when applicable)

Legal registration status in Kosovo (optional, when applicable)

Respondents may submit:

● responses to some or all of the questions in the RFI;

● capacity statements; and

● documents, if any, that support the answers to the RFI Questions as attachments.

The collected information will be used to determine the level of interest and will not be released publicly. By responding to this notice, there will be no advantage to any entity or organization.

The submitted documentation and content thereof becomes the property of USAID and will not be returned.

This announcement is not to be construed as a Request for Proposals. It does not commit USAID to reply to information received, or to later publish a request for applications, or to award an agreement based on this information. Furthermore, it does not commit USAID to pay for any costs incurred in response to this RFI. Only the information requested above will be considered.

[End of Annex A]

THIS IS A REQUEST FOR INFORMATION (RFI) ONLY. This notice does not constitute a commitment by the United States Government (USG). All information submitted in response to this announcement is voluntary, and the USG will not pay for information requested nor will it compensate any respondent for any cost incurred in developing information provided to the USG.

ANNEX B

Draft Statement of Objectives (SOO) /Economic Reform Activity

PURPOSE:

The purpose of USAID’s Economic Reform Activity is to support the Government of Kosovo in strengthening economic governance and adopting inclusive and effective regulatory reforms. These efforts will improve the competitiveness of Kosovo’s economy, promote the transparency and fairness of reforms, and advance Kosovo’s integration into regional, European, and Euro -Atlantic institutions and markets.

BACKGROUND AND CONTEXT:

Kosovo's economy exhibits many strengths including stable growth, an emerging dynamic private sector, low public debt, prudent fiscal policy, and a robust banking sector. The Government of Kosovo

(GOK) has also improved its industrial and trade policies, and is working to increase its revenue base and private investment. However, challenges persist, such as Kosovo being a relatively small economy, issues associated with Kosovo’s status and international recognition, high levels of economic informality, the fight against corruption, Foreign Direct Investment (FDI) consolidating in the real estate market, and a large inflow of diaspora remittances that contribute to stability but are also used primarily for consumption and financing a substantial trade deficit rather than more productive investment. Moreover, Kosovo’s per capita GDP remains the lowest in the Western Balkan region, and only at 27 percent of the EU-average for member states.

The IMF reports Kosovo achieved a growth rate of 3.8 percent in 2023, primarily driven by private consumption and accelerated investment.1 Yet, the relatively large size of total diaspora remittances, which accounted for 15 percent of GDP in 2022, highlights a concerning lack of diversification in sources of economic growth. Moreover, despite gradual improvement, unemployment remains a persistent challenge, disproportionately affecting women, youth, and ethnic minorities.

Kosovo has maintained a stable macroeconomic environment and credible fiscal policy, with government deficits remaining small and strong adherence to fiscal rules. Improved tax revenues and grant assistance have contributed to fiscal stability, despite increased expenditure, including capital investment. However, there remain significant opportunities to improve public spending efficiency and revenue collection. Kosovo has maintained a low and stable public debt level, primarily denominated in foreign currency, mitigating currency risk. Moreover, the banking sector remains robust, characterized by adequate capitalization and low non-performing loan ratios. It is essential to sustain and further improve macroeconomic stability and minimize policy and regulatory uncertainty for both investors and consumers.2

1 https://www.imf.org/en/News/Articles/2024/04/04/pr-24105-kosovo-agreement-on-the-2nd-reviews-of-the-stand-by-agreement-and-rsf-agreement

2 https://www.state.gov/reports/2023-investment-climate-statements/kosovo

A significant imbalance in trade, with imports vastly surpassing exports, underscores Kosovo's underperformance in external trade compared to its regional comparators. 3 Kosovo’s moderate level of FDI exacerbates this issue, emphasizing the need for economic diversification. While the European

Union represents a crucial trading partner and offers preferential access through the Stabilization and

Association Agreement, Kosovo must capitalize on this opportunity to bolster its economic resilience.

Government of Kosovo reform efforts have been steady, with a focus on strengthening economic policy, reducing corruption, and enhancing regulatory frameworks. The government has also worked on improving the business enabling environment including simplifying business registration processes, improving legal framework and enhancing property rights.

Kosovo’s legal system aligns with global standards for protecting and encouraging investment, but there is a lack of strong enforcement. Challenges in governance, such as poor interagency coordination, and inconsistent regulation enforcement, constrain opportunities and hold back private sector growth. Furthermore, inconsistent implementation of rules and regulations, bureaucratic inefficiency, and underdeveloped public-private dialogue, particularly in key areas such as tax administration, continue to negatively impact private business operations. Kosovo must keep enhancing its legal structure and infrastructure to boost trade, foster e -commerce, and streamline tax administration and business regulation, including inspections.

Tensions with Serbia and the lack of political progress poses the greatest risk to economic stability as persistent disputes undercut efforts for economic regionalization and integration into international institutions and markets, although the likelihood of outright conflict remains low. Efforts to resolve these tensions and achieve full international recognition continue, but progress is slow.

Overall, while Kosovo's economy exhibits resilience and potential, addressing structural challenges, advancing governance reforms, and making progress on preconditions for further integration into

European and Euro-Atlantic institutions is essential for sustained growth built on improved access to regional and global markets.

Building on past achievements - USAID’s Economic Governance Activity (2019-2024)

USAID’s Economic Reform Activity will, directly and indirectly, build on achievements of USAID’s Economic Governance Activity. USAID’s Economic Governance Activity (EGA) made significant progress in supporting business regulatory reforms and in improving e conomic governance within key government institutions. The new Economic Reform Activity will similarly provide technical assistance, conduct assessments, facilitate reform efforts, and provide other types of support to government institutions to enact and implement inclusive and effective government policies and regulations that can expand business activity and regional and European market integration. For more information about EGA’s past activities and achievements, please refer to its final report published on DEC in the following link:

https://dec.usaid.gov/dec/content/Detail_Presto.aspx?ctID=ODVhZjk4NWQtM2YyMi00YjRmLTkxNj ktZTcxMjM2NDBmY2Uy&rID=NjMzODUy&inr=VHJ1ZQ%3d%3d&dc=YWRk&rrtc=VHJ1ZQ%3d%3d&b ckToL=

3 https://documents1.worldbank.org/curated/en/099040524061582128/pdf/P5006481fb98fb0db1a9401e200293e761d.pdf https://dec.usaid.gov/dec/content/Detail_Presto.aspx?ctID=ODVhZjk4NWQtM2YyMi00YjRmLTkxNjktZTcxMjM2NDBmY2Uy&rID=NjMzODUy&inr=VHJ1ZQ%3d%3d&dc=YWRk&rrtc=VHJ1ZQ%3d%3d&bckToL= https://dec.usaid.gov/dec/content/Detail_Presto.aspx?ctID=ODVhZjk4NWQtM2YyMi00YjRmLTkxNjktZTcxMjM2NDBmY2Uy&rID=NjMzODUy&inr=VHJ1ZQ%3d%3d&dc=YWRk&rrtc=VHJ1ZQ%3d%3d&bckToL= https://dec.usaid.gov/dec/content/Detail_Presto.aspx?ctID=ODVhZjk4NWQtM2YyMi00YjRmLTkxNjktZTcxMjM2NDBmY2Uy&rID=NjMzODUy&inr=VHJ1ZQ%3d%3d&dc=YWRk&rrtc=VHJ1ZQ%3d%3d&bckToL=

Linkages to Strategy

The proposed activities will support reforms for better implementation of laws and regulations and strengthening the GoK systems and processes, which will lead to more effective and accountable institutions serving citizens’ needs. These activities will directly support USAID Kosovo’s 2020-2025

Country Development Cooperation Strategy (CDCS) Development Objective: DO1 - Citizens are better served by accountable and effective governance institutions, IR 1.2. Executive governance and legislative responsiveness strengthened, Sub IR 1.2.1 Influence of civil society and citizens on public policy strengthened, Sub IR 1.2.2 Implementation of select policies, laws and procedures strengthened. Additionally, the proposed activities will contribute to the US Mission to Kosovo’s

Integrated Country Strategy (ICS) 2020-2025 Mission Goal 2: Improved rule of law and accountable and effective governance meets all citizens’ needs, Mission Objective 2.1: Access to reliable, credible, efficient, and accountable justice increased for all Kosovo citizens. Mission Objective 2.2: Institutions’ transparency and ability to respond to all citizens’ needs; deliver quality services; implement laws, regulations, and court decisions; and reduce corruption is enhanced.

In addition, the proposed activity will support business environment and inspections and trade facilitation reforms which will increase private sector growth and regional economic integration.

These activities will directly support the CDCS DO2 - Opportunities for inclusive democratic and economic participation increased, IR 2.2 Private sector Competitiveness in targeted sectors increased, Sub IR 2.2.3 Environment for private investment enhanced. Additionally, the proposed activity will contribute to ICS Strategic Objective Mission Goal 3:Inclusive human development and sustainable economic growth supports Kosovo’s stability; enhances its ability to be a strong, self -reliant partner to the United States; and advances Euro-Atlantic integration, Mission Objective 3.1:

Enhanced engagement and policy enactment in trade, regional economic integration, and private sector competitiveness helps Kosovo take ownership of its own prosperity.

DEVELOPMENT CHALLENGE:

As Kosovo makes progress towards developing a functioning market economy, it must continue to address multiple impediments and obstacles to private sector business development, trade, and growth, many of which are outlined in the economic criteria of the European Commissions’ Report of

2023.4 Only through legislative, policy, and administrative economic governance and regulatory reforms, implemented sustainably, consistently, fairly, and transparently with sufficient consultation and notification, can further progress be achieved. Such initiatives are well documented and included in multiple reform agendas associated with the European Commission, the Western Balkans Growth

Fund, the IMF, the World Bank, and others. The scope of these agendas are vast, but include critical issues such as improving macroeconomic planning and public financial management, addressing informality and corruption, incentivizing private sector investment, improving business registration and tax regimes, and improving trade facilitation and addressing barriers.

USAID’s new Economic Reform Activity will focus its efforts on a set of interventions that will lead to marked progress in one or more of the established economic reform agendas recognized by the

4 https://neighbourhood-enlargement.ec.europa.eu/kosovo-report-2023_en

Government of Kosovo. Through these interventions, USAID will help expand private sector opportunity and growth, and advance Kosovo’s integration into European and Euro -Atlantic institutions.

THEORY OF CHANGE:

IF the Government of Kosovo enacts and implements sustainable economic reforms that are responsive to the concerns and interests of all citizens and private business, and key economic institutions are more accountable, transparent, effective and inclusive, THEN Kosovo’s business enabling environment, investment, trade, and market economy will improve, opportunities for corruption and informality diminished, and Kosovo will advance its progress towards European and

Euro-Atlantic integration.

PROGRAM OBJECTIVES:

USAID’s Economic Reform Activity is intended to strengthen and improve the capacity and reforms of the Government of Kosovo, specifically through close partnership and engagement with the

Ministry of Finance, Labor, and Transfers, the Ministry of Entrepreneurship, Industry, and Trade, the

Tax Administration of Kosovo, the Central Bank of Kosovo, the Prime Minister’s Office, and others as deemed relevant/necessary. With close partnership with the Government of Kosovo, the results of the activity are intended be achieved through three mutually supportive performance objectives:

1. Development and implementation of targeted, sustainable economic governance reforms that support European and Euro-Atlantic integration, as measured against the European

Commission’s annual report, other established reform agendas, and/or national priorities;

2. Strengthening of Government of Kosovo institutional capacities and practices that foster positive and productive engagement and feedback mechanisms with the private sector and civil society;

3. Enhanced capacity of the Government of Kosovo to implement economic reforms that fully account for and work to promote economic empowerment of minority communities, women, and youth.

Additionally, the PWS must propose a flexible and adaptive management approach that includes continuous monitoring and systematic review at regular and pre-established increments proposed by the Offeror and consistent with USAID’s Collaborating, Learning, and Adapting (CLA) policies and practices. By their very nature, economic reform interventions will have variable progress, and the

Contractor, in consultation with USAID, will be required to adapt and make real-time adjustments in number, type, and performance of specific areas of effort throughout the period of performance.

This flexibility will allow the activity to respond to emerging opportunities and issues.

Proposed interventions identified in the PWS are subject to change after award depending on the evolving context, additional information gathered, and consultation with USAID. Application of the management approach will result in recommendations from the Contractor to USAID--documented in the Annual Work Plan and modifications--for new interventions to begin and previous ineffective interventions to end.

RESULTS

Offerors will propose a PWS that they contend will best accomplish the three performance objectives laid out above. The following are some results and indicators that are intended to be illustrative only, and are by no means required components of the offe ror’s PWS. Offerors are encouraged to be innovative and creative in developing interventions, results, and indicators. The successful offeror will propose results and indicators that facilitate adaptive learning and management of the activity, and support greater local ownership and sustainability. In addition to the results and indicators, a

Quality Assurance Surveillance Plan (QASP) will be incorporated to evaluate the overall performance of the Activity.

Illustrative Results:

● Key Kosovo institutions reformed to better promote regional, European and Euro-Atlantic integration.

● Capacity of key economic institutions strengthened.

● Private sector and civil society are engaged and play an active role in development and implementation of key economic reforms.

● Key economic reforms inclusive of direct consideration for minority communities, women, and/or youth enacted.

● Key emerging needs of the business enabling environment are addressed on time.

● Effective dialogue among the private sector, civil society, the government, and citizens helps to influence, formulate and establish best approaches in addressing business enabling environment needs.

● Policies, plans, and investments that support advancement to Euro integration are introduced, adopted, and implemented.

● Barriers to trade are reduced and regulations comply with the WTO and EU legislation.

● Central Market Surveillance Inspectorate within the Ministry of Industry, Entrepreneurship and Trade (MIET) is strengthened

● Construction Inspectorate function within the Central Inspectorate of Environment, Waters, Nature, Spatial Planning and Construction at MESPI is strengthened

● Municipalities expedite the review of applications for legalization of unpermitted buildings

● The Tax Administration of Kosovo (TAK) implements risk-based inspections and establishes an internal case management for tax compliance

● TAK further improves its transparency and accountability

● Institutions involved in producing the macroeconomic data are coordinated and produce qualitative and timely data.

● MFLT implements Public Financial Management reforms and addresses the PEFA findings.

ILLUSTRATIVE INDICATORS:

The successful offeror will propose illustrative indicators that facilitate adaptive learning and management in support of greater local ownership and sustainability. The following are illustrative indicators that the offeror may consider when developing their proposed approach:

Illustrative Indicators:

● Number of reforms that promote regional, European and Euro-Atlantic integration introduced .

● Number of key economic institutions strengthened.

● Number of private sector and civil society engaged in development and implementation of key economic reforms.

● Number of economic reforms that integrate minority communities, women, and/or youth introduced and implemented.

● Number of emerging needs of the business enabling environment addressed.

● Number of new or updated policies that support anti-corruption implemented.

RELATIONSHIP TO OTHER USAID ACTIVITIES, DONORS AND GOK:

The Contractor must work in close coordination with other USAID and donor-supported activities in Kosovo, including but not limited to those listed below. The Contractor must avoid duplication of efforts, ensure synergies, and maximize impact and investments. The Contractor must ensure that the activity takes into consideration other related initiatives and maintains complementarity with other donor approaches.

USAID’s E-Governance Activity: This activity aims to support the Government of Kosovo in digitizing the processes to ensure effective and accessible government services.

USAID’s Property Governance Activity: This activity aims to improve the property rights system in Kosovo by standardizing processes and improving the services to citizens in registering their properties.

USAID’s Compete Activity: This activity is focused on promoting resilient, self-sustaining market systems, and facilitating the private sector’s improved competitiveness in local, regional, and global markets.

USAID’s Commercial Justice Activity: This activity works to strengthen Kosovo’s business operating environment by promoting contract enforcement and commercial law reform.

USAID’s Investment Promotion and Access to Finance Activity: This activity works to strengthen private sector capacity for sustainable economic growth through investment promotion and increased access to diversified finance.

Government of Kosovo and Development Partners: USAID’s Economic Reform Activity will be in alignment with Government of Kosovo strategic goals of improving the business enabling environment, fighting corruption, and strengthening macroeconomic stability, among others. The

Activity will work to coordinate with the Government of Kosovo whenever possible and appropriate to advance targeted reform efforts. Additionally, the activity will cooperate closely with the European

Union Assistance Mission to Kosovo, World Bank Group, the International Monetary Fund, United

Nations agencies and programs, and other bilateral donors/development partners whenever possible to measure progress, advance joint objectives, and avoid duplication of effort.

GUIDING PRINCIPLES:

In addition to addressing the development challenges and how the Contractor will achieve the performance objectives, the PWS must address and integrate each of the following guiding principles below:

● Engagement with the Government of Kosovo: The Contractor must comply with applicable laws, regulations,and USAID guidance regarding engagement with the Government of

Kosovo. As guidance may change over time, close coordination and communication with

USAID is required.

● Private Sector Engagement: Private sector engagement and leadership is paramount to the success of this activity. Partnerships between and among the private sector, government entities, and associations are strongly encouraged and could bring innovative solutions to addressing Kosovo’s private sector competitiveness challenges.

● Sustainability: The activity’s fundamental achievements must be sustained beyond the period of performance. The Offeror must include the Government of Kosovo, private sector, civil society, and other stakeholders in the approach to seek sustainable solutions. The implementation of the core objectives must consistently reflect sustainability as the end goal of USAID assistance in Kosovo.

● Integration of Minorities, Women, and Youth: The Contractor must take a proactive and direct approach while carrying out this activity to improve representation, participation, and capacity building of underserved, disadvantaged, and marginalized populations, including but not limited to minorities, women and youth. The Contractor must ensure that economic reform efforts and interventions of the activity work to enhance, and not undercut, the lives of minorities, women, and youth. This will require inclusive approaches to design, selection, targeting, and implementation of interventions through public consultation, community issue identification and prioritization, building partnerships, and training. All interventions will take integration of minorities, women, and youth into account in the selection of participants, timing of program activities, location, and training program content. Through its targeted interventions, the activity continuously be in alignment with USAID policies on gender equality and women’s empowerment, as well as with Diversity, Equity, Inclusion, and Accessibility approaches and with positive youth development approaches.

● Do No Harm: The Contractor will take necessary precautions to ensure that the assistance, including interventions and reforms, will safeguard against any foreseeable and demonstrable negative impacts on local markets, production, services or employment, and discrimination against one or more socio-economic, religious, political, ethnic, or other citizen subgroups.

● Multi-Stakeholder Approach: Simultaneously work from the bottom-up (e.g., through working directly with communities, businesses, associations, and other key stakeholders) and from the top-down (e.g., engaging the Government of Kosovo and independent agencies) to develop the right enabling conditions that will advance the performance objectives of the activity.

● Adaptive Management and Collaborating Learning and Adapting (CLA): USAID expects the

Contractor to leverage adaptive management approaches in order to identify opportunities, support local ownership and implementation, and shift the activity as needed when bottlenecks occur so as to ensure that the activity’s main results and objectives are met.

USAID expects that each annual report will detail how adaptive management and CLA has been used and what lessons have been learned throughout the life of the activity.

● Climate Change: Although this activity is not intended to have direct environmental impacts, the Offeror should consider how economic reform interventions enacted to achieve the performance objectives of the activity can simultaneously, directly or indirectly, promote climate change awareness and a ‘green’ economy in Kosovo.

[End of Annex B]

THIS IS A REQUEST FOR INFORMATION (RFI) ONLY. This notice does not constitute a commitment by the United States Government (USG). All information submitted in response to this announcement is voluntary, and the USG will not pay for information requested nor will it compensate any respondent for any cost incurred in developing information provided to the USG.