The savings of population were affected by these factors:
Considering these factors, a positive impact in the population’s savings has had only the psychological-traditional factor. Other factors in recent years have only hindered and lessened the value of population’s savings. Hard economic situation, the feeling of physical, economic and health uncertainty, has caused the change in the families’ expenses. If we rely on statistical estimates that in Kosova at present live 2.3 million inhabitants, while the average number of family members is about 7 persons, derives that there are approximately 325 thousand families living in Kosova. The data about employment indicate that in the state sector are employed about 142 thousand persons, which means one person in every 2.3 families. The decrease of economic activity in the period after 1989 has not only eroded the savings of population, but has also drastically increased the volume of social problems. In other words, the survival of a part of population with over 50% is endangered. According to the results of a study, in 1996 nearly 1.2 million inhabitants of Kosova (53% of entire population) lived in extreme poverty. In 1989 this category of population was half less. Logically, it results that since 1989, when the savings from the incomes of families was 6.9%, in 1996 family economies do not realize savings at all (-7.6%).
Statistical data show that the population of Kosova realized very modest savings. The family economy is not on a better position for self-financing its business. In the structure of family expenses, except the personal consumption, which embraces 82% of family budgets, the proportion with over 10% of expenses for residence construction is very obvious. Such a structure of expenses of family budgets is quite understandable when we take into account the fact that the population of Kosova has inherited a very poor state of residential fund.
In the poll results done by the Federal Institute of Statistics on the consumption and household incomes for 1996, it results that in Kosova in 1996 each family possessed in average 17.751 dinars or 5.320 DM according to the official exchange rate of 1 DM=3.3 din. From this sum about 18% are the value of natural consumption. In the structure of family expenses, over 55% is consumed for food from the money funds, and over 81% of natural goods. Only 3.3% are saved, i.e. 586 din. saved per year. The quantification of this sum gives the following outcome: 325 thousand families times 586 din. saved per year, equals 190 million din., which means about 53 million DM according to the exchange rate.
But, since these are examinations based on polls and theoretical models, this doesn't seem to be true in reality. A number of families, which according to our estimates, make up 20% of the total number of families, still live in conditions and living standard above the average of Kosova. These families realize incomes, enabling them to cover the expenses and also to realize savings. According to this estimation, in this category of families in Kosova belong about 65 thousand families, which save in average, 1.000 DM per year, and we can see that economy families in Kosova save around 65 million DM per year. This almost fits with the above data of "official statistics".
In the second variant, it is assumed that half of those who can save, are able to do so, save about 2.000 DM per year, and we can see that from the first half 32.5 million DM are saved, and from the second half 65.0 million DM. In total, 98.5 million DM are saved.
As a conclusion about that part of savings of family economies, it follows: Family economies in Kosova save, despite a low level of living standard. These savings are modest and quite insufficient for assuring an economic development in the future. Nevertheless, in the concept of future development the forms of engagement and mobilization of these savings cannot be ignored. On the contrary, they must be very carefully determined. The savings of private enterprises is another category of savings which in the balance sheets of enterprises is presented as a part of profit separated for the fund of accumulation. The occurrence of decreasing of economic activity, especially after 1989 is also expressed in the loss in business, so that the opportunities for investments fall from year to year.
The volume of realized investments in the private sector in this period is not as a result of realized accumulation from the economic activity of this sector, but more as a result of population savings from the previous periods or from other forms of savings. The growth of private sector is seen by an increase on the number of private enterprises registered in the period after 1989. If we follow the assumption that 56% of the total number of registered private enterprises, or 9.500 enterprises that perform activities, save in average 11 thousand DM within a business year, based on Poll outcome we can see that private enterprises could engage a potential of 190 million DM for investments.
Another category of economic subjects that can accumulate are private craft stores and repair service stores. These forms of private activity are not obliged to present their balance sheets to the banks (official payment services), but they are registered and they are obliged to have a current account Nevertheless, this economic category in some cases operates successfully and is able (except to cover its current expenses) to share a part of its profit for accumulation. In 1995, according to the "official statistics", in Kosova existed about 19.250 craft stores and repair service shops. If a part of these, because of their non-attractive activity, position and insufficient market, operates in margins of rentability, we estimate that 2/3 or 12 thousand craft and repair service stores are able to save with the intention of expanding their economic activity after covering current expenses. If each of these stores is able to save about 5.000 DM within a year, then from this category are saved around 60 million DM per year. For this analysis it is also interesting to note the category of citizens who perform various productive and service activities, but are not registered. To this category belong various entrepreneurs (constructors, craftsmen, plumbers, electricians, tradesmen without premises, as well as all the others that belong to the so-called "gray" economy). This is a category of economic activity that mostly operates successfully. It is an uncertain, not permanent job, but it avoids obligations and various burdens from state authorities. If we can rely on the estimation that with this type of activity deal about 5.000 persons, who except the expenses manage to save up to 3.000 DM within a year, derives that from this category, about 15 million DM are saved each year.
After political changes, a great number of unemployed in Kosova through employment and intermediary associations found jobs in West-European countries, especially in Germany, Switzerland, Sweden, and Austria. Characteristically, in this period, persons that migrated, left their families at home and thus the connection between them was regular and intensive. In this period, these families, by means of financial support of their members working in foreign country, experienced an obvious prosperity. For example, according to the evidence of employment agencies, the number of temporarily employed persons in foreign countries was 40 thousand. But, it is known that some people found jobs in foreign countries without intermediary associations. After 1981, the number of migrated people from Kosova increased rapidly as a result not only of economic factor, but also political and repressive factor. This especially counts for the period after 1989. According to the data of the Central Commission of Kosova for registering of citizens in diaspora, we can see that in 1993 in Western Europe lived 368 thousand Albanians from Kosova. Some other data speak of a number of 400 thousand. According to the EC Commission of Emigration, Refugees and Demography (for January of 1996), in West European countries are recorded 340.700 Albanian asylum-seekers from Kosova. If we add to this number the part of earlier emigration, who have regulated their status for living and working in host countries, it results that the estimation by Dr. Hivzi Islami in his paper entitled "Demographic Dimension of Kosova’s Issue" that around 500 thousand Albanians from Kosova are emigrants with different status, stands true. This human potential engaged in developed industrial countries represents the main factor in the source of hard foreign currency incomes in Kosova. It must be said that in the structure of the recent diaspora, a big space covers mainly young work age, particularly males. Although after 1989 migrations had a family character, in our analysis a particular importance has the estimation that about 300 thousand people in some way work in various jobs in West European countries. If we assume that these persons would send home in average 1.500-2.000 DM a year, we would have incomes of 450 to 600 million DM. And if we assume that 30% of this quantity could be mobilized for investments, we would have 135 to 180 million DM from this source.
A surveyed accounting of potential funds (assets) that could be mobilized for investments would be:
mill. DM
Var.1 Var.2
The savings from the family sources 65.0 98.5
Enterprises 104.5 104.5
Stores 60.0 60.0
"Gray" Economy 15.0 15.0
The funds from diaspora 135.0 180.0
Total 379.5 458.0
It can be concluded that the development policy of SME could be based on financial resources that can express a sound basis for development and investments. But, at present this capital is immobilized and not incorporated in a financial infrastructure, because the financial system of Kosova has been destroyed. This can be seen from the very modest investment activity.
The major obstacles for the development of investment activity, according to the ranking of three factors (taken from the poll) are:
Only about 4% of polled businessmen have responded that they haven’t dealt with investments at all. The lack of organization and experts makes up 5.4% and 4.3% respectively. It is interesting to note that the lack of ideas for investments and the lack of projects participate with 7.5%. This speaks more about the importance that is given to the preparatory stage of investments, rather than about real importance of this problem. According to statistical data, investment activity in Kosova has faced a drastic fall. In 1993 investments decreased for about 5 times compared to 1987. In 1994 investments of private sector made up about 69% of total investments in fixed capital.
The average of annual investments of polled enterprises is 10.962 DM, which means that only these enterprises invest about 3 million DM a year. This is certainly not a desirable volume and it is an expression of the impact of the above-mentioned factors. The structure of investments is not favorable. The building of premises for business activity has the greatest proportion with 23.6%, transporting vehicles 22.9%, other vehicles 18.8%, manufacturing equipment only 14.3%.
Statistical data also testify for a very unfavorable structure of investments of private economy in Kosova (including family economies) in 1995:
Consructing works 73.10 %
Equipment 1.70 %
Other 15.20 %
Total 100.00 %
According to statistical data, about 60% of investments in private sector are destined for building constructions, 28.6% agriculture, 9.4% trade, and 4% for other activities. The poll testifies a preoccupation of Kosova’s entrepreneurs with investments. Furthermore, the aim of investing in manufacturing and in agribusiness dominate in their orientations. This orientation is, according to our analyses, a very right one. But, the effectuation of this concernment and the orientation face obstacles, which are mentioned earlier. If we take the political situation and uncertainty as a factor in which we cannot influence, then as main factors remain the lack of capital and the lack of bank support. Only supporting and generation of private sector investments can overcome the situation of stagnation in development and in business of private enterprises.