Scorecard of Municipalities Montenegro 2011

Economic Growth Project & Good Governance Activity in Montenegro Scorecard of Municipalities Montenegro 2011 PLUŽINE PLJEVLJA ŽABLJAK BIJELO POLJE ŠAVNIK MOJKOVAC NIKŠIĆ KOLAŠIN BERANE ROŽAJE ANDRIJEVICA January 2012 This study was made possible with the support of the American people through the U.S. Agency for International Development, specifically through its Good Governance Activity in Montenegro and Economic Growth Project. The author s views expressed in this study do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CETINJE DANILOVGRAD KOTOR HERCEG NOVI PODGORICA HERCEG NOVI TIVAT BAR PLAV

Economic Growth Project & Good Governance Activity in Montenegro Scorecard of Municipalities MONTENEGRO 2011 This study was made possible with the support of the American people through the U.S. Agency for International Development, specifically through its Good Governance Activity in Montenegro and Economic Growth Project. The author s views expressed in this study do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

Table of Contents Introduction...3 Executive Summary...4 Methodology...6 Scorecard of Municipalities Indicators...8 Indicator Quality of Life...8 Indicator Public Utility Services Delivery...10 Indicator Local Self-Governance...12 Indicator Delivery of Business Sector Services...14 Improvement in Local Administration...16 Municipalities in Montenegro Brief Presentation...20 Annexes...45 2 USAID Montenegro

Introduction GOOD GOVERNANCE ACTIVITY IN MONTENEGRO The Good Governance Activity in Montenegro (GG Activity) is a multi-year project funded by the United States Agency for International Development (USAID) being implemented by the East-West Management Institute (EWMI). The GG Activity provides assistance covering business regulation and environment reform at national and municipal levels; improved rule of law; and civil society strengthening. ECONOMIC GROWTH PROJECT The Economic Growth Project, which is funded by USAID and implemented by CHF International (CHF), is helping to increase economic opportunity in northern Montenegro. In 13 northern municipalities the project is supporting sectoral initiatives in tourism, agriculture and agro-processing, as well as business enabling environment and small infrastructure initiatives with municipal governments. Montenegro is divided into 21 municipalities, including the Capital, Royal Capital and 19 municipalities. These municipalities could be categorized geographically as belonging to Coastal, Central or Northern regions, but there is no formal regional division. The USAID programs are focusing their data collection and analysis on the local/municipal level because local institutions are the first point of contact between companies and the government during business start-up and operations. In addition, residents usually perceive local government as responsible employers, and facilitators or controllers of their business operations. Therefore, the idea of ranking municipalities was initiated in order to measure and provide feedback on the perceived effectiveness of local efforts to facilitate improvement in socio-economic conditions and business environments in each municipality. The initial 2011 Scorecard of Municipalities was conducted during the second half of 2011 by two USAID programs: the Good Governance Activity in Montenegro and the Economic Growth Project. The primary Montenegrin partner institutions were the Chamber of Commerce of Montenegro, Union of Municipalities of Montenegro, and the American Chamber of Commerce in Montenegro. Since it is anticipated that the Scorecard will be updated annually by local institutional partners at minimal cost, the methodology and scope of the Scorecard have been kept deliberately simple yet useful. The Scorecard of Municipalities in Montenegro is based on qualitative data collected from residents, companies and representatives of local governments. It also draws on quantitative data provided through Monstat (the Statistical Office of Montenegro), as well as by individual municipalities. One of the key objectives is to enable the continued implementation of the Scorecard activity beyond the end of the mandates of the Good Governance Activity and Economic Growth Project. Therefore, Montenegrin institutions were included as partners and potential successors of the project who would continue with its implementation on an annual basis. USAID Montenegro 3

Executive Summary The initial 2011 Scorecard was conducted during the second half of 2011 by two USAID programs: the Good Governance Activity in Montenegro and the Economic Growth Project. The primary Montenegrin partner institutions were: Chamber of Commerce of Montenegro, Union of Municipalities of Montenegro, and the American Chamber of Commerce in Montenegro. since it is anticipated that the Scorecard will be updated annually by local institutional partners at minimal cost, the methodology and scope of the Scorecard have been kept deliberately simple yet useful. The goal of the Scorecard of Municipalities is to measure and compare, using a simple annual survey and some municipal level statistics, perceptions of economic potential and performance, and general attractiveness of living in Montenegro s municipalities. The survey is targeted at citizens, businesses and public officials, and covers quality of life, public utility services, local self-governance and business sector service delivery. Some municipal-level statistics are also gathered and compared covering population trends, education, employment, public service quality and the economy. The Scorecard allows municipalities themselves, as well as companies, investors and other interested audiences to see how a municipality is perceived by its citizens, businesses and officials on various criteria. It will serve as a spur to improvements in various areas of public policy, and to better communication between municipalities and their citizens and companies. Ultimately, such improvements will lead to greater prosperity and quality of life for all involved. The Scorecard does not aim to judge, analyze or make recommendations, but merely to present the perception of various target groups and to systematically present various readily available quantitative data. Qualitative data gathered through field surveys in September and October 2011 were used for the ranking of municipalities. The 2011 Scorecard of Municipalities was conducted for four main areas: a) Quality of life; b) Public utility services; c) Local self-governance; and d) Business sector service delivery. Each area included sub-areas, and a simple average of responses to the questions under these sub-areas was used to produce a score for each municipality. The main basis for the municipalities ranking on each sub-indicator was the level of satisfaction expressed by target groups, followed by their perception of its improvement over the previous year. The four indicators cover various aspects of the business, government, and civil society interface. Respondents were asked about their satisfaction level, and about their perception of improvement over the previous year. The Quality of Life indicator seeks to capture views on general well-being and prosperity, but also for businesses how amenable the municipality is from their perspective. It also allows for a comparison of perceptions amongst different target groups. Public utility service questions covered: local roads, water supply, sewerage system, wastewater treatment, solid waste treatment, and an overall rating of these services. Local self-governance questions, for companies and individuals, addressed involvement in decisions and performance of the local administration and the adequacy of policies pursued by the local administration. Responses from local officials indicated how businesses are involved in public decision-making activities, and whether they felt their work met citizens and companies needs. Business service delivery questions were asked of businesses and public officials. 4 USAID Montenegro

The main benefit of the Scorecard is that it allows municipalities to see what citizens and businesses think of local government performance, and enables individuals and businesses to compare the livability and competitiveness of municipalities. The Scorecard will help municipalities to communicate better and improve their public policy performance. Interestingly, a few predictable findings emerged from the 2011 Scorecard: There was no clear pattern of superior performance by some municipalities across different indicators and target groups; there was also no strong regional pattern of coastal, central or northern regions being better or worse. Local administration representatives generally and unsurprisingly thought better of their service delivery than did citizens or businesses, which partly may suggest the benefits of better engagement and communication in the future. Survey findings showed that citizens and companies were generally less satisfied than the local administration, and perceived lower improvements in all areas. Still, companies showed a slightly higher satisfaction level than did citizens. Even the most satisfied citizens did not express satisfaction with any of the issues raised, but the highest rates were between rates of could be better and high satisfaction. A similar situation was observed with the improvement level in comparison to the previous year, where citizens did not generally perceive improvement, although the highest rates were close to improvement. The most satisfied companies also did not express significant satisfaction on any issue and in only one case perceived improvement. On the other hand, the most satisfied representatives of local administrations expressed a high level of satisfaction, mostly with own results, and perceived significant improvement in certain areas. Quantitative data used in this project were presented in the brief description of each municipality as accompanying data for each indicator. Some of the most interesting quantitative data were used to support the qualitative findings: Some municipalities are challenged by having a youthful population, but a small percentage of higher education graduates per capita. The percentage of total citizens who are employed ranges from 8.93% to 55.09% per municipality, and is generally higher in the Southern region than in the Central or North regions. Newly established companies (those started in the past year) as a proportion of total active companies ranged from 0% to 6.61%, and this rate was generally higher in the Northern region. Nevertheless, more than half of Montenegrin municipalities did not invest any budget funds in business sector development. The proportion of municipal budgets devoted to NGO sector development ranged from 0.05% to 12.91% the previous year. Finally, investment in infrastructure ranged from 0.82% to 50.18% of municipal budgets. USAID Montenegro 5

Methodology The purpose of the Scorecard of Municipalities (SoM) is to provide a simple, easily repeated, and useful snapshot of the opinions of local businesses, citizens and government officials in certain key socio-economic and business areas in all of Montenegro s municipalities. Accordingly, in order to ensure continuation of the Scorecard in the future, the methodology was kept relatively simple. The Scorecard of Municipalities 2011 is a survey-based project complemented by selected quantitative data collected at the municipal level and through the Statistical Office. Qualitative data are derived from survey responses from select target groups, as described below. Quantitative data was primarily provided by the Montenegrin Statistical Office (MONSTAT), while data on public service quality was provided by the relevant department under each local government. All quantitative data was provided in September and October 2011. Quantitative data was not considered in conducting the scorecard analysis; rather, it has been used solely to provide a brief socio-economic background of municipalities. Qualitative data was derived from questionnaires (see Annex) prepared for each target group: citizens, companies and local administration. Questions were grouped in accordance with a pre-determined set of indicators: (i) quality of life, (ii) public utility services, (iii) local self-governance; (iv) general questions, including those on local government efficiency and corruption in local governments; and (v) delivery of services to the business sector (only companies and local administrations were asked this latter question). Qualitative data was considered as the basis for ranking municipalities. The main ranking parameters were satisfaction level (1=very low; 2=low; 3=could be higher; 4=high; 5=very high); and improvement level in comparison to the previous year (1=it is worse; 2=remains the same; 3=improved). Defined indicators were split into sub-indicators upon which respondents expressed their satisfaction and improvement level. The average score for sub-indicators constitutes the final score for indicators, which is then compared with other municipalities. Data given for Montenegro represents aggregated data for the entire country, including all responses for each target group: citizens, businesses and local administration. 6 USAID Montenegro

Qualitative data was collected through direct interviews with respondents from the target groups. The selection and number of interviewed individuals sample size and structure were defined at the outset as follows: CITIZENS LOCAL ADMINISTRATION COMPANIES SAMPLE STRUCTURE CRNA GORA 469 43 200 ANDRIJEVICA 5 2 5 Citizens Age: BAR 30 2 17 30% of 18-30 30% of 31-45 BERANE 26 2 10 20% of 46-60 BIJELO POLJE 34 2 10 20% of 61+ BUDVA 15 2 16 CETINJE 15 2 5 DANILOVGRAD 15 2 5 HERCEG NOVI 22 2 12 Local admin Position: KOLAŠIN 10 2 5 1 high official (e.g. Chief Administrator, Vice Mayor ) KOTOR 16 2 10 1 (+1 for Podgorica) Secretary of business related office MOJKOVAC 10 2 5 NIKŠIĆ 52 2 15 PLAV 10 2 5 PLJEVLJA 22 2 5 PLUŽINE 5 2 5 Companies Sectors/Industries: PODGORICA 130 3 40 30% tourism (both catering and accommodation) 20% production (food) ROŽAJE 17 2 5 20% production (non-food) ŠAVNIK 5 2 5 20% trade (food and non-food) TIVAT 10 2 5 10% construction and transportation ULCINJ 15 2 10 ŽABLJAK 5 2 5 *Data analysis and ranking process was completed using SPSS statistical software and MS Office Excel program. USAID Montenegro 7

Scorecard of Municipalities Indicators Indicator Quality of Life Citizens, companies and representatives of local administrations had an opportunity to rate their satisfaction with, and improvement of, their living quality according to the following sub-indicators: estimate of general poverty level; overall satisfaction with the living quality; role and influence of civil sector (NGOs and organized groups) on business development and on the quality of life in the local community; public sector efficiency; satisfaction with the quality of public services provided to citizens and companies; satisfaction with offered/available jobs; satisfaction on regulations/policies established by local authority in the field of regulating business activities and investments; and satisfaction on public and private sector interaction in design and implementation of business-related policies. The quality of life indicator presents the general opinion of all target groups on their living quality. Citizens were mostly focused on their assessment of the general poverty level and available jobs. Representatives of companies gave their personal opinion not only as citizens of their communities, but also as employers; similarly, local administration officials responded as citizens, employers and as a provider of public services. Representatives of all three target groups also had an opportunity to express their opinion on interconnections amongst respondent groups thereby providing some sense of the cohesiveness of the municipality in pursuit of an improved quality of life. Generally, citizens and companies were less satisfied with the quality of life than were representatives of local administration. That difference is very obvious in some municipalities, where citizens and companies were strongly negative in ranking satisfaction levels, while representatives of local administrations almost always indicated that living quality was at a very high level. When we compare the general opinion on quality of life across all three groups, citizens are the least satisfied, followed by companies, while local administration officials give the highest scores. Citizens of only one Montenegrin municipality ranked quality of life above the could be higher rank, while all others ranked it as low,» sometimes as very low.» Companies ranked quality of life closer to the level of could be better rather than low, while local administration officials believe that their living quality is generally high, and above the rank of could be better. Quality of life is in most cases worse than the previous year for citizens; companies tend to believe that it remains at the same level, while representatives of local administrations mostly believe that it has improved. Views on improvement in quality of life followed a pattern similar to that of satisfaction with this indicator. Citizens and companies did not perceive significant improvement in their living quality. Representatives of local administrations, meanwhile, believe that their living quality is somewhat above the level of the previous year, and is improving. There was no significant difference in opinion on quality of life by region. However, representatives of companies located in the Central and Coastal region are more satisfied with living quality than those in the north of Montenegro. 8 USAID Montenegro

Figure 1: Satisfaction with and improvement of quality of life, as rated by target group Citizens Companies Local Administration 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 BAR 2,49 3,13 HERCEG NOVI 1,96 2,88 DANILOVGRAD 2,02 2,66 TIVAT 2,26 2,61 PODGORICA 2,08 2,61 BIJELO POLJE 1,87 2,60 PLUŽINE MOJKOVAC 1,77 1,73 2,41 2,33 ŽABLJAK 2,03 2,31 KOTOR 1,69 2,31 BERANE PLAV 1,86 1,78 2,27 2,20 ŠAVNIK 1,83 2,15 PLJEVLJA 2,05 1,84 NIKŠIĆ 1,66 2,02 CETINJE ANDRIJEVICA BUDVA ROŽAJE 1,93 1,76 1,92 1,79 1,90 1,92 1,88 1,72 ULCINJ 1,71 1,66 KOLAŠIN 1,47 1,29 MONTENEGRO 1,92 2,38,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 CETINJE HERCEG NOVI 2,37 2,51 3,30 3,18 TIVAT BERANE MOJKOVAC 2,21 2,10 2,13 3,03 2,99 2,90 PLUŽINE BAR BIJELO POLJE 2,13 2,19 2,10 2,87 2,83 2,75 NIKŠIĆ 1,83 2,67 ŽABLJAK BUDVA PODGORICA 1,98 2,11 2,11 2,65 2,63 2,62 KOLAŠIN 1,60 2,57 PLJEVLJA KOTOR 1,87 1,86 2,57 2,53 ULCINJ ROŽAJE PLAV 2,00 2,00 1,82 2,47 2,40 2,37 DANILOVGRAD 1,50 2,30 ANDRIJEVICA 2,10 2,00 ŠAVNIK 1,57 1,33 MONTENEGRO 2,04 2,67 ULCINJ ERCEG NOVI MOJKOVAC ANILOVGRAD ANDRIJEVICA ŽABLJAK BAR TIVAT PLUŽINE ROŽAJE BERANE BUDVA KOTOR JELO POLJE ŠAVNIK PLAV PODGORICA KOLAŠIN PLJEVLJA CETINJE NIKŠIĆ 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 2,64 3,86 2,43 3,79 2,93 3,79 2,21 3,71 2,64 3,64 2,14 3,50 2,86 3,43 2,43 3,36 2,57 3,14 2,07 3,14 2,43 3,07 2,00 3,07 2,64 3,07 2,57 3,00 2,21 3,00 2,21 2,86 2,71 2,50 2,00 2,64 2,21 2,64 2,07 2,00 1,57 2,00 Satisfaction level: 1=very low; 2=low; 3=could be higher; 4=high; 5=very high Improvement level in comparison to the previous year: 1=worse; 2=the same; 3=improved *The rankings are ordered by satisfaction level. USAID Montenegro 9

Indicator Public Utility Services Delivery Citizens, companies and local administration had an opportunity to express their satisfaction with, and perception of, improvements in, the following public utility services at the local level: local roads, water supply, sewage system, wastewater treatment, solid waste treatment and overall public services. All public utility companies are owned by local governments in each Montenegrin municipality and management, investment and customer relations for these services are the responsibility of the local administration. In general, public utility service in Montenegro is in relatively poor condition as infrastructure is old and outdated. In recent years, all local administrations made significant investments in public utility infrastructure, thereby acknowledging that it is a very important element in quality of life, and an important precondition for business investment. Since the entire community relies on public utility services, and they are provided only by public companies, the local administration is perceived as the only party responsible for the quality of those services. Local parliaments formally decide on issues related to the management of public companies, and on investments that will be made in infrastructure. The basic network of local roads was established long ago, and it is rather the maintenance and expansion thereof that are the main investment challenges for local administrations. Some parts of the local road system, especially in the north of Montenegro, require maintenance and reconstruction every year after cold and rainy winters. Therefore, citizens expect that local administration will serve their needs promptly and with a high quality of service. Water supply in Montenegro is also provided by public water supply companies. In small cities, this company will additionally provide wastewater treatment and solid waste treatment services. Infrastructure for water supply in the whole of Montenegro is very old and out of date, although it has been reconstructed in some municipalities and expanded according to specific needs. The Government of Montenegro contributes significant in investment to water supply systems when required. Thus, a regional water supply network has been provided for most coastal cities, as they have suffered water shortages for years. Sewage systems, as well as wastewater and solid waste treatment, are usually managed by local administrations. The Government of Montenegro also participates in some regional projects and investments, but municipalities are still not decisive and strong enough to provide adequate services. Therefore, negotiations and disagreements among municipalities are still ongoing in the process of attempting to establish regional waste disposal arrangements across Montenegro. Citizens are not satisfied with public utility services, while companies are somewhat more satisfied and representatives of more than half of the local administrations stated they could be better in other words, that they are at an acceptable, if imperfect, level. Representatives of all three groups in the majority of Montenegrin municipalities believe that local public utility services were no worse than they had been the previous year. Additionally, the majority of representatives of local administrations, as providers of those services, believe rather that public utility services improved in comparison to the previous year. 10 USAID Montenegro

Figure 2: Satisfaction with and improvement of public utility services, as rated by target group Citizens Companies Local Administration,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 PLUŽINE 2,73 3,77 MOJKOVAC 2,09 3,60 BERANE 2,27 3,42 BAR 2,73 3,42 HERCEG NOVI 2,28 3,40 KOLAŠIN 2,27 3,17 DANILOVGRAD 2,30 2,97 NIKŠIĆ 1,93 2,96 PODGORICA 2,23 2,92 TIVAT 2,85 2,63 BUDVA 2,20 2,81 PLAV 1,99 2,75 ROŽAJE ŠAVNIK 2,22 2,11 2,74 2,70 ŽABLJAK 2,70 2,57 BIJELO POLJE ANDRIJEVICA PLJEVLJA CETINJE KOTOR 2,02 1,90 2,01 2,17 2,15 2,59 2,57 2,54 2,46 2,44 ULCINJ 1,64 1,91 MONTENEGRO 2,19 2,91,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 ŽABLJAK 3,00 3,80 MOJKOVAC BAR BUDVA BERANE 2,40 2,47 2,56 2,50 3,60 3,53 3,50 3,40 PLJEVLJA 2,00 3,40 PLUŽINE 2,60 3,40 ROŽAJE 2,40 3,40 TIVAT PODGORICA HERCEG NOVI KOLAŠIN 2,60 2,58 2,50 2,40 3,40 3,32 3,25 3,20 NIKŠIĆ BIJELO POLJE 2,00 2,10 3,13 3,10 KOTOR 2,40 2,90 ANDRIJEVICA 1,80 2,80 DANILOVGRAD 1,40 2,80 ULCINJ 2,20 2,70 CETINJE 2,60 2,60 ŠAVNIK 1,40 2,20 PLAV 2,00 1,80 MONTENEGRO 2,35 3,19-0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 BUDVA 3,00 4,42 BERANE 2,83 4,17 MOJKOVAC 2,17 3,92 PLUŽINE DANILOVGRAD PODGORICA 3,00 3,00 2,94 3,83 3,75 3,67 ANDRIJEVICA 2,50 3,50 BAR 3,00 3,50 KOLAŠIN 2,33 3,50 NIKŠIĆ 3,00 3,50 TIVAT 2,67 3,50 ROŽAJE 2,67 3,25 HERCEG NOVI CETINJE KOTOR ŽABLJAK BIJELO POLJE PLAV ULCINJ 2,25 2,42 2,25 2,25 2,08 2,33 2,00 3,08 3,00 3,00 3,00 2,92 2,83 2,67 PLJEVLJA 2,00 2,58 ŠAVNIK 2,42 2,25 MONTENEGRO 2,54 3,34 Satisfaction level: 1=very low; 2=low; 3=could be higher; 4=high; 5=very high Improvement level in comparison to the previous year: 1=worse; 2=the same; 3=improved *The rankings are ordered by satisfaction level. USAID Montenegro 11

Indicator Local Self-Governance Citizens, companies and representatives of local administrations had an opportunity to express their satisfaction level and opinion on the improvement of the following: interest in work of the local government; involvement in developing activities of the local government; work of the local government; municipal budget and its allocation; decisions made by the local assembly and/or mayor; public procurements conducted by the local government; provision and performance of public works; how far local government decisions respond to local public interests; construction permitting at the municipal level; resolving other requests; openness and accessibility of the local government in making local regulations; influence and effect of policies made by local government (measures, regulations, fees) on development of private entrepreneurship; inclusion of businesspeople in decision-making at local level; confidence in the services that local government is providing; level of investments in training/education by local companies; local availability of a skilled labor force in accordance with market needs; and access to finance. The indicator on local self-governance also considers involvement of citizens and businesses in local policies, as well as the adequacy of policies made by the local administration. Figure 3: Satisfaction (1-5) with involvement of citizens and businesses in local policies (national averages) Interest in work of the local government Involvment in developing activities of the local government Municipal budget and its alocation Decisions made by the local assembly and/or mayor Public procurement conducted by the local government Provision and performance of public works,00 1,00 2,00 3,00 4,00 5,00 2,63 2,98 2,59 2,49 2,59 2,56 2,79 3,07 3,81 3,76 3,98 3,95 Citizen respondents from almost all Montenegrin municipalities and the majority of companies are not satisfied with local self-governance, while representatives of almost all local administrations stated it could be better or is close to a high level. Generally, citizens and companies in almost all Montenegrin municipalities tend to believe that local selfgovernance is at the same level as it was the previous year. However, the majority of representatives of local administrations believe that local self-governance has improved in comparison to the previous year. Responsiveness of local government decisions to public interests Construction permitting at the municipal level Resolving other requests Overall satisfaction with work of the local self-government 2,60 2,77 2,86 2,74 3,88 3,72 4,00 3,84 Citizens Companies 12 USAID Montenegro

Figure 4: Satisfaction with and improvement of local self-governance, as rated by target group Citizens Companies Local Administration,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 BAR 2,68 3,44 HERCEG NOVI 2,21 3,09 TIVAT 2,66 3,09 PLUŽINE DANILOVGRAD BERANE ŠAVNIK BIJELO POLJE PODGORICA PLJEVLJA ŽABLJAK CETINJE 2,24 2,19 2,13 2,30 2,11 2,17 2,04 2,27 1,94 3,01 2,97 2,96 2,89 2,83 2,73 2,59 2,55 2,49 ROŽAJE KOTOR ANDRIJEVICA NIKŠIĆ PLAV MOJKOVAC 1,84 1,87 1,75 1,70 1,76 1,90 2,39 2,35 2,32 2,27 2,21 2,17 BUDVA 2,16 2,07 ULCINJ 1,75 2,12 KOLAŠIN 1,55 1,95 MONTENEGRO 2,08 2,66,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 BERANE 2,54 3,63 PLJEVLJA 2,00 3,36 HERCEG NOVI 2,77 3,32 NIKŠIĆ 2,01 3,23 CETINJE 2,42 3,20 ŽABLJAK 2,22 3,18 PODGORICA 2,40 3,11 BAR 2,16 3,05 PLUŽINE BIJELO POLJE 2,31 2,29 3,02 3,00 TIVAT ROŽAJE KOLAŠIN MOJKOVAC BUDVA PLAV ULCINJ DANILOVGRAD KOTOR 2,02 1,96 1,89 2,13 2,13 2,11 2,06 1,98 1,92 2,96 2,87 2,78 2,78 2,76 2,76 2,67 2,64 2,54 ANDRIJEVICA 1,87 2,22 ŠAVNIK 1,56 2,07 MONTENEGRO 2,21 2,99-0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 ANDRIJEVICA 2,35 4,19 BAR NIKŠIĆ 2,88 3,00 4,15 4,12 PODGORICA PLUŽINE DANILOVGRAD 2,69 2,92 2,69 3,90 3,88 3,85 KOTOR 2,46 3,85 HERCEG NOVI BERANE 2,73 2,77 3,81 3,77 ULCINJ 2,19 3,77 CETINJE 2,88 3,73 TIVAT 2,50 3,73 BUDVA 2,69 3,65 MOJKOVAC ŠAVNIK 2,54 2,54 3,58 3,46 ŽABLJAK PLAV 2,62 2,54 3,19 3,12 ROŽAJE 2,12 3,08 PLJEVLJA 3,04 2,83 BIJELO POLJE 2,00 2,92 KOLAŠIN 2,08 2,38 MONTENEGRO 2,57 3,58 *The rankings are ordered by satisfaction level. Satisfaction level: 1=very low; 2=low; 3=could be higher; 4=high; 5=very high Improvement level in comparison to the previous year: 1=worse; 2=the same; 3=improved USAID Montenegro 13

Indicator Delivery of Business Sector Services Companies and local administration officials had an opportunity to express their satisfaction level and opinion on improvement of the following services for businesses at the local level: Information/advice on setting up a new business; market information; information on standards; certification; assistance with locating/contacting potential customers; assistance with locating/contacting training programs or mentors; assistance with locating/contacting consultants with specific expertise; assistance with obtaining financing; information on trade fairs/exhibitions/missions; information on networking with other businesses in the sector or in the region; information about conferences or seminars; business incubator space; issuing licenses/permits; construction permitting; and inspections required. Montenegrin companies and local administrations have different perceptions of the use/offer of the business services listed. For most services, a lower percentage of companies stated that they use these services than representatives of local administrations reported offering such services to businesses. Companies and local administration officials were asked whether they were aware of the provision of business incubator space in their municipalities. It is interesting that companies and local administration officials had opposite perceptions in all municipalities -- a high number of companies said that there is no such space in their municipalities, while the majority of representatives of local administrations stated there is business incubator space in their municipality. Still, at the national level, both target groups responded at almost the same level. Representatives of companies from most Montenegrin municipalities are less satisfied with business sector service delivery than are representatives of local administrations. The former rated those services as being at a low level, while the latter rated those services as being at a high level. Generally, companies in all Montenegrin municipalities rated the improvement level of business service delivery lower than did local administration respondents. Companies mostly tend to believe that business service delivery is at the same level as it was the previous year or even worse, while the majority of representatives of local administrations believe that delivery has improved in comparison to the previous year. Local administrations were not asked about providing construction permits and licenses, since they are obliged to provide these services under national law. Figure 5: Use of Business Services Montenegro Information about conferences or seminars Information on networking with other businesses in your industry Information on networking with other businesses in your region Information on trade fairs/exhibitions/missions Business incubator space Assistance with obtaining financing Assistance with locating/contacting consultants with specific expertise Assistance with locating/contacting training programs or mentors Information/advice on business planning Assistance with locating/contacting potential customers Information on standards, certification 14 USAID Montenegro Market information Information/advice on setting up a new business Construction permitting Licenses/permits 13% 21% 21% 31% 30% 29% 32% 32% 33% 38% 38% 43% 41% 49% 48% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Local administration Companies 63% 60% 67% 67% 65% 67% 69% 77% 81% 81% 84% 88% 88%

Figure 6: Satisfaction with and improvement of business service delivery, as rated by companies and local administrations Companies Local Administration,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 NIKŠIĆ PLJEVLJA PODGORICA BIJELO POLJE BERANE 1,98 2,11 2,27 2,31 2,03 3,28 3,21 3,20 3,17 3,17 HERCEG NOVI 2,72 3,13 CETINJE MOJKOVAC BAR BUDVA TIVAT 2,34 2,26 2,30 2,18 2,04 3,02 2,96 2,85 2,83 2,79 ULCINJ KOLAŠIN 1,99 1,89 2,64 2,59 ROŽAJE ŽABLJAK KOTOR PLUŽINE 2,17 2,09 1,97 1,98 2,51 2,49 2,48 2,36 ANDRIJEVICA 1,85 2,33 PLAV 2,03 2,30 DANILOVGRAD 1,85 2,19 ŠAVNIK 1,61 1,48 MONTENEGRO 2,16 2,85,00,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 ANDRIJEVICA 2,64 BUDVA 2,54 BERANE 2,82 BAR 2,93 CETINJE 3,00 DANILOVGRAD 2,86 PODGORICA 2,48 TIVAT 2,91 PLUŽINE 3,00 ŠAVNIK 2,85 NIKŠIĆ 2,86 ROŽAJE 2,96 ŽABLJAK 2,55 PLAV 2,58 ULCINJ 2,25 KOTOR 2,14 MOJKOVAC 2,56 2,93 BIJELO POLJE 2,08 2,88 HERCEG NOVI PLJEVLJA 2,00 2,67 2,57 2,50 KOLAŠIN 1,71 1,77 MONTENEGRO 2,62 4,54 4,36 4,04 4,00 4,00 4,00 3,88 3,75 3,61 3,58 3,50 3,46 3,46 3,33 3,29 3,27 3,57 *The rankings are ordered by satisfaction level. Satisfaction level: 1=very low; 2=low; 3=could be higher; 4=high; 5=very high Improvement level in comparison to the previous year: 1=worse; 2=the same; 3=improved USAID Montenegro 15

Improvement in Local Administration Citizens, companies and representatives of local administrations from all Montenegrin municipalities were asked to select one or more of the following improvements that they would like to see provided by their local administrations: regulations, better organization, qualified employees, modern technology, reduced corruption, the establishment of a one-stop shop, or introduction of System 48 1. The most desired areas of local self-governance improvement as reported by respondents were as follows: Regulations: for citizens from Cetinje and Danilovgrad; for companies from Andrijevica and Kolašin; and for local administration from Nikšić. Organization: for citizens from Budva; companies from Plav; and for local administration from Andrijevica and Mojkovac. Qualified employees: for citizens from Plav; for companies from Žabljak; and for local administration from Cetinje. Modern Technology: for citizens from Pljevlja; for companies from Nikšić; and for local administration from Plav. Less Corruption: for citizens from Herceg Novi; for companies from Mojkovac; and for local administration from Bijelo Polje. The main areas of local self-governance inefficiency identified by respondents were as follows: Regulations: for citizens and for companies from Kolašin; and for local administration from Bar. Organization: for citizens from Kolašin; companies from Pljevlja; and for local administration from Kotor. Unqualified employees: for citizens from Andrijevica; for companies from Danilovgrad; and for local administration from Kotor. Old Technology: for citizens from Mojkovac; for companies from Herceg Novi; and for no representative of any local administration. Corruption: for citizens from Herceg Novi; for companies from Bijelo Polje; and for local administration from Kolašin. Note: Since representatives of local administrations in certain municipalities did not perceive corruption in their administration, they did not report if it would be eventually reduced through the introduction of System 48 or a one-stop shop. At the national level, the introduction of System 48 would be the most desirable improvement for citizens (25%) and companies (25%), while representatives of local administrations would prefer introduction of one-stop shops as an improvement in local administration. 1 System 48 is the complex of IT and spatial systems that enables administrations to respond to all clients requests in 48 hours. This system was first developed and introduced in the municipality of Inđija, Republic of Serbia, and implemented in many other municipalities in the Region 16 USAID Montenegro

Figure 7: Would the "One-stop shop" model or System 48 increase efficiency and reduce corruption Citizens Companies Local Administration 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANDRIJEVICA BAR BERANE BIJELO POLJE BUDVA CETINJE DANILOVGRAD HERCEG NOVI KOLASIN KOTOR MOJKOVAC NIKSIC PLAV PLJEVLJA PLUZINE PODGORICA ROZAJE SAVNIK TIVAT ULCINJ ZABLJAK MONTENEGRO 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANDRIJEVICA BAR BERANE BIJELO POLJE BUDVA CETINJE DANILOVGRAD HERCEG NOVI KOLASIN KOTOR MOJKOVAC NIKSIC PLAV PLJEVLJA PLUZINE PODGORICA ROZAJE SAVNIK TIVAT ULCINJ ZABLJAK MONTENEGRO 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANDRIJEVICA BAR BERANE BIJELO POLJE BUDVA CETINJE DANILOVGRAD HERCEG NOVI KOLASIN KOTOR MOJKOVAC NIKSIC PLAV PLJEVLJA PLUZINE PODGORICA ROZAJE SAVNIK TIVAT ULCINJ ZABLJAK MONTENEGRO One-stop shop model or System 48 would make public administration more efficient One-stop shop model or System 48 would reduce corruption USAID Montenegro 17

Corruption in Local Administration A significant percentage of citizens, and a somewhat lower percentage of companies (but still over 50%), believe that there is corruption in their local administrations. As could be expected, only a few representatives of local administrations believe that there is corruption in their administrations. Figure 8: Perception of Corruption Citizens Companies Local administration Yes, there is corruption; 67% No, there is no corruption; 31% Yes, there is corruption; 53% No, there is no corruption; 42% Yes, there is corruption; 12% No, there is no corruption; 81% Don't know if there is corruption; 1% Don't know if there is corruption; 5% Don't know if there is corruption; 7% When asked about personal experience with requests for bribes or the provision of favors, not many of those interviewed responded in the affirmative, with a few exceptions: - Citizens: Herceg Novi (23%), Žabljak (20%), Podgorica (17%), Budva (13%), Rožaje (12%), Plav (10%), Nikšić (8%), Danilovgrad (7%), Kotor (6%), Pljevlja (5%) and Berane (4%). - Companies: Kotor (50%), Rožaje (20%), Herceg Novi (8%), Bar (6%) and Podgorica (5%). - Local administration: Plav (50%). 18 USAID Montenegro

Figure 9: Perception of citizens, companies and local administrations on whether there is corruption in their local administration 100% 90% 100% 95% 94% 90% 100% 90% 95% 90% 80% 75% 82% 80% 80% 70% 60% 50% 69% 70% 60% 60% 60% 60% 60% 53% 53% 50% 50% 50% 50% 50% 50% 62% 65% 60% 67% 40% 30% 40% 38% 29% 40% 40% 40% 33% 25% 20% 20% 20% 20% 10% 7% 0% Citizens Companies Local administration *If there was no response from those surveyed, no data line has been included in the chart. USAID Montenegro 19

Municipalities in Montenegro Brief Presentation The Statistical Office of Montenegro (MONSTAT) organized and conducted a census of the population, households and real-estate in April 2011, and provided the most recent data in response to the Scorecard request. Data provided by MONSTAT: Population (Population represents persons whose usual place of residence is Montenegro) - Number of households A household is a family or other community of persons living together and spending their income on primary living needs (housing, food, etc.) regardless of whether its members are present in the place where the household lives, or some live for a longer period in another place, i.e. abroad for the purposes of work, education or other reasons. - Density -- Density is the number of inhabitants per square kilometer - Natural growth Based on data on births, deaths, and migration flows as submitted by the Ministry of the Interior - Level of population growth -- 1990/2003/2011 censuses -- comparison of data with previous censuses conducted in Montenegro. - Share of population aged 25-64 in total population (%) - Share of population aged 0-24 in total population (%) -- Data on age was obtained from responses regarding date of birth. Data is presented as the age of completed years of life. This means that the age range of 5-9 years, for example, includes persons who have reached 5,6,7,8 and 9 years, but have not yet turned 10. Education - Number of higher education graduates aged 20-24 per 1000 population -- Statistics include all higher education institutions, both public and private, data on registered students refer to the academic year, while data on completed studies and obtained titles refer to the calendar year. Employment - Employees -- Labor force includes all persons working or seeking work in order to earn their living. - Employees as a % of total population -- Share of labor force in total population. - Women as a % of total number of employed persons -- Share of female labor force in total labor force. 20 USAID Montenegro

- Average earnings without taxes and contributions (net) -- Data on average wages show wages paid in the month and are obtained from the regular monthly survey monthly report on employees and wages (Form RAD-1). The survey covers enterprises, institutions, cooperatives and organizations of all types within the reporting administrative unit (i.e., the municipality). - Unemployment rate -- Unemployed persons registered in the Employment Office of Montenegro as a % of total labor force in each municipality. Economy - Number of companies active during the previous year - Number of newly established companies in the previous year (Note: The Structural Business Statistics Survey was used for the calculation of indicators that are needed for analyzing the structure of company activities, the structure of inputs and outputs in the production process, business success and competitiveness of economic agents at a certain level of activity.) Quantitative data provided by local administrations were related to public service quality and included: - Number of those employed by local administration - employees of local administration as a percentage of total population - budget for NGO sector as % of total budget - budget for business sector as % of total budget - Investment in infrastructure as % of total budget Some information provided by citizens, companies, as well as representatives of local administration, was used to explain and complement quantitative data obtained from local administrations. Therefore, the number of people employed by local administrations might corroborate a finding that citizens and companies are satisfied with their involvement in the work and decisions of local administration, or that they find policies pursued by the local administration adequate for their life and business. The percentage of population working in local administration in Montenegrin municipalities ranges from 0.41% in Rožaje to 2.22% in Šavnik. NGO sector involvement in the community/municipality activities and decisions could contribute to satisfaction with the quality of life, and local administrations are indeed obliged to support the work of local NGOs by investing certain portions of the annual budget in the NGO sector and its proposed projects. The share of local budget expended on NGO sector projects in Montenegrin municipalities ranges from 0.05% in Ulcinj to 12.91% in Pljevlja. USAID Montenegro 21

A significant portion of the local budget for many Montenegrin municipalities is devoted to infrastructure development. As the public utility companies are owned and managed by the local administrations, these administrations recognize their own responsibility for providing quality services through those companies. Investments in infrastructure in Montenegrin municipalities as a share of total annual budget range from 0.82% in Ulcinj to 50.18% in Plužine. Satisfaction with the infrastructure in a certain community may translate into greater satisfaction with the quality of life in that community. In considering our findings on the quality of life in Montenegrin municipalities, employment rates and average wages in that municipality (derived from quantitative data) were also considered. However, even if quantitative data produces positive results for a municipality (employment or average wage), qualitative data (opinion of citizens and/or companies) may still produce negative results (i.e. relative dissatisfaction with quality of life), and vice versa. The share of newly established companies in the overall number of active companies in each Montenegrin municipality may provide some indication of a proactive business sector, and ranges from 0% in Plužine and Šavnik to 6,61% in Mojkovac. The share of the local budget that each local administration invests in business sector development can also indicate a commitment by the local administration to developing the private sector, although in 2010 12 Montenegrin municipalities did not devote any budget expenditures to business sector development. 22 USAID Montenegro

Table 1: Overview of quantitative data, by municipality 2 CRNA GORA Andrijevica Bar Berane Bijelo Polje Budva Cetinje Danilovgrad Herceg Novi Kolašin Kotor Mojkovac Nikšić Plav Pljevlja PlužinePodgorica Rožaje Šavnik Tivat Ulcinj Žabljak Population 620029 5071 42048 33970 46051 19218 16657 18472 30864 8380 22601 8622 72443 13108 30786 3246 185937 22964 2070 14031 19921 3569 Number of households 194795 1699 14211 9991 13199 6982 5747 5497 11133 2850 7649 2815 21683 3737 10790 1140 57346 5684 695 4862 5812 1273 Density 45 18 70 47 50 158 18 37 131 9 67 23 35 27 23 4 129 53 4 305 78 8 Natural growth 1785-25 156 83 137 123-32 9 35-31 44-45 122 29-188 -27 1069 261-19 30 70-16 Level of population growth (census 1990/2003/2011) -0,02% -12,34% 5,02% -3,13% -8,42% 20,80% -9,87% 11,80% -6,57% -15,77% -1,51% -14,35% -3,77% -5,05% -22,66% -24,02% 9,94% 1,19% -29,76% 2,94% -1,82% -15,10% Share of population aged 25-64 in total population (%) 53,99% 52,30% 54,72% 50,57% 51,74% 59,29% 55,87% 53,80% 57,23% 52,47% 56,71% 53,68% 54,03% 48,34% 54,37% 51,57% 54,62% 48,88% 52,37% 57,05% 51,95% 52,54% Share of population aged 0-24 in 33,17% total population (%) 30,90% 32,03% 36,10% 35,92% 30,73% 28,68% 32,29% 28,00% 30,51% 29,13% 32,32% 32,41% 38,39% 27,30% 26,28% 34,65% 43,01% 27,78% 30,26% 33,65% 28,08% Education Num of students per capita 3,49% 1,89% 3,16% 3,11% 3,23% 2,84% 5,15% 2,30% 2,77% 2,49% 3,62% 3,50% 3,82% 1,89% 2,64% 3,17% 4,41% 1,93% 2,75% 3,41% 1,97% 4,46% Num of graduated students in population aged 20-24 778 5 40 30 34 21 49 17 28 12 32 21 133 2 30 5 282 3 4 14 10 6 Employment Employees 161742 453 11072 5279 7250 10587 3706 3012 10838 1394 6308 1356 16687 1180 6095 637 64706 2817 240 3357 4037 731 % of employees per total population 26,09% 8,93% 26,33% 15,54% 15,74% 55,09% 22,25% 16,31% 35,12% 16,63% 27,91% 15,73% 23,03% 9,00% 19,80% 19,62% 34,80% 12,27% 11,59% 23,93% 20,27% 20,48% % of women in total number of employees 47,5 37,1 45,6 38,6 41,8 66,1 53,7 35,9 50,8 40,1 51,9 44,5 35,7 33,8 38,1 32,5 50,3 34,4 30,4 56,5 43 46,5 Average earnings without taxes and contributions (net) 479 420 417 400 392 487 415 382 382 432 466 422 476 397 536 531 530 440 413 517 371 432 Unemployment rate 19,9 Public service quality Num of employed in local administration 29 286 420 350 354 279 115 168 178 263 69 414 122 292 32 930 95 46 91 204 48 % of budget for NGO sector 0,40% 0,11% 0,35% 0,30% 0,24% 0,90% 0,70% 1,20% 8,70% 0,78% 0,37% 0,20% 0,20% 12,91% 0,58% 0,22% 0,65% 0,06% 0,54% 0,05% 0,26% % of budget for business sector 0,70% 0,12% 0,00% 2,20% 0% 0% 0,00% 0,20% 0% 0% 0% 0% 1,34% 0% 0,52% 1,62% 0% 0,49% 0,90% 0% Investments in infrastructure as % of total budget 26,49% 10,80% 40,36% 18,60% 44,70% 43,57% 6,00% 10,00% 21% 12,80% 26,90% 16,15% 24,69% 17,44% 21,32% 50,18% 49,71% 18,00% 36,37% 34,69% 0,82% 12,26% Economy Num of active companies last year 19410 51 1875 478 992 2060 514 318 1686 135 855 121 1332 95 501 26 6393 458 17 597 818 88 Num of newly established companies last year 523 1 55 15 24 42 9 11 27 8 17 8 36 2 15 0 209 13 0 15 11 5 2 There were no available data on unemployment rates by municipality. USAID Montenegro 23

Andrijevica The town of Andrijevica is located in the north of Montenegro. The economy of Andrijevica was impacted heavily by the decline of industry during the Yugoslav Wars; hence, the population of the municipality is declining slowly but steadily. The municipality has great tourism potential thanks to a superb unspoiled natural environment, and central location. Activities that can be developed include mountaineering, hiking, biking, rafting, and fishing. Main Statistical Indicators: Number of higher education graduates aged 20-24 per 1000 population 0.99 Employees as % of total population 8.93% Employees of local administration as % of total population 0.57% Newly established companies the previous year as % of total number of active companies 1.96% The 2011 Scorecard of Municipalities showed that the quality of life in Andrijevica is perceived by all three groups surveyed to be at or near a low level, while citizens perceived a worse situation compared to the previous year, and companies and local administration thought it unchanged. From the local budget the previous year, Andrijevica invested 0.40% in NGO sector development, which may help improve the quality of life. Additionally, statistics show that the average salary in Andrijevica is above the lowest levels in Montenegro. The previous year, the local administration in Andrijevica invested 10.8% of its total budget in infrastructure. However, public utility services in Andrijevica were perceived to be at a very low level by all three groups, and citizens and companies believe that they were better the previous year, in contrast to the opinion of representatives of the local administration. Citizens and companies in Andrijevica indicated low satisfaction with their involvement in, and with the adequacy of policies pursued by, the local administration, while the local administration demonstrated the strongest satisfaction of all Montenegrin municipalities. Local self-governance and local policies were deemed somewhat worse than they were the previous year by citizens and companies, but notably better by local administration representatives. A higher percentage of the 5 companies interviewed in Andrijevica believe that there is corruption in the local administration than do its citizens or local administration representatives. However, nobody cited any personal experience with requests for bribes/favors as proof. Official statistical data indicate that employment and business are not particularly developed in Andrijevica, as the number of newly established companies is far below the national average and the share of employees among the total population is the lowest in the country. This is also reflected in the opinion of the business sector in Andrijevica. However, the local administration s evaluation of its own business services was the highest of any municipality. Budget investment for business sector development amounted to 0.70% of the total local budget for the previous year. 24 USAID Montenegro