SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Montenegro

1. Assessment findings by policy dimension

Abstract

This chapter assesses policy performance across 13 dimensions key to SME growth and competitiveness as part of the SME Policy Index 2026 assessment cycle. For each dimension, scores are benchmarked against the 2022 assessment to track progress over time, situated within the regional distribution of results and contextualised relative to economy’s own performance profile across dimensions. Results are disaggregated by sub-dimension and thematic block, with comparisons drawn to regional averages throughout. The analytical sections identify recent achievements and persistent gaps underpinning score changes, while implementation reviews for each sub-dimension document key developments recorded during the assessment period against recommendations issued in the previous cycle.

The chapter is intended as a practical reference for policymakers, offering a structured overview of areas where measurable progress has been achieved and areas where challenges remain. It is to be read in conjunction with the cluster section of the economy profile, which sets out forward-looking recommendations to support continued reform efforts.

Dimension 1: Entrepreneurial learning and women’s entrepreneurship in Montenegro

Overview of Montenegro’s performance on Dimension 1

Montenegro received an overall score of 4.50 for Dimension 1 (Figure 1.1). Despite little change from the previous assessment cycle (4.47), this score places the economy well above the Western Balkans and Türkiye (WBT) regional average of 3.72 and confirms Montenegro’s position as the strongest performer in this area. Dimension 1 is also the economy’s highest scoring area, reflecting the highly advanced nature of its policy environment.

Figure 1.1. Overview of Montenegro’s score on Dimension 1 and evolution since 2019

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The steady overall score for Montenegro since 2022 reflects offsetting developments across policy areas, with progress in women’s entrepreneurship partly counterbalanced by a slight decline in entrepreneurial learning. Monitoring and evaluation also remain comparatively weaker than planning and design in both areas, meaning that the revised methodology, which places a greater weight on monitoring and evaluation, has further limited improvements in the overall score. At the same time, the stable score should be interpreted in light of Montenegro’s prior high level of alignment with international good practice, where further improvements are more incremental and harder to translate into additional score gains.

Sub-dimension 1.1: Entrepreneurial learning

Montenegro’s performance on Sub-dimension has evolved only marginally, sliding from 4.61 in 2022 to 4.52 in 2026, mainly due to a lower score in implementation. Despite this small decrease, Montenegro remains the top performer in the WBT region across all three thematic blocks.

When considering planning and design, Montenegro’s approach to entrepreneurial learning is characterised by a shift towards a more distributed, sector-anchored policy model. In this context, the conclusion of the Strategy for Lifelong Entrepreneurial Learning 2020-2024 signals the maturation of the policy ecosystem rather than a reduction in policy attention, as entrepreneurial learning no longer depends on a stand-alone strategic document. Responsibilities have instead been mainstreamed across core frameworks: entrepreneurial learning in formal education is embedded in the Education Reform Strategy 2025-2035, reflecting efforts to integrate it into the fabric of the education system, while non-formal entrepreneurial skills development is addressed through the Strategy for the Development of MSMEs 2023-2026. Translation of these strategic objectives into classroom practice is supported by comprehensive guidance materials aligned with the European Union’s (EU) Entrepreneurship Competence Framework (EntreComp) and a wide range of in-service training opportunities; however, entrepreneurship is not yet a compulsory component of pre-service teacher education, and teachers continue to report challenges in applying the framework effectively in practice (see Cluster 4).

Implementation of entrepreneurial learning is particularly strong, underpinned by sustained efforts to integrate practical entrepreneurial experiences into the formal curriculum. This curricular focus is reinforced by a well-developed ecosystem of extracurricular activities (e.g. entrepreneurship clubs, workshops, fairs, discussion forums, partnerships with non-governmental organisations, local businesses and the wider community), which collectively enhance access to mentorship, resources and real-world learning opportunities for students. Practical entrepreneurial learning is available across all levels of education, reflecting a system-wide approach rather than a concentration at a single stage. At the same time, the depth and sophistication of provision tend to increase at higher levels of education, with more structured and advanced models evident in vocational education through mini-company schemes and in higher education through initiatives such as the University of Donja Gorica’s Entrepreneurship Nest, which supports students in developing, incubating and bringing business ideas to market (Ministry of Education, Science and Innovation of Montenegro, 2026[1]).

Against this backdrop, the observed decline in score is less indicative of weaknesses in overall implementation and more reflective of this cycle’s increased emphasis on addressing gender imbalances in entrepreneurial education. While national awareness-raising campaigns and one-off initiatives are in place, these have not yet been translated into systematic, school-based measures, such as structured extracurricular programmes, sustained exposure to female role models or tailored career guidance aimed at encouraging girls to pursue STEM and entrepreneurship pathways1 (Ministry of Education, Science and Innovation of Montenegro, 2026[1]). Without more targeted and sustained support for girls, the broader impact of entrepreneurship education is likely to remain constrained.

Monitoring and evaluation mechanisms are in place across all levels of education, with schools undergoing regular reviews to assess the integration of key competences, including entrepreneurship. However, the findings are not yet systematically consolidated to identify national-level trends or common challenges (Table 1.1). In this context, the planned development of software to track students, drawing on EU good practices, could represent an important initial step towards strengthening system-level monitoring. In parallel, the 2024 implementation report of the Strategy for the Development of MSMEs 2023-2026 announced plans to publish an “Analysis of the Situation and Evaluation of Entrepreneurship Learning Policy”, which could provide the first high-level overview of the policy area and serve as a foundation for the development of future strategies and programmes.

Table 1.1. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 1, Sub‑dimension 1.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Match pre-service teacher training provisions to the needs of the new framework for key competences	No progress has been made since the previous assessment cycle in addressing the absence of training on entrepreneurial learning for trainee teachers.	None	See Cluster 4: “Fostering entrepreneurial skills and mindsets through education”
Develop a system-level approach to graduate tracking from vocational and higher education	At the higher education level, the University of Donja Gorica has strengthened its graduate tracking efforts by systematically collecting and analysing data through a new student survey methodology introduced in the 2023/2024 academic year. While this represents a positive institutional initiative with potential relevance for broader adoption across other universities, it does not yet amount to a system-wide approach. Nevertheless, the commitment set out in the Career Guidance and Counselling Strategy 2025-2030 to develop a comprehensive system for tracking students from both vocational and higher education represents an initial step towards more integrated and systematic monitoring.	Limited	See Cluster 4: “Fostering entrepreneurial skills and mindsets through education”

Sub-dimension 1.2: Women’s entrepreneurship

Montenegro scored 4.47 on Sub-dimension 1.2 on women’s entrepreneurship, up from 4.26 in 2022. The higher score reflects progress in implementation and monitoring and evaluation, supported by a robust policy framework that continues to provide strong strategic direction.

Indeed, the planning and design thematic block continues to be a key strength, aligned with international good practice. Since the previous assessment cycle, Montenegro has adopted the Strategy for Women's Entrepreneurship 2025-2028, marking the third consecutive strategic document in this area. The new strategy builds on the results and lessons of its predecessor, ensuring continuity in policy direction and sustained support for women’s entrepreneurship. It is well-structured, with clearly defined objectives, indicators and baseline and target values to monitor progress (Ministry of Economic Development of Montenegro, 2025[2]). Institutional arrangements are also robust. In addition to the Working Group for the Economic Empowerment of Women, a new working group was established to lead the preparation of the strategy and will remain active throughout its implementation period, reflecting the high policy priority accorded to women’s entrepreneurship. However, the effectiveness of the Working Group for the Economic Empowerment of Women could be further strengthened, as its functioning relies heavily on individual initiative rather than systematic institutionalisation.

Implementation is supported by a broad range of mechanisms targeting women’s entrepreneurship, a critical consideration given that women-owned SMEs accounted for only 25% of all SMEs in 2024 (Figure 1.2). Financial support in particular remains substantial: in 2023 alone, the Investment and Development Fund approved EUR 23.8 million for 160 projects led by women entrepreneurs, compared with EUR 7.4 million for 77 projects in 2015 (Ministry of Economic Development of Montenegro, 2024[3]). These financial measures are complemented by a wide range of non-financial support instruments (e.g. training, mentoring other capacity-building initiatives) designed to support women entrepreneurs throughout the business lifecycle. These instruments address not only business creation but also growth and sustainability, covering areas that range from financial literacy and business management to digitalisation and green innovation. To further enhance accessibility and awareness of these opportunities, the National Digital Platform for the Development of Women's Entrepreneurship (https://zenskibiznis.me/) was launched to bring together information on available support measures and programmes, although further updates and expansion are needed to ensure comprehensive coverage (Table 1.2).

Figure 1.2. Key statistic for Dimension 1, Montenegro, 2015-2024

Source: Ministry of Economic Development of Montenegro (2025[2]).

Montenegro’s performance in monitoring and evaluation has continued to improve since the last assessment cycle. The newly established Working Group for the Development of the Strategy for Women’s Entrepreneurship 2025-2028 served as an evaluation body for the predecessor strategy, adopting the “Report on the Evaluation of the Strategy for the Development of Women's Entrepreneurship (2021-2024)” in November 2024 (Ministry of Economic Development of Montenegro, 2024[3]). This evaluation, conducted in line with OECD Development Assistance Committee criteria,2 drew on interim monitoring mechanisms such as biennial action plans (2021-2022 and 2023-2024) and annual implementation reports. Between 2021 and 2024, 87% of planned activities (253 of 290) were implemented, demonstrating strong commitment despite ongoing capacity constraints. The evaluation identified successes and areas for improvement, providing recommendations that informed the new strategy. Survey data3 further indicate positive outcomes, with 83.3% of respondents reporting that measures aligned with women entrepreneurs’ needs and 67% noting that the strategy significantly encouraged development of women’s entrepreneurship. Nevertheless, the absence of a comprehensive framework for gender-disaggregated indicators limits the ability to quantitatively assess impact, constraining systematic measurement of outcomes and long-term impact.

Table 1.2. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 1, Sub‑dimension 1.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Develop a system-level approach to monitoring women’s entrepreneurship, including gender-disaggregated data	Although the Strategy for Women’s Entrepreneurship 2025-28 mentions this recommendation and reinforces its importance, no efforts have been undertaken to address this gap.	None	See Cluster 4: “Improving talent availability by empowering women entrepreneurs”
Launch a single portal for women’s entrepreneurship in Montenegro to bring together information and resources at the national level	In 2022, the Ministry of Economic Development, with the support of the United Nations Development Programme, launched the National Digital Platform for the Development of Women's Entrepreneurship (https://zenskibiznis.me/). However, the platform remains incomplete, with gaps in content, non-functional links, and inaccuracies in key areas such as business registration procedures and financing opportunities.	Moderate	See Cluster 4: “Improving talent availability by empowering women entrepreneurs”

Dimension 2: Bankruptcy and second chance for SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 2

Montenegro scored 3.32 on Dimension 2 (Figure 1.3), which is an increase from 3.02 in the previous cycle. This places Montenegro as the top performer in this dimension in the Western Balkans and Türkiye (WBT) region, above the regional average of 2.97. As in the previous cycle, however, Dimension 2 remains among the economy’s lowest-scoring areas, suggesting a need for further policy reforms in this area.

Figure 1.3. Overview of Montenegro’s score on Dimension 2 and evolution since 2019

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Montenegro’s score indicates an improvement in the planning and design of small and medium-sized enterprise (SME) bankruptcy policies that emphasise both preventive actions and second-chance opportunities. Still, scores for monitoring and evaluation have declined in the first two sub-dimensions, limiting performance. The dimension score is also, in part, explained by methodological changes that give greater weight to Sub-dimension 2.1 and the monitoring and evaluation thematic blocks in this assessment cycle.

Sub-dimension 2.1: Preventive measures

Performance in this sub-dimension has slightly declined, from 2.50 in 2022 to 2.39 in 2026. Monitoring and evaluation components, in particular those receiving greater emphasis in this assessment cycle, have consistently shown gaps. A very modest improvement in implementation accompanies these developments.

Montenegro’s MSME Strategy now acknowledges bankruptcy prevention under its access-to-finance objective. Yet, no concrete activities have been defined in recent action plans. Critically, the establishment of a comprehensive early warning system (EWS) to collect business data and enable targeted, data-driven support for firms at risk of financial distress remains absent.

Advisory mechanisms and self-assessment tools for struggling SMEs are still missing, revealing a persistent gap between strategic intent and implementation. The Mentoring Programme implemented by the Ministry of Economic Development, in cooperation with the Japan International Cooperation Agency, remains the only government initiative resembling prevention support, providing over 200 businesses between 2023 and 2024 with one-on-one mentoring, diagnostics, and financial analysis to avert failure.

However, monitoring and evaluation have not advanced, as data are limited to programme reports and Commercial Court statistics, which do not adequately capture SME-specific distress trends. This could hinder the government’s ability to design timely, targeted interventions.

Sub-dimension 2.2: Survival and bankruptcy procedures

Montenegro scored 3.88 on Sub-dimension 2.2 on survival and bankruptcy procedures, up from 3.38 in 2022. The improvement reflects stronger legislation aimed at increasing accountability and reducing informality in the SME sector, particularly through enhanced tax debt enforcement. While implementation remains stable, judicial efficiency is uncertain, and monitoring mechanisms are still underdeveloped.

Since 2022, amendments to key laws have improved transparency of bankruptcy procedures, introducing restrictions for owners of insolvent businesses and reinforcing enforcement measures and incentives under the 2023 Law on Preventing Illegal Business. However, SMEs still lack access to simplified or fully out-of-court settlement options (Table 1.3), and the duration of court proceedings remains dependent on judicial efficiency, as no maximum discharge period is defined. Positively, the 2022 Bankruptcy Law amendments strengthen the competencies and accountability of bankruptcy administrators, which is expected to improve procedural quality in the coming period.

Monitoring and evaluation could be further improved, as data on case duration are not disaggregated by firm size or procedure type. Advancing digitalisation of proceedings (Table 1.3) could enhance data collection and transparency, enabling more evidence-based policymaking to support SME restructuring and survival.

Table 1.3. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 2, Sub-dimension 2.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Updating outdated bankruptcy proceedings	Progress in modernising bankruptcy procedures remains limited. Court processes are still largely paper-based, and digitalisation of case management and insolvency procedures has stalled. This slows resolution times and increases uncertainty for SMEs facing financial distress. For SMEs, these inefficiencies can exacerbate financial risks and delay restructuring or market exit.	Limited	See Cluster 2: “Fostering SME sustainability and resilience”
Digitalising liquidation proceedings by introducing e-auctions to sell assets from the bankruptcy estate	Montenegro has not yet implemented a full-scale e-auction system for asset sales in liquidation, with traditional procedures still in place. As a result, the potential benefits of digitalisation, faster resolution, lower costs, and greater transparency, remain largely unrealised, limiting faster exit options for SMEs. Currently, e-auctions are only available for the sale of assets related to tax debt collection.	Limited	See Cluster 2: “Fostering SME sustainability and resilience”
Improving the formal bankruptcy reorganisation proceedings	Since 2023, the 2022 amendments to the Bankruptcy Law have been applied, primarily concerning the appointment of bankruptcy administrators, who play a key role in the proceedings. The Commercial Court continues to maintain the capacities and competencies of insolvency practitioners and administrators through the mandatory professional training programmes prescribed by law, as well as regular evaluation and reporting on their performance, ensuring quality and accountability in implementation.	Moderate	See Cluster 2: “Fostering SME sustainability and resilience”
Introducing simplified bankruptcy proceedings for SMEs	SMEs in Montenegro can use a hybrid pre-negotiated reorganisation procedure, allowing the submission of a reorganisation plan alongside the insolvency petition, thereby reducing court involvement. However, there is still no mechanism for fully voluntary, out-of-court debt settlement. No progress has yet been made toward establishing extrajudicial agreements that would enable SMEs with smaller debts to restructure more quickly and under simplified conditions.	Limited	See Cluster 2: “Fostering SME sustainability and resilience”

Source: European Commission for the Efficiency of Justice (2023[4]).

Sub-dimension 2.3: Promoting second chance

Montenegro scored 2.60 on Sub-dimension 2.3 on promoting second chance for SMEs, up from 2.00 in 2022. This increase reflects a growing basis for authorities to entertain a longer-term recovery and second-chance programmes, while policy planning and design, as well as performance and monitoring, still require progress.

The legal framework clearly distinguishes between honest and fraudulent insolvencies, and recent amendments to restrictions on insolvent entrepreneurs and companies strengthen creditor protection, thereby helping to build trust in the system. However, SMEs still lack provisions for securing new financing during bankruptcy, limiting viable entrepreneurs’ ability to rebuild during or after reorganisation.

Second-chance policies, while referenced in the MSME Strategy, have yet to be institutionalised through concrete support programmes for business re-entry (Table 1.4). Notably, the Ministry of Economic Development reports having adequate capacity and a network of trained advisers, creating a solid basis for launching a dedicated second-chance programme in the coming period, particularly by building on experience from the Mentoring Programme mentioned above.4

Table 1.4. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 2, Sub-dimension 2.3

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Promoting second chance to honest entrepreneurs	While the MSME Strategy references second-chance policies under its access-to-finance objective, Montenegro has yet to develop and institutionalise concrete support measures in its action plans.	Limited	See Cluster 2: “Fostering SME sustainability and resilience”

Dimension 3: Institutional and regulatory framework for SME policymaking in Montenegro

Overview of Montenegro’s performance on Dimension 3

Montenegro scored 4.19 on Dimension 3 (Figure 1.4), remaining above the regional average of 3.77 and ranking first among Western Balkans and Türkiye (WBT) economies. Compared to the 4.16 recorded in the previous cycle, performance has remained stable, confirming Dimension 3 as one of the most well-established areas of Montenegro’s assessment.

Figure 1.4. Overview of Montenegro’s score on Dimension 3 and evolution since 2019

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Montenegro’s institutional and regulatory framework for small and medium-sized enterprise (SME) policymaking is characterised by one of the region’s strongest performances in policy quality and evidence-based lawmaking. Although the institutional architecture remains fragmented, policy implementation capacity is comparatively strong. Further scope exists to systematise ex post regulatory simplification processes, and mechanisms for the structured integration of private-sector input into policy design remain unevenly applied.

Sub-dimension 3.1: Institutional framework

Montenegro’s performance in this sub-dimension has remained broadly stable compared to the previous assessment, reflecting a mature policy framework with solid strategic continuity, while residual weaknesses persist in institutional integration, co-ordination and monitoring arrangements. The marginal decline in score (from 4.40 to 4.32) is primarily attributable to methodological refinements (see Methodology).

Following the broadly successful implementation of the 2018-2022 Strategy for the Development of Micro, Small and Medium Enterprises (MSMEs), Montenegro adopted a successor MSME Strategy in June 2023, which remains in effect until 2026. Developed through an ad hoc multi-stakeholder working group, the strategy builds on the previous framework and integrates adjustments introduced after the mid-term evaluation (Ministry of Economic Development and Tourism, 2023[5]). Oversight responsibility remains with the Competitiveness Improvement Directorate within the Ministry of Economic Development, reinforcing institutional continuity in SME governance. The regulatory environment was further strengthened through the adoption of a new Law on Business Companies, aimed at full alignment with EU standards and improved regulatory predictability, as well as preparations for the establishment of a Credit Guarantee Fund to expand SME access to finance. While these reforms strengthen the formal architecture, the overall institutional landscape remains fragmented, with multiple bodies operating at national and local levels and limited mechanisms for systemic integration.

Implementation performance under the new MSME Strategy has been relatively strong in quantitative terms. The first two years of the strategy’s action plans included 145 planned activities, with an execution rate of 86%, signalling high administrative delivery capacity. However, this operational performance masks structural weaknesses in policy coherence and resource alignment. The absence of systematic and reliable cost estimation for action plans, which often include funding proposals that are not always retained in the final adopted budget, has led to persistent misalignment between strategic objectives and available financial resources. In this context, the observed lack of involvement from budget experts in the design phase further constrains the realism of planning. At the same time, while recent reforms such as the new Companies Law and the planned Credit Guarantee Fund strengthen the enabling environment, some measures risk generating short-term compliance costs for businesses, with no explicit formalisation targets embedded in the strategic framework. Given that informality remains structurally high, at around 21% of gross domestic product, the launch of a Programme for Combating the Grey Economy 2024-2026 has introduced a relevant complementary instrument, yet too weakly integrated within the SME strategic framework (Ministry of Finance, 2023[6]).

Monitoring arrangements for the MSME Strategy rely primarily on annual implementation reports produced by the Competitiveness Improvement Directorate, providing structured tracking of activity execution. However, monitoring remains largely input- and output-focused, with limited emphasis on outcome-level assessment, policy impact evaluation or cost-effectiveness analysis. Moreover, the lack of a monitoring mechanism for the Programme for Combating the Grey Economy limits its capacity to generate systemic effects on SME competitiveness and formalisation. Limitations in policy monitoring are compounded by persistent structural weaknesses in the national data environment, which are generally less rich in indicators and in sectoral granularity than those of other economies in the region (Table 1.5).

Table 1.5. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 3, Sub-dimension 3.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Expand SME data collection	No measurable progress was recorded in this assessment period. Official structural business statistics remain structurally constrained, as, for instance, they do not report employment data, thereby preventing the independent computation of standard productivity indicators (e.g. value added per employee) using official sources. In addition, the MONSTAT database lacks functionalities for user-driven data extraction, data customisation, or the construction of time series through public platforms.	No progress	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 3.2: Legislative simplification and regulatory impact assessment

Montenegro’s performance in this sub-dimension increased from 3.95 in 2022 to 4.29 in 2026, reflecting a mature framework for better regulation and evidence-based policymaking, with improvements observed across the policy cycle. Nevertheless, limitations remain, notably the weak institutionalisation of regulatory simplification efforts and the absence of systematic follow-up mechanisms.

In Montenegro, the policy framework for promoting better regulation and evidence-based policymaking is well established and applied, with regulatory impact assessment (RIA) mandatory for all types of legislation. Quality control and methodological oversight are exercised by the RIA Directorate within the Ministry of Finance, which is entrusted with systematic review and reporting. In 2024, clear and detailed guidelines for the conduct of assessments were consolidated into a new RIA manual. While they include an assessment of SME impacts among the requirements, the SME test envisaged under the MSME Strategy 2018-2022 has not yet been introduced. In parallel, regulatory simplification efforts have been reactivated with the Competitiveness Council’s adoption of the Action Plan for Removing Business Barriers in March 2024, which identifies 11 priority barriers to be addressed through 37 targeted actions by the end of 2026.

RIA performance and quality have strengthened over time, particularly for primary legislation (Table 1.6). In 2023, RIAs accompanied 96% of draft laws adopted by the government, and overall quality indicators show a clear upward trend, with 83% of assessments rated as “quality work”, compared to 68% in 2020 (Figure 1.5) (Ministry of Finance, 2024[7]). Nonetheless, practice remains uneven for secondary legislation and proposals initiated by Members of Parliament, and line ministries continue to face challenges in analysing policy options and embedding RIA at the earliest stages of policy design (OECD, 2025[8]; Ministry of Finance, 2024[7]). In response, the Ministry of Finance is revising the framework to improve the frequency, analytical depth and timeliness of assessments, in line with the Reform Agenda target to ensure that 100% of RIAs are conducted prior to public consultation by December 2025 (Ministry of European Affairs, 2024[9]).

Table 1.6. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 3, Sub-dimension 3.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Concentrate efforts to improve regulatory impact assessment quality in priority areas	According to the most recent reports by the Ministry of Finance, the overall quality of regulatory impact assessments (RIAs) has improved compared to the previous assessment period. A higher share of assessments was rated “well-performed”, with progress observed across several stages of the RIA process, including issue definition, impact analysis, stakeholder consultation, and monitoring and evaluation.	Strong	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Figure 1.5. Key statistics for Sub-dimension 3.2 on legislative simplification and regulatory impact assessment, Montenegro, 2019-2024

Yearly share of highly performed regulatory impact assessments

Source: Ministry of Finance of Montenegro (2024[7]).

Monitoring arrangements for RIA are comparatively robust, supported by regular reporting from the RIA Directorate and structured performance classification across key analytical dimensions. However, the regulatory simplification agenda remains weakly institutionalised. While the online portal launched in 2021 to map all fiscal and para-fiscal charges continues to serve as a useful transparency tool, it has not yet translated into a systematic reduction programme. Current efforts and action plans are largely embedded within the time-bound Reform Agenda 2024-2027, in the absence of a permanent, structured national framework for regulatory simplification, which constrains policy continuity beyond the programme cycle and defuses long-term systemic impact.

Sub-dimension 3.3: Public-private consultations

Montenegro scored 3.75 in this sub-dimension on public-private consultations (PPCs), down from 4.04 in the previous assessment. While the economy continues to demonstrate solid performance in consultation frameworks and quality, both consistent implementation and monitoring mechanisms remain limited.

The legal framework for public consultations is established under the Law on State Administration and the Rules of Procedure of the Government, which require consultations for draft laws and strategies, but not for secondary legislation or acts initiated by Members of Parliament. In practice, however, the application of such provisions is constrained by broad exemption clauses allowing procedures to be bypassed under “extraordinary, urgent or unpredictable circumstances”, with criteria that remain loosely defined and widely used in practice.

In 2024, the Ministry of Public Administration reported that line ministries provided evidence of having conducted consultations for only 26% of adopted laws, consistent with the 27% of adopted laws that were subject to public consultation in 2023, as reported in the SIGMA Monitoring Report (OECD, 2025[8]) (Ministry of Public Administration, 2025[10]). At the same time, administrative reporting indicates that, when exemptions are applied, around 90% of laws formally subject to consultation obligations were published for public scrutiny, although official statistics do not disclose the volume of exempted drafts, limiting transparency and comparability of coverage data (Table 1.7). When conducted, PPCs generally comply with procedural requirements and quality standards, including the mandatory minimum duration of 20 days, extended timeframes for complex proposals, and the publication of consultation reports. Despite the existence of a central e-participation portal that functions as a national registry for consultations, it is underutilised as an engagement channel, with only around one-third of consultations conducted through the platform and consistently low stakeholder participation. As part of the 2022-2024 Action Plan for the Open Government Partnership, Montenegro planned to enhance the portal’s functionality, but this commitment remains unfulfilled.

Table 1.7. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 3, Sub-dimension 3.3

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Introduce regular reporting on government use of public-private consultations and its results	No progress has been made in implementing the 2022 recommendation to strengthen monitoring and evaluation of public-private consultations. While reports on individual consultations continue to be published, there is still no aggregate reporting or systematic assessment of the overall consultation process or the level of stakeholder engagement. With regards to the SCC’s annual and semi-annual reports on “Involvement of the private sector in the law-making process”, the number of available statistics capturing business stakeholder participation has improved in 2025.	No progress	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Dimension 4: Operational environment for SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 4

Montenegro scored 3.54 on Dimension 4 (Figure 1.6), indicating broadly stable performance compared to 3.49 in 2022. Despite the marginal increase in the score, performance remains below the regional average of 3.75 for this dimension. Nevertheless, Dimension 4 performs slightly below the economy’s average score across other dimensions (3.73).

Figure 1.6. Overview of Montenegro’s score on Dimension 4 and evolution since 2019

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Montenegro’s sustained performance in the operational environment for small and medium-sized enterprises (SMEs) over this assessment reflects stagnation across sub-dimensions, with limited progress observed in the implementation of the 2022 assessment recommendations. While the availability of e-government services has continued to expand gradually, user needs and performance monitoring considerations remain insufficiently integrated into service design and delivery.

Sub-dimension 4.1: Digital government services for SMEs

Montenegro’s score on Sub-dimension 4.1 on digital government services increased slightly from 3.34 in 2022 to 3.46 in 2026, indicating modest progress in e-government development. This improvement mainly reflects a stronger strategic commitment to digital service delivery and the gradual expansion of online services for businesses. However, while the policy framework and service availability have advanced, digital government services remain only partially adapted to SME needs, and evidence of systematic monitoring and user-oriented service design remains limited.

Policy planning and design for digital government services have been strengthened through the adoption of the Digital Transformation Strategy 2022-2026 and its accompanying Action Plan, which includes dedicated objectives for the development of e-services and data openness. The strategy promotes key principles such as interoperability, digital-by-default and whole-of-government co-ordination, and marks a shift toward treating digital service delivery as a core reform priority. Institutional co-ordination has also been reinforced by the establishment of a co-ordination body for digital transformation, which brings together representatives of government institutions, the private sector and local authorities. The Ministry of Public Administration retains primary responsibility for digital transformation policy. However, despite these institutional and strategic advances, there is no clear differentiation between services for citizens and businesses, and no evidence of government-led assessments to identify SME needs or adapt service design accordingly.

Implementation has focused on expanding centralised digital platforms. Montenegro operates a dedicated business portal (biznis.gov.me) that provides access to information and administrative procedures relevant to enterprises, alongside the national e-government portal, which currently offers more than 330 e‑services for legal entities in areas such as business registration, finance, and urban planning. Separate platforms are also available for business registration and tax-related procedures. While these platforms indicate progress in digitising administrative interactions, services remain largely generic rather than SME-specific, and the degree of end-to-end digitalisation varies across institutions. There is limited evidence that services are structured around business life events or that they systematically reduce administrative burdens for SMEs.

Monitoring and evaluation of digital government services remain underdeveloped (Table 1.8). Evaluations are conducted mainly internally by the Ministry of Economic Development in relation to the Programme for Improving the Competitiveness of the Economy, based on data analysis and interviews with beneficiary firms. Although a revised evaluation form has been introduced to improve data processing and feedback collection, these efforts relate primarily to business support programmes rather than to e-government services themselves. No dedicated framework exists to track SME usage of digital public services, assess service quality, or systematically integrate user feedback into service improvement.

Table 1.8. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 4, Sub-dimension 4.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Build the capacity of the public administration to understand the end needs of users when designing digital services	There is no clear evidence of government-led user research, SME needs assessments or systematic consultation mechanisms to inform the design of digital public services. As a result, service development appears to be driven mainly by administrative supply rather than by structured insights into business users’ needs.	No progress	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Improve monitoring and evaluation of digital services for businesses, including company registration	Monitoring and evaluation practices remain weak and fragmented. While the Ministry of Economic Development has conducted internal evaluations of the Programme for Improving the Competitiveness of the Economy, these do not constitute a dedicated monitoring and evaluation framework for digital government services. There is no central system tracking SME usage, satisfaction or performance of e-services, such as business registration.	No progress	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 4.2: Company registration

Montenegro continues to perform relatively poorly on company registration indicators, with a score of 3.53, below the Western Balkans and Türkiye (WBT) average of 4.02 and substantially unchanged from 3.65 in 2022. While efforts towards the full digitalisation of company registration are underway, performance remains hindered by the absence of a monitoring mechanism to streamline costs and administrative burden associated with opening a new business.

In July 2025, Montenegro adopted its first Law on Business Registration, alongside the new Company Law, which established the legislative basis for fully digitalised company registration procedures, in compliance with EU regulations and aligned with the objectives of the Micro, Small and Medium Enterprises (MSME) Strategy. The target was to complete the testing phase by the end of 2025 and introduce fully electronic procedures as of 2026. However, due to legislative challenges and the fact that the new Integrated Revenue Management System was only launched in January, the rollout of online procedures has been delayed to become fully operational in early April. At the time being, the eFirma portal offers a centralised electronic system for applying to the Central Registry of Business Entities (CRPS), for both the establishment of a new entity or changes to an existing one, as well as for requesting the issuance of extracts and certificates of registration. In complying with the procedure, businesses are supported by the online Point of Single Contact (PSC), which functions as a one-stop-shop providing all relevant information for business registration, although guidance currently prioritises single-member limited liability companies, reflecting the ongoing stabilisation of the system. According to available information, CRPS officials are expected to issue a decision on the submitted application within 3 working days, while the entire procedure for starting a business is estimated at around 20 days (World Bank, 2025[11]). Further time and cost optimisation of the process by reducing the number of procedural steps has been an objective at least since the previous strategic cycle, yet no changes have been observed.

Company registration in Montenegro continues to lack a monitoring and evaluation mechanism supported by systematic data collection, thus limiting the authorities’ ability to assess procedural efficiency, measure reform impact, and adjust implementation (Table 1.9). Although the previous assessment noted that the Council for Electronic Government was mandated to monitor and improve the implementation of the process, its annual reports continue to omit any mention of company registration.

Table 1.9. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 4, Sub-dimension 4.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Improve monitoring and evaluation of company registration	No improvement has been recorded since the previous assessment, as no monitoring framework for implementing the company registration process has been established. Inter-institutional co-ordination and targeted data collection remain limited, preventing systematic evaluation of process efficiency. The online portal continues to lack a user feedback channel, hindering the assessment of service quality and user satisfaction.	No progress	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 4.3: Business licensing

Montenegro scored 3.77 on Sub-dimension 4.3 on business licensing, showing no significant improvement from 3.75 in the previous cycle. Despite efforts to streamline procedures and enhance transparency, the absence of structural co-ordination and the slow pace of digitalisation of licensing processes continue to constrain overall performance.

At the institutional level, no single body is responsible for centrally conducting the licensing procedures, nor has a centralised one-stop shop been established to facilitate them. Each authority continues to issue licences within its own mandate, applying distinct regulations and fee structures. This fragmented system increases administrative complexity for businesses, which, according to the Balkan Barometer, are the most likely among Western Balkan economies to identify licensing and permit procedures as a major obstacle to business growth (RCC, 2024[12]).

In response, the Ministry of Public Administration and the Ministry of Finance have jointly advanced initiatives to improve the quality and transparency of business licensing information. The PSC website now functions as a centralised platform providing detailed guidance on licensing conditions, legal bases, fees and application procedures. However, its content largely duplicates that of the licensing register available on the e-government portal (eUprava), as both platforms primarily serve an informational purpose. Although electronic services have been introduced, allowing online submission of requests for some individual licences, the implementation of fully digital licensing procedures remains limited (Table 1.10). Moreover, monitoring and evaluation mechanisms to assess the performance and compliance of licensing officials have not yet been established.

Table 1.10. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 4, Sub-dimension 4.3

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Streamline the process of electronic licensing and create a co-ordination body responsible for overseeing the licensing process	The licensing framework remains fragmented, with each authority responsible for its own procedures and fee structures. No central body has been created to oversee or harmonise licensing processes. While informational platforms such as the Point of Single Contact have been developed to optimise the time and cost of complying with procedural requirements, the implementation of electronic licensing procedures remains limited.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 4.4: Tax compliance procedures for SMEs

Despite positive developments, especially for unincorporated SMEs, labour taxation remains a key concern for both employers and employees, with mandatory taxes and social security contributions continuing to represent a significant cost factor in employment relationships. Tax reform initiatives between 2022 and 2025 have nevertheless introduced several measures beneficial to SMEs and self-employed individuals (Table 1.11). In 2025, Montenegro increased the threshold for lump-sum taxation of self-employment income from EUR 18 000 to EUR 30 000, easing the burden on many small-scale entrepreneurs (KPMG, 2024[13]). However, the threshold is still lower than that of other economies in the region, for example, Serbia, where it is set at EUR 51 000. Yet, the lump-sum regime primarily benefits lower- and medium-income self-employed activities (e.g. writers, photographers and decorators), while professions with higher and more variable income profiles remain excluded under the current eligibility rules (Article 3 of the Rules for Lump-Sum Taxation).

The online fiscalisation system, fully rolled out in 2022, has now become the standard for all value-added tax (VAT)-registered businesses, enabling the creation, transmission and authentication of invoices in real time through an online platform. This digitalisation effort has significantly reduced VAT compliance costs for SMEs and self-employed professionals, while also improving the accuracy of tax reporting and strengthening enforcement. By 2024, integration with accounting software became mandatory for medium-sized taxpayers and optional (but incentivised) for micro and small enterprises, accompanied by targeted training sessions and technical support.

Table 1.11. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 4, Sub-dimension 4.4

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Rebalance the tax burdens of unincorporated and incorporated SMEs to limit the tax-induced incentives for SMEs to incorporate	Recent reforms in Montenegro have altered the relative tax treatment of incorporated and unincorporated business activity through reductions in social security contributions, differentiated corporate income tax and personal income tax structures, and the expansion of the lump-sum regime for self-employed income. However, there is no evidence of a coherent, explicit policy strategy aimed at systematically neutralising incentives for SMEs to choose legal form based on tax considerations.	Moderate	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Evaluate the tax burdens faced by different types of SMEs from a tax policy perspective, for instance, by using business tax returns	Montenegro has not publicly reported a comprehensive evaluation of the tax burdens faced by SMEs since the last assessment.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Assess the possible reforms to improve the design of the lump-sum tax regime	While Montenegro increased the annual revenue threshold for eligibility under the lump-sum tax regime, no publicly available assessment has been published examining the regime’s design or its potential effects on SME growth incentives.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Assess whether there is scope to reduce and facilitate tax administration procedures for SMEs, for instance, through business surveys	No dedicated assessment has been reported. Montenegro continues to maintain the existing systems for monthly tax payments, pre-payments, and the EUR 110 certificate fee. Yet, thanks to Montenegro’s co-operation with the International Monetary Fund, the economy developed a strategy in 2024 to improve tax regulation and compliance management. With the adoption of the Analysis of Certain Aspects of the Tax System in 2024, Montenegro officially initiated the reform of its tax system model to decrease its negative impact on economic growth. While several strategic initiatives point to gradual modernisation and simplification efforts, including the rollout of an Integrated Revenue Management System (currently in its initial phase), their specific impact on reducing administrative burdens for SMEs remains to be assessed.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

To support liquidity in priority sectors, temporary VAT relief measures introduced during the COVID‑19 pandemic, such as the reduced VAT on certain hospitality and tourism services, were extended through mid-2023. While these measures have since expired, new sector-specific VAT relief for renewable energy equipment and energy-efficiency materials was introduced in 2024, encouraging SME investment in green transition projects. In 2025, Montenegro introduced a new corporate income tax credit that allows businesses reinvesting profits into agricultural projects to reduce their tax liability (subject to a cap of EUR 300 000) over three years. Additionally, the law refines the rules governing the deductibility of expenses in areas such as health, education, research and development, culture, and environmental protection, permitting deductions of up to 3.5% of revenue (or up to 5% for sports associations).

Dimension 5a: Business support services for SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 5a

Montenegro received an overall score of 4.48 on Dimension 5a on business support services (BSS), which is a slight drop since the previous assessment when it scored 4.58. Despite this slight decline, Montenegro continues to perform strongly in this dimension, ranking as the second-highest performer in the Western Balkans and Türkiye (WBT) region and remaining well above the regional average of 4.07 (Figure 1.7).

Figure 1.7. Overview of Montenegro’s score on Dimension 5a and evolution since 2019

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This decline remains limited in magnitude but signals emerging implementation and design gaps, particularly in stimulating private provision of BSS, which outweighed incremental improvements in monitoring and evaluation practices. Relative to Montenegro’s performance across other dimensions, Dimension 5a remains an area of comparative strength, reflecting a mature and well-institutionalised framework for government-led BSS. However, the results also point to a growing divergence between strong public provision (Sub‑dimension 5a.1) and weaker market development for private BSS (Sub‑dimension 5a.2), highlighting the need to further strengthen market-shaping instruments, quality assurance mechanisms and long-term financing predictability to sustain performance going forward.

Sub-dimension 5a.1: Business support services provided by the government

Montenegro’s performance on this sub-dimension has remained broadly stable since 2022, with the score increasing marginally from 4.48 to 4.50. This very limited change reflects a mature and well-established framework with incremental improvements in programme design. Continued strengths in strategic alignment have been partly offset by gaps in implementation, resulting in no major change in score compared to the previous assessment (Figure 1.7).

Building on the previous SME Development Strategy, Montenegro has adopted a more integrated and evidence-based framework through the MSME Strategy 2023-2026 and its Action Plan,5 which are aligned with broader economic, digital and industrial policies. The two strategies operate at complementary levels, with the MSME Strategy providing horizontal support across the SME ecosystem and the Industrial Policy 2024-20286 focusing on sectoral and value-chain upgrading (Government of Montenegro, 2023[14]). Inter-agency co-ordination has become more structured, with clearer mandates and shared monitoring arrangements among key institutions,7 strengthening policy coherence across SME, innovation and labour-market programmes. Analytical tools introduced since 20238 have further supported evidence-based and inclusive policy design, although multiannual financing and systematically integrating evaluation findings into policy revision remain underdeveloped.

Implementation of BSS has become more operationally consolidated and digitally administered, centred on the Programme for Improving the Competitiveness of the Economy (PICE)9 as the flagship delivery instrument. Building on the 2023 programme review, the 2024 iteration of PICE has reduced administrative fragmentation and shifted support toward larger, more investment-oriented measures, improving absorption and transparency10 (Government of Montenegro, 2024[15]). However, this has also narrowed the breadth of beneficiaries and increased reliance on a limited number of programme lines. SME participation remains uneven across municipalities, with persistent regional disparities in uptake and advisory capacity. In addition, programme lines are not aligned with the priority areas defined under Montenegro’s Smart Specialisation Strategy, limiting the strategic focus of support and weakening its contribution to sectoral upgrading and innovation-driven growth. Digitalisation of application11 (see Box 1.1) and management processes has reduced administrative burdens12 and improved transparency,13 supporting higher absorption and a shift toward more investment-oriented support (Government of Montenegro, 2024[15]). Expanded outreach activities have broadened SME engagement, including among youth and start‑ups, and complementary initiatives14 have strengthened linkages between enterprises, academia and private service providers. However, participation remains uneven across municipalities, reflecting persistent regional disparities in uptake and advisory capacity, despite complementary initiatives such as the donor-supported Business Development Services (BDS) Helpdesk aimed at expanding local advisory support.15 Differences in utilisation across programme lines16 (Montenegrin Secretariat of the Council for Competitiveness, 2024[16]), alongside administrative complexity and limited funding continuity, continue to constrain predictability and the depth of service delivery, underscoring the need for a more integrated, demand‑driven approach and stronger regional outreach mechanisms.

Monitoring and evaluation practices have become more systematic since 2022, supported by digital tracking tools, on-site verification and beneficiary feedback surveys (Government of Montenegro, 2024[15]). Programmes such as PICE now include feedback loops and public reporting mechanisms that inform design adjustments, contributing to greater transparency and accountability, including through independent external reviews that have informed programme refinements. However, while independent evaluations are occasionally undertaken, they remain project-based, and the monitoring framework continues to face structural gaps. The overall framework is still undermined by limited data collection, fragmented reporting practices and the absence of a fully integrated outcome-based evaluation framework.

Box 1.1. Spotlight: Building a single access point for SMEs in Montenegro

Small and medium-sized enterprises (SMEs) in Montenegro have faced a fragmented support ecosystem, with programmes dispersed across ministries, agencies and donor-funded initiatives, each with different eligibility rules and application procedures. The Strategy for the Development of Micro, Small and Medium Enterprises 2023-2026 therefore introduced a new institutional objective: the creation of a Single Access Point (SAP) for SMEs, a unified mechanism to co-ordinate, communicate and deliver all business support services through a single national interface. The reform is designed to simplify entrepreneurs’ access to public programmes, reduce administrative overlap and promote inter-agency co-operation among institutions such as the Ministry of Economic Development and Tourism, the Employment Agency, the Innovation Fund, Tehnopolis, and the Chamber of Economy of Montenegro (Government of Montenegro, 2023[14]).

The SAP initiative, developed with technical and financial support from the European Bank for Reconstruction and Development and supported by implementation and evaluation work conducted by PwC and the Institute for Entrepreneurship and Economic Development (IPER) (2023-2024), combines a digital platform and an institutional co-ordination mechanism (Government of Montenegro, 2024[15]). The digital platform – the Programi.gov.me portal – launched in 2023, functions as a virtual one-stop shop where SMEs can identify available support schemes, access eligibility criteria, submit applications electronically and track their status, supported by automated data verification to reduce the administrative burden. The portal has been further enhanced through additional service features, integration with advisory tools such as the Business Development Services (BDS) Helpdesk, and targeted communication and training activities to improve visibility and usability. In parallel, an inter-agency co-ordination mechanism brings together key SME support institutions to harmonise data standards, share information and co-ordinate outreach activities (Government of Montenegro, 2025[17]).

The SAP has moved rapidly from concept to initial operation, improving the transparency and accessibility of SME support and establishing the foundations for real-time monitoring of programme uptake, with over 130 000 visits recorded to the Programi.gov.me portal by the end of 2023 and 80+ featured active programmes. It has also formalised inter-agency co-operation through clearer divisions of labour between policy co-ordination and programme delivery. Looking ahead, the government plans to expand the SAP into a more integrated national SME service platform, incorporating mentoring, feedback and performance reporting functions (Government of Montenegro, 2025[17]). Key challenges remain in ensuring sustainable financing, extending coverage to subnational programmes and formalising data-sharing arrangements.

Sources: Government of Montenegro (2023[14]; 2024[15]; 2025[17]).

Table 1.12. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations on Dimension 5a, Sub-dimension 5a.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Intensify the efforts to monitor government-provided business support services by inviting an independent institution to conduct a review	Since 2022, Montenegro has strengthened the monitoring of government-provided business support services through the commissioning of independent external evaluations of key programmes, notably the Programme for Improving the Competitiveness of the Economy, conducted by PwC and IPER through support from the European Bank for Reconstruction and Development. These reviews informed concrete programme adjustments, including revised scoring criteria, simplified application procedures and higher grant allocations. In parallel, the government developed a Training Needs Assessment and Monitoring Methodology, providing a structured framework for regular data collection and future independent assessments across all SME support measures.	Strong	See Cluster 1: Creating an enabling environment for SMEs and entrepreneurs

Sub-dimension 5a.2: Government initiatives to stimulate private business support services

Montenegro’s performance on this sub-dimension has declined moderately from 4.69 in 2022 to 4.47 in 2026, primarily due to weaker performance in the planning and design and implementation thematic blocks. This decline reflects gaps in the strategic development and implementation of private BSS, including incomplete funding predictability, limited market-shaping instruments, and the absence of a unified accreditation and quality assurance framework for private providers. In contrast, performance in the monitoring and evaluation block has improved, supported by more systematic reporting, increased transparency through published ranking lists and the selective use of evaluation findings from programme-level reviews to inform adjustments to programme design (Figure 1.7).

Planning and design arrangements remain formally comprehensive but have become less strategically coherent. The policy framework is anchored in the MSME Development Strategy 2023-2026, its Action Plans for 2023-2024 and 2025-2026, and the Industrial Policy 2024-2028.The MSME Development Strategy recognise a mixed public‑private delivery model and formalise the role of private consultants, training providers and innovation intermediaries.17 Bothe strategies define measurable indicators and budgets; and promote collaboration in digital transformation, cluster development and green transition services.18 Operational elements are relatively comprehensive, including defined activities, responsible institutions, impact indicators and financial projections; however, funding streams are not fully secured, limiting predictability for long-term private BSS market development (Government of Montenegro, 2023[14]; 2025[17]). Co-ordination responsibilities are clearly assigned to the Ministry of Economic Development, working alongside the Innovation Fund, the Science and Technology Park, and IPC Tehnopolis. However, the framework does not establish a unified accreditation or quality assurance system for private providers, constraining professionalisation and market expansion.

Implementation of measures to stimulate private BSS has expanded since 2022 through a mix of co-financing schemes19 (Government of Montenegro, 2024[15]), voucher instruments and intermediary delivery via public institutions20 (Innovation Fund of Montenegro, 2023[18]). These mechanisms are fully operational and have increased the volume of supported activities, particularly in areas such as consultancy, digitalisation and innovation-related services. However, delivery remains largely programme-cycle driven and supply-side in nature, with limited scope for SME choice and weak incentives for sustained market development among private providers. Access to services and depth of support remain uneven across regions, reflecting disparities in provider capacity and outreach beyond central areas. While implementation reporting indicates high levels of activity and budget execution,21 outcomes are difficult to assess beyond completion of planned measures, and linkages between support delivery and longer term private BSS market development remain weak. Together these factors underpin the observed decline in implementation performance.

Monitoring and feedback mechanisms for private BSS have been strengthened since 2022, with the Ministry of Economic Development, the Innovation Fund, and Tehnopolis introducing regular progress reports, financial audits, field inspections and performance-based funding as part of their monitoring systems. Independent evaluations have led to programme revisions, while beneficiary satisfaction surveys and the public disclosure of ranking lists have improved transparency and accountability (Government of Montenegro, 2024[15]). However, the system remains fragmented across implementing bodies and lacks a formal accreditation framework or unified evaluation methodology for private consultants, limiting consistency and the comparability of performance data (Table 1.13).22

Table 1.13. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations on Dimension 5a, Sub‑dimension 5a.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Extend the level of quality assurance and develop a system to collect feedback from beneficiaries of private business support services to ensure accredited consultants cater to SMEs in their provision of support services	Since 2022, Montenegro has strengthened quality assurance and feedback mechanisms for private business support services through annual monitoring, field inspections and SME satisfaction surveys linked to co-financed programmes. Although no formal accreditation system for consultants exists, procedures for vetting providers and evaluating mentoring outcomes have been standardised under the SME Strategy and Innovation Fund schemes. Progress is therefore moderate, with improvements in monitoring and feedback but remaining gaps in systematic accreditation and service quality certification.	Moderate	See Cluster 1: Creating an enabling environment for SMEs and entrepreneurs

Dimension 5b: Public procurement in Montenegro

Overview of Montenegro’s performance on Dimension 5b

Montenegro scored 3.97 on Dimension 5b (Figure 1.8), which is a moderate decline from its score of 4.16 in the previous cycle. Despite this decrease, Montenegro remains close to the Western Balkans and Türkiye (WBT) average of 4.05, maintaining a broadly aligned position with the regional trend.

Figure 1.8. Overview of Montenegro’s score on Dimension 5b and evolution since 2019

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The decline in the overall score since 2022 primarily reflects a weakening in implementation, while performance in planning and design slightly increased. Monitoring and evaluation recorded modest improvement. Dimension 5b remains a mid-to-high-performing policy area for Montenegro compared to other dimensions, underpinned by solid strategic and legal foundations. However, the recent deterioration underscores emerging challenges in translating these frameworks into consistent implementation outcomes.

Developments since 2022

Developments indicate significant fluctuations in both the size and structure of the public procurement market. The share of public procurement in Montenegro’s gross domestic product (GDP) is steadily increasing, reaching 11.38% of GDP in 2024, up from 8.74% in 2022, indicating a stronger role for public procurement in economic development (Public Procurement Directorate, 2022-2025[19]). There have also been fluctuations in the use of competitive procedures, with negotiated procedures without prior publication covering 8.26% of procedures in 2024, compared to 11.14% in 2022 (Public Procurement Directorate, 2022-2025[19]). The average number of bids per procedure was 3.03 in 2024, down from 3.5 in 2022 (Public Procurement Directorate, 2022-2025[19]) (Figure 1.9). However, a high share of procedures received only one bid, a percentage that has increased since the last assessment, from 20.9% in 2022 to 38.3% in 2024 (Public Procurement Directorate, 2022-2025[19]). The lowest price remains the dominant award criterion, although annual statistical reports do not include detailed data on this aspect, and information on the share of small and medium-sized enterprises (SMEs) in public procurement is still unavailable (OECD, 2025[20]). Survey responses from the OECD Support for Improvement in Governance and Management (SIGMA) 2024 Assessment revealed that many economic operators declined to participate in public procurement due to perceptions that procedures were tailor-made for specific bidders (OECD, 2025[20]).

Figure 1.9. Public procurement market and competition levels in Montenegro and WBT economies, 2024

Source: Public Procurement Directorate (2022-2025[19]).

Montenegro scored 4.47 in planning and design, a substantial progress from 2022, when the economy scored 4.13. This increase is mostly due to the development of a new programme on public procurement and the consolidation of the current legislative framework. The Strategy for Improving Public Procurement Policy and Public-Private Partnership for the Period 2021-2025 includes goals and measures related to SME participation in public procurement. The successor strategy for 2026-2030 was adopted in 2026, and despite not having policies to support SMEs directly, several of its measures represent indirect improvements, such as greater use of market consultation and promotion of contract lot division (Government of Montenegro, 2025[21]). The Public Procurement Law was amended in 2023, and a draft law with a new set of amendments was submitted for consultation in 2026 (Government of Montenegro, 2026[22]). The law is highly aligned with the 2014 EU Directives (OECD, 2025[20]) despite not including certain provisions of particular importance to SMEs, such as the option to make direct payments to subcontractors. As the core instrument of transparency and e-procurement, the Electronic Registry for Public Procurement (ERPP) remains central to ensuring transparency and facilitating the implementation of electronic procedures. Legal protection of economic operators is ensured by the Commission for the Protection of Rights in Public Procurement Procedures (RPRPPP). Regarding the average duration of decisions by the RPRPPP, a relatively positive trend has been observed since the last assessment, with the average duration decreasing from 28 days in 2022 to 24 days in 2024 (Commission for the Protection of Rights in Public Procurement Procedures, 2024[23]).

Montenegro scored 4.32 in implementation, marking a setback from 2022, when the economy scored 4.80. This is due to the lack of implementation of tools and instruments of the Public Procurement Directorate (PPD), the institution responsible for implementing public procurement in the economy. Despite the PPD providing a range of support tools, including advisory services, manuals, and a dedicated help desk, a greater focus is still needed on developing tailored instruments, such as manuals on price–quality award criteria and the implementation of sustainable procurement (Table 1.14). A new training programme targeting economic operators has been prepared but has not yet been implemented. While some capacity-building activities, including training on the use of the ERPP, already involve economic operators, no structured or regular training scheme for economic operators and SMEs is currently in place (Public Procurement Directorate, 2026[24]). The private sector actively participates in broad consultations on the development of strategic and legal frameworks. Nevertheless, stakeholder engagement during the design of more targeted policy tools, such as training curricula or implementation guidelines, remains limited.

Table 1.14. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 5b

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Facilitate meaningful application of quality criteria to enable the selection of the most economically advantageous tender	The lowest price remains the dominant award criterion. Annual statistical reports do not contain data relevant to this aspect.	Limited	Provide training and develop implementation tools on the use of non-price award criteria

Source: OECD (2025[20]).

Montenegro scored 2.76 in monitoring and evaluation, representing a modest improvement from 2.60 in 2022. This reflects gradual strengthening in the regularity and scope of data collection on public procurement procedures. However, the monitoring framework remains less developed than the WBT average, as data on SME participation, the use of sustainable criteria, and the proportion of public contracts paid on time are still not systematically collected. While the PPD gathers general information on the obstacles faced by economic operators through various activities, there is no analytical overview specifically addressing the challenges SMEs encounter in accessing public procurement procedures (Public Procurement Directorate, 2026[24]).

Dimension 6: Access to finance for SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 6

Montenegro scored 3.17 on Dimension 623 (Figure 1.10), a stable performance compared to the previous cycle (3.15).24 Montenegro is the third-best performer of the Western Balkan and Türkiye (WBT) region, in line with the regional average of 3.21. However, Dimension 6 is one of the economy’s comparatively lower-scoring areas, highlighting room for further progress in strengthening small and medium-sized enterprises’ (SMEs) access to finance.

Figure 1.10. Overview of Montenegro’s dimension score on Dimension 6 and evolution since 2019

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The stability in Montenegro’s score since 2022 mainly reflects steps to develop the legal frameworks for capital markets and private equity, alongside policies that support access to bank finance, such as the upcoming national credit guarantee schemes (CGS). However, the lack of proactive policies supporting alternative financing sources, such as capital markets, leasing, and microfinance; the absence of a dedicated legal framework for crowdfunding; and gaps in financial literacy policies continue to constrain access to finance in Montenegro.

Sub-dimension 6.1: Bank finance

Montenegro scored 3.39 on Sub-dimension 6.1, a performance stable compared to the 2022 assessment cycle (3.38).25 This performance primarily reflects the introduction of policies that facilitate SME access to credit, particularly through the establishment of CGS, despite persistent structural weaknesses in the credit information infrastructure and asset registration systems, and a greater emphasis on monitoring and evaluation in scoring calculations.

Creditor rights in Montenegro are broadly aligned with the EU acquis. One significant development over the last assessment cycle is that the Central Bank of Montenegro (CBCG) stems from the Law Amending the Payment System Law, which enhanced financial transparency by introducing a system for daily public reporting of frozen business accounts, replacing the previous monthly updates, to strengthen banks’ ability to assess SME creditworthiness.

While Montenegro has an operational public credit information infrastructure covering a broad set of regulated financial institutions, gaps in non-financial data sources can still constrain lenders’ ability to assess credit risk, particularly for SMEs with short or informal credit histories. The public credit registry, managed by the CBCG, collects data on debtors (natural and legal persons), guarantors and co-debtors from a broad range of supervised reporting entities, including banks, microcredit financial institutions, the Development Bank of Montenegro, and non-bank providers such as factoring and leasing companies, receivables-purchase companies and payment institutions. However, Montenegro does not operate a private credit bureau, leaving the financial sector reliant on the CBCG’s registry.

Montenegro has established a comprehensive framework for asset registration, although no formal evaluation has yet been conducted to assess its performance. Cadastre systems now cover the entire territory of Montenegro, with around 90% of the land registered in the Real Estate Cadastre and the remainder recorded in the Land Cadastre and Cadastral Survey Register. The framework for registering security rights over movable assets remains unchanged since the last cycle. It continues to rely on the Central Register of Pledges on Movable Property and Rights, administered by the Ministry of Justice under the Law on Pledge over Movable Property and Rights. Intangible assets are registered through specialised institutions rather than the movable pledge registry: Montenegro’s Intellectual Property Office maintains publicly accessible online registers for patents, trademarks and industrial designs, each searchable through dedicated e-register interfaces. However, the absence of performance monitoring and evaluation of these registries limits the ability to identify potential bottlenecks, assess data reliability, and ensure that registration systems effectively support creditor confidence and SME access to finance. Finally, it should be noted that the Law on Pledge over Movable Property and Rights explicitly allows the use of intangible assets as collateral for loans, subject to proper registration, thereby facilitating access to bank finance for innovative SMEs.

The increase in Montenegro’s score mainly reflects progress in developing policies to facilitate business access to credit, although not all the new policy tools are operational yet. Following the adoption of the Law on the Development Bank of Montenegro in December 2024, the former Investment and Development Fund of Montenegro was officially transformed into the Development Bank of Montenegro (DBM). It should be noted that early concerns, particularly regarding potential deposit-taking and payment services outside the standard commercial bank framework, have been addressed through amendments adopted by Parliament in 2025, which exclude both activities from the DBM’s mandate and clarify its role as a development bank. Oversight has also been strengthened: the CBCG supervises the DBM’s compliance with the law and, in August 2025, issued a dedicated prudential rulebook on capital adequacy, asset classification and provisioning, risk-management standards, large exposures and reporting (Table 1.15). The DBM continues to play a central role in SME financing, offering a portfolio of 16 credit and financial-support programmes amounting to approximately EUR 200 million in 2025 for which 90% are allocated for SMEs (Montenegro Business, 2025[25]), representing a 33% increase compared to 2024. In parallel, with technical assistance of the European Bank for Reconstruction and Development, Montenegro has made progress in developing a national CGS with the adoption of the Law About the Credit Guarantee Fund of Montenegro in August 2025, and the selection of independent board members in February 2026. While the date of operation is not known yet, the Guarantee Fund of Montenegro has been allocated a capital of EUR 10 million funded by State Budget and will cover 50% of partner commercial banks loans in term of risk.

Table 1.15. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 6, Sub-dimension 6.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Promote sustainable banking practices by reviewing the Investment and Development Fund’s mandate and decision-making process, and create an independent credit guarantee scheme	While Montenegro has advanced in establishing the Credit Guarantee Fund as an independent institution, the transformation of the former Investment and Development Fund into the Development Bank of Montenegro has prompted closer scrutiny of its operating model and supervisory arrangements, even though recent legislative amendments and CBCG prudential rules have clarified its mandate and strengthened oversight.	Moderate	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 6.2: Non-bank finance

Montenegro scored 2.91 on Sub-dimension 6.2, slightly up from 2.8026 in the 2022 assessment cycle. Despite recent progress in strengthening the legal frameworks for capital markets and private equity, Montenegro’s performance remains constrained by the scarcity of proactive policies that promote the development of non-bank finance channels.

Montenegro has undertaken steps to stimulate capital-market activity, yet it remains underused by SMEs. The economy operates the Montenegro Stock Exchange (MNSE), which encompasses a wide range of securities, including short and long-term securities, investment funds, government bond and shares from government fund portfolios. To foster the development of the MNSE, the authorities adopted the Law on Voluntary Pension Funds in February 2025, which provides a legal framework for establishing companies to manage pension funds, with the aim of broadening the economy’s investor base and developing domestic equity and bond markets.27 Regarding access for SMEs, the MNSE operates a dedicated market segment for newly established or growing companies, MTP GROW,28 with lighter regulatory requirements than the prime listing, and an alternative market segment, MTP ME Market, which serves as a general platform for instruments that do not meet regulated-market criteria.29 While the MTP ME market’s capitalisation reached EUR 469.5 million in August 2025, or 20.7% of the MNSE’s total market capitalisation, the MTP GROW’s market capitalisation reached EUR 1.9 million in August 2025 (Montenegro Stock Exchange, 2025[26]), indicating that capital markets play a marginal role in the financing of growing SMEs and that additional measures may be needed to stimulate their participation.

Montenegro has taken steps to establish a dedicated legal framework for private equity and venture capital. In February 2025, Parliament adopted the Law on Alternative Investment Funds and the Law on Open Investment Funds with Public Offering, aligning national legislation with the acquis governing the creation and operation of investment funds and their management companies. Despite this progress, no venture capital activity was recorded in 2024 (Dealroom, 2025[27]), indicating that the market remains at an early stage of development. The Innovation Fund of Montenegro remains the main public instrument supporting early-stage financing through its Support Early-Stage Startup Development programme, which combines grants with business development services, indirectly contributing to the emergence of an investment ecosystem.30 Montenegro also hosts a Business angel network (BAN), but in the absence of a dedicated legal and policy framework, its activity has declined, raising only EUR 500 000 in 2023, compared to EUR 2.1 million in 2019 (European Business Angels Network, 2026[28]).

Montenegro currently lacks a dedicated legal framework for crowdfunding, and the Reform Agenda 2024–2027 does not include plans to develop or adopt specific legislation, leaving a financing gap for fast-growing SMEs, such as start-ups (Table 1.16).

The legal framework for factoring and leasing has not changed since the last assessment cycle, but their uptake remains low due to limited programmes supporting their development. In relative terms, factoring volumes have been slightly decreasing from 2.1% of gross domestic product (GDP) in 2019 (EUR 102 million) to 1.6% of GDP in 2024 (EUR 123 million),31 remaining well below the EU average of 11.9% in 2023 (FCI, 2024[29]). The absence of active policy measures, such as tax incentives, promotion programmes and dedicated training opportunities, constrains the further development of factoring, possibly reflecting the lack of initiatives encouraging businesses to use these financing instruments and ongoing challenges in financial literacy (Table 1.16), as only 37% of Montenegrin SMEs declared to be familiar with factoring in 2022 (OECD, 2023[30]). As for factoring, leasing volumes are also modest, accounting for 0.7% of GDP in 2022 (EUR 44 million) (OECD, 2024[31]), a level well below the EU average of 2.05% in 2023 (Leaseurope, 2024[32]). While leasing is familiar to 83% of SMEs (OECD, 2023[30]), its limited uptake may be partly due to the lack of incentives, such as tax reliefs or exemptions.

Table 1.16. Montenegro’s implementation of SME Policy Index’s 2022 recommendations for Dimension 6, Sub-dimension 6.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Raise awareness about alternative sources of finance	There is no evidence of an awareness-raising campaign about alternative sources of finance in Montenegro.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Pursue legislation to facilitate financing for start-ups	Montenegro has advanced private equity financing by adopting the Law on Alternative Investment Funds and the Law on Open Investment Funds with Public Offering. However, the lack of a legal framework for crowdfunding continues to leave a regulatory gap in the environment for early-stage and innovation financing.	Moderate	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 6.3: Financial inclusion

Montenegro scored 3.1 in Sub-dimension 6.3, slightly down from 3.3832 in 2022. Despite the adoption of a new strategic framework for financial education policies, this decline stems from a very limited focus on entrepreneurs, alongside the absence of policies supporting the development of microfinance.

The Programme for Financial Education Development in Montenegro (2023–2027) provides the main framework for improving financial literacy, with its first annual action plan adopted in December 2024 (Central Bank of Montenegro, 2024[33]) (see Table 1.17). Coordinated by the CBCG for its implementation, the plan envisages activities such as educational campaigns and workshops for various target groups, particularly children and youth, alongside the development of educational materials, the integration of financial literacy into school curricula, and the organisation of events like Global Money Week and Savings Week. However, entrepreneurs are not explicitly prioritised, suggesting that their financial literacy needs, particularly regarding alternative sources of finance, may remain insufficiently addressed (see Table 1.17). While annual action plans and end-year implementation reports are prepared and reviewed by the National Committee, they are not published and are available only upon request, limiting transparency on progress and results.

Microfinance remains Montenegro’s most used source of alternative finance, but its uptake has plateaued in recent years. Loans provided by these institutions are equivalent to 1.8% of GDP (EUR 142.9 million) by December 2025 (Central Bank of Montenegro, 2026[34]) 2022, a level stable since 2019 (International Monetary Fund, 2025[35]). The absence of policies focused on developing microfinance, such as initiatives to strengthen MFIs’ capitalisation or measures to facilitate technical accessibility through platforms that provide information or services, may impede the sector’s development.

Table 1.17. Montenegro’s implementation of SME Policy Index’s 2022 recommendations for Dimension 6, Sub-dimension 6.3

2022 recommendation	Main developments during the assessment period	Progress status
Develop a comprehensive financial literacy strategy	Montenegro has adopted the Programme for Financial Education Development (2023–2027), with the first annual action plan approved in December 2024. However, entrepreneurs are not explicitly prioritised in Montenegro’s financial literacy strategy.	Moderate

Dimension 7: Standards and technical regulations in Montenegro

Overview of Montenegro’s performance on Dimension 7

Montenegro received an overall score of 4.11 on Dimension 7 (Figure 1.11), a slight increase from its score of 3.94 in 2022. This score places Montenegro in line with the Western Balkans and Türkiye (WBT) regional average of 4.05. Dimension 7 remains a mid-scoring policy area for Montenegro, reflecting a quality infrastructure (QI) system that has markedly strengthened in certain institutional dimensions while continuing to face implementation and capacity challenges in others.

Figure 1.11. Overview of Montenegro’s score on Dimension 7 and evolution since 2019

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Montenegro’s performance points to a QI framework where progress has been driven by improvements in strategic co-ordination and institutional positioning rather than by broad-based advances across all components of legislative harmonisation. While overall co-ordination and general measures (Sub-dimension 7.1) and small and medium-sized enterprises’ (SMEs) access to standardisation (Sub‑dimension 7.3) have notably improved over the assessment period, harmonisation with the European Union (EU) acquis (Sub-dimension 7.2) has remained broadly stable.

Sub-dimension 7.1: Overall co-ordination and general measures

Montenegro’s performance on Sub-dimension 7.1 has substantially improved between assessment cycles, increasing from 3.33 in 2022 to 4.27 in 2026, which is above the WBT regional average of 3.97. This improvement reflects strengthened strategic direction and clearer policy planning, notably through the adoption of new, economy-wide strategies aligned with EU accession priorities. However, despite this formal progress, certain gaps in operational co-ordination, SME-facing guidance and systematic monitoring continue to limit the effectiveness of overall co-ordination mechanisms in practice.

The Ministry of Economic Development’s Directorate for Internal Market and Competition continues to co‑ordinate activities across standardisation, metrology and accreditation. The adoption of the Industrial Policy 2024-2028 and its accompanying Action Plan for 2024 has set new policy directions, aligning with the EU Accession Programme 2024-2027, which explicitly includes legislative planning under Chapter 1 – Free Movement of Goods (European Commission, 2024[36]).

Nevertheless, progress in centralising information and providing clear guidance to SMEs remains limited (Table 1.18). The long-anticipated centralised SME information portal, first recommended in 2022, has not been established, and information on regulations, standards and conformity assessment procedures remains scattered across institutional websites. SMEs continue to rely on the Chamber of Commerce and the Enterprise Europe Network for partial guidance. The Point of Single Contact serves as a national co‑ordination tool but lacks content tailored to exporters.

Regional co-operation continues through the WB6 Chamber Investment Forum, providing platforms for technical exchange and joint quality initiatives. However, without a dedicated QI strategy, co-ordination between institutions remains ad hoc and dependent on donor or EU-funded projects. The 2026 score, therefore, reflects formal progress on strategic frameworks but highlights the need for operational mechanisms, resource planning and systematic monitoring.

Table 1.18. Montenegro’s implementation of the SME Policy Index’s 2022 recommendation for Dimension 7, Sub-dimension 7.1

2022 recommendation	Main developments during the assessment period	Progress status
Finalise the creation of a centralised information portal for exporters, which provides key information on standards, regulations and the conformity assessment process	Preparatory work for a centralised small and medium-sized enterprise and exporter information portal has begun but remains incomplete. As of 2026, Montenegro still lacks a single-entry point consolidating guidance on standards, technical regulations and conformity assessment procedures.	Limited

Sub-dimension 7.2: Harmonisation with the EU acquis

Montenegro’s performance on Sub-dimension 7.2 has remained broadly stable between assessment cycles, from 4.23 in 2022 to 4.18 in 2026, above the WBT regional average of 4.02. This stability reflects a context where sector specific legislative progress has been counterbalanced by persistent capacity constraints, combined with delayed strategic renewal, incomplete procedural harmonisation and limited digitalisation.

Technical regulations have faced constraints during the assessment period brought by a lack of planning tools. Despite the legislative framework on technical regulations remaining largely harmonised with the old acquis, persistent implementation and capacity gaps have remained. The Law on Technical Requirements for Products and Conformity Assessment continues to serve as the primary legal instrument, however no new horizontal strategy or QI action plan has been adopted. The European Commission’s 2024 Enlargement Report confirmed progress in sectoral legislation, particularly on medicines, medical devices and construction products, but noted that procedural harmonisation remains incomplete (European Commission, 2024[36]). Additionally, no regular evaluation of technical regulations or implementing institutions’ training needs is conducted, nor has an SME-specific web page been developed.

Standardisation performance has increased slightly since the previous assessment, supported by continued standard integration efforts and sustained institutional activity. The Institute for Standardization of Montenegro (ISME) remains an affiliate member of CEN and CENELEC and is working towards full membership. Between June 2023 and June 2024, the ISME published 2 486 new Montenegrin standards aligned with EU standards, raising total adoption to more than 95%. However, financial and human resource constraints persist, with only 21 staff, and full reliance on public funding compounded by outdated IT infrastructure (Table 1.19). For SMEs, this translates into slower access to up-to-date information and limited opportunities to influence standard development.

Accreditation has remained stable and continues to represent a relative strength, as the Accreditation Body of Montenegro (ATCG) reached European co‑operation for Accreditation Multilateral Agreement signatory status in 2023, granting its certificates EU-wide recognition. It now accredits 42 conformity assessment bodies, though this represents a net decrease following the termination of 2 conformity assessment bodies. The ATCG currently employs 13 staff and co‑ordinates a pool of over 130 assessors and experts. However, the body’s limited staff capacity may result in bottlenecks, potentially delaying accreditation procedures and increase costs. For SMEs, this increases both the time and financial burden of certification, reducing their competitiveness against larger or foreign competitors that can rely on faster services in EU markets.

Conformity assessment in Montenegro has remained stable since the previous assessment, supported by donor-funded programmes, including loans from the European Bank for Reconstruction and Development and EU grants despite facing limited national capacity. This forces SMEs in regulated sectors to rely on foreign-notified bodies, increasing certification expenses and complicating logistics. This dependency not only raises operational costs but also discourages smaller firms from entering high-value export markets. Additionally, there is limited evaluation of legislation on conformity assessment and no dedicated website for SMEs on conformity assessment bodies. Without targeted support measures or simplified recognition procedures, compliance will remain a barrier to SME internationalisation.

Metrology remains a relative strength of Montenegro’s quality infrastructure and remained stable since the previous assessment, underpinned by a well-functioning institutional framework and continued progress on both staffing and digitalisation. The Bureau of Metrology has strengthened its operational capacity through targeted recruitment and staff transfers. It has also advanced its digitalisation agenda through integration into the e-government portal, enabling online administrative communication and the maintenance of databases covering service users, reviewed instruments and certificate validity. Furthermore, in 2023 the Bureau of Metrology improved its international standing by joining the International Organisation of Legal Metrology, and new rulebooks were adopted in 2022 and 2023 to align metrology practices with EU standards. Progress is tempered, however, by the absence of a formal metrology strategy, with operations currently guided by an Action Plan for the harmonisation of national legislation rather than a comprehensive long-term framework.

Market surveillance faces structural constraints that limit enforcement effectiveness, as the economy’s performance has slightly declined. While the Directorate for Inspection Affairs expanded its inspection activities, carrying out 1 278 inspections in 2023-2024 and identifying 618 dangerous or non‑compliant products for a total of 32 258, the legislative framework remains outdated and continues to rely on Regulation 765/2008. Fragmented IT systems further constrain co-ordination and enforcement efficiency. Although new inspectors have been hired and co-ordination has improved through the Coordination Body for Harmonisation and Monitoring of Inspections, the absence of an updated market surveillance strategy and sufficient digital tools continues to weaken the system. For businesses, these gaps contribute to uneven market conditions and weaker consumer protection, potentially undermining trust in domestically placed products.

Table 1.19. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 7, Sub-dimension 7.2

2022 recommendation	Main developments during the assessment period	Progress status
Focus and uphold efforts to become a full CEN/CENELEC member and European co‑operation for Accreditation Multilateral Agreement (EA-MLA) signatory	The Accreditation Body of Montenegro (ATCG) achieved full EA-MLA signatory status in December 2023, placing it on par with EU accreditation bodies. However, the Institute for Standardization remains an affiliate member of CEN and CENELEC, still working toward full membership.	Moderate
Increase financial and human resources for quality infrastructure institutions	Quality infrastructure bodies remain under-resourced. The ATCG employs 13 staff, the Institute for Standardization of Montenegro 21, and the Bureau of Metrology lacks technical personnel and adequate premises. No significant budget increases have been reported since 2022.	Limited

Sub-dimension 7.3: SMEs’ access to standardisation

Montenegro’s performance on Sub-dimension 7.3 significantly increased between assessment cycles, from 3.19 in 2022 to 3.65 in 2026, but remaining below the WBT regional average of 3.91. This progress reflects a strong performance in awareness-raising and growing SME participation, which has however not been matched by financial support mechanisms, constraining SMEs’ ability to translate increased knowledge into effective standard adoption and competitiveness gains.

Awareness and information stands out as a strong point: the ISME organised 43 events between 2020 and 2024, engaging nearly 1 000 participants from around 650 SMEs. Activities were held in several cities, in co‑operation with the Chamber of Commerce, demonstrating a broad outreach effort. The updated Guide to QMS Principles for MSMEs of 2024 has further contributed to spreading knowledge on how standards can drive operational efficiency and export readiness. However, without systematic monitoring of SME participation or regional uptake, it remains unclear whether these efforts are reaching the smallest and most resource-constrained firms.

SME participation in standardisation has increased through the integration of national SME representatives across ISME's 17 technical committees, where they contribute expertise and knowledge to standards development. While a dedicated technical committee for SMEs has not yet been established, its creation is currently planned, reflecting a recognition of the need for more targeted SME engagement within the standardisation framework. In addition, SMEs can provide feedback to the ISME through satisfaction surveys, allowing for the possibility of gathering evaluative input, although there is currently no evidence of systematic formal evaluation. Participation is further encouraged through concrete facilitation measures, including the organisation of training activities and the provision of financial discounts on standards purchases and training participation for ISME members.

Financial support on the purchasing of standards remains absent. There are currently no direct subsidies or reimbursement schemes for SMEs to cover certification or costs of implementing standards, marking a regression compared to 2022, when the Programme for Improving the Competitiveness of the Economy provided such support. Although standardisation-related expenditure may be indirectly addressed within broader SME competitiveness programmes, these instruments are not targeted at standards acquisition or certification costs specifically. This gap particularly affects small firms, with the absence of targeted funding limits the practical impact of awareness activities, since many SMEs lack the resources to implement standards despite being more well-informed.

Dimension 8a: Enterprise skills in Montenegro

Overview of Montenegro’s performance on Dimension 8a

Montenegro received an overall score of 3.75 for Dimension 8a (Figure 1.12), up from 3.28 in the previous assessment cycle and representing one of the greatest improvements observed in this dimension across the Western Balkans and Türkiye (WBT) region. This progress places Montenegro as the third highest-scoring economy in the region, exceeding the regional average of 3.44. Nevertheless, within the context of Montenegro’s overall strong performance in the current assessment cycle, Dimension 8a is one of its mid-performing areas, suggesting that despite notable advances, there is scope for further improvement.

Figure 1.12. Overview of Montenegro’s score on Dimension 8a and evolution since 2019

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The increase in Montenegro’s score since 2022 stems from progress achieved across all three thematic blocks, most notably in planning and design as well as in monitoring and evaluation. Taken together, these developments point to a more strategic approach to skills intelligence and skills development of small and medium-sized enterprises (SME), supported by concrete programmes that are increasingly aligned with business needs and broader economic priorities. Improvements in monitoring practices have further reinforced this shift by strengthening feedback mechanisms and supporting more evidence-based policymaking.

Developments since 2022

Performance in planning and design has improved, supported in part by clearer commitments to skills assessment and anticipation set out in key strategic documents, notably the Strategy for the Development of MSMEs 2023-2026 and the Education Reform Strategy 2025-2035. A stronger sectoral orientation has also emerged, with the Industrial Policy 2024-2028 signalling a more cross-sectoral approach to skills intelligence and placing a greater emphasis on SMEs. However, gaps persist in the overall policy architecture, preventing the consolidation of recent progress into a more advanced and coherent framework for this thematic block. Other key strategies (i.e. those related to entrepreneurial learning and smart specialisation) have expired and not been replaced, thus reducing strategic continuity in these areas (Table 1.20). Additionally, there is scope to strengthen institutional arrangements. While the Ministry of Economic Development holds nominal responsibility for co-ordination, it lacks a clear mandate to independently oversee the planning of SME training needs. Moreover, a wide range of actors, including the Chamber of Commerce, the Science and Technology Park and the University of Donja Gorica, deliver training without formal obligations to share information or co-ordinate with the ministry, and key institutions traditionally involved in skills intelligence (e.g. the Ministry of Labour, Employment and Social Dialogue; the Ministry of Education, Science and Innovation) are not yet systematically engaged.

Instead, the most significant progress within this thematic block has been driven by advances in the legal and strategic framework for social enterprises. In particular, the adoption of the Strategy for the Development of Social Entrepreneurship 2025-2029, alongside work on a draft Law on Social Entrepreneurship, represents a clear step forward compared to the previous assessment cycle, when no dedicated policy framework was in place.

In terms of implementation, Montenegro has continued to expand SME training provision and progressively align offerings with evolving megatrends and labour market needs. Digital skills development represents a clear area of relative strength, supported by a more structured institutional set-up. Provision is delivered through dedicated bodies, including the Montenegrin European Digital Innovation Hub – a consortium of national institutions – as well as Technopolis and the National Competence Centre in High-Performance Computing, and is reinforced by Innovation Fund incentives. In contrast, skills development related to the green transition remains less embedded, as current measures prioritise financial and technical support over structured training or reskilling programmes, creating a gap between the retraining ambitions of the Reform Agenda 2024-2027 and current implementation capacity. Nevertheless, awareness of available training opportunities has improved through enhanced information provision, particularly via the centralised SME support portal (https://biznis.gov.me/edukacija-i-razvoj), although there remains scope to further expand and enrich the information available (Table 1.20).

However, uptake of training generally remains low. A 2023 study found that nearly 75% of companies do not allocate an annual budget for employee training, resulting in fewer than half organising any form of staff development (PwC, 2023[37]). Among companies that did provide training, there was a clear preference for tailored, on-the-job approaches that directly address the firm’s needs. Yet, budgetary constraints reveal a central tension: for example, in digital skills provision, while most employers recognise the importance of such skills, few have invested in developing them internally (Figure 1.13). Programmes offered by employer associations or the Chamber of Commerce provide an alternative, but their generalised format is seen as less relevant, with fewer than 15% of companies making use of them. These findings underline a persistent challenge for SME training: even when opportunities exist, their perceived alignment with SMEs’ needs is limited.

Figure 1.13. Key statistic for Dimension 8a, Montenegro, 2023

Note: The figures presented are based on survey data and may differ slightly from official national statistics.

Sources: PwC (2023[37]); RCC (2023[38]).

Monitoring and evaluation mechanisms have advanced, albeit from a relatively low baseline. Specifically, reporting under the Strategy for the Development of MSMEs 2023-2026 and long-standing data collection by the Chamber of Commerce has improved the visibility of training provision and helped lay the foundations for more structured oversight. However, monitoring efforts remain fragmented, as no uniform or centralised system is yet in place. Parallel reporting exercises across institutions limit the development of a system-wide perspective and risk reducing the overall analytical value of the data. In particular, inconsistencies in data collection methodologies hinder comparability, while the absence of a shared taxonomy for skills and competences makes it difficult to identify emerging training priorities. Although the 2023 Report on SME Training Needs Analysis and Training Needs Monitoring Methodology offers a potential framework for greater harmonisation, it has not yet been implemented (PwC, 2023[37]). As a result, challenges persist in centralising key information (such as data on in-demand skills, SME skills gaps and social enterprise activity), weakening the link between available evidence and the design of targeted training initiatives.

Table 1.20. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 8a

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Designate a body to lead the co-ordination and development of an action plan for SME skills intelligence	There are no ongoing or planned efforts to establish such an action plan.	None	See Cluster 4: “Understanding and anticipating skills needs”
Ensure consistent focus on SME skills within the Smart Specialisation Strategy (S3) of Montenegro (2019-2024), its operational plans and related policies	The final evaluation of the Smart Specialisation Strategy 2019-2024 indicates that the Strategy embedded a clear focus on strengthening “S3 skills” through a dedicated operational objective, contributing to improvements in innovation- and skills-related indicators. However, although several instruments targeted SMEs, SME-specific skills were not systematically mainstreamed or consistently monitored across all priority areas, limiting full horizontal integration within the S3 framework. The preparation of the forthcoming S3 2026-2031 therefore presents an opportunity to embed SME skills considerations more coherently and systematically in the next strategic cycle.	Moderate	See Cluster 4: “Understanding and anticipating skills needs”
Create a single portal for enterprise skills to open up access to information and support for start-up and skills development	In June 2022, the government of Montenegro launched a centralised portal for enterprise skills (https://biznis.gov.me/edukacija-i-razvoj). The portal enables businesses to search for training opportunities by type of support (financial or non-financial), key sector (e.g. tourism, manufacturing) and/or type of activity (e.g. business planning, market research, digital skills). However, its content remains relatively limited, which constrains its usefulness for SMEs.	Moderate	See Cluster 4: “Addressing skills needs of SMEs through adult education”

Dimension 8b: Innovation policy for SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 8b

Montenegro received an overall score of 3.56 on Dimension 8b (Figure 1.14), a significant increase since 2022 (2.99). Montenegro has become the third performer in the Western Balkans and Türkiye (WBT) region, outperforming the regional average of 3.27. As a result, innovation policy for small and medium-sized enterprises (SMEs) has become one of Montenegro’s comparatively stronger, though still mid-range, areas of performance.

Figure 1.14. Overview of Montenegro’s score on Dimension 8b and evolution since 2019

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Montenegro’s higher score mainly reflects stronger delivery of SME-oriented innovation support, driven by the full operationalisation of the Innovation Fund, an expanded offer of technology extension services infrastructure for established SMEs, and a major milestone for business-academia collaboration with the opening of the Science and Technology Park (STP) in June 2024. However, tax incentives for innovation remain scarce, and the successor strategic framework for innovation policy is still under preparation, constraining Montenegro’s overall performance in Dimension 8b.

Sub-dimension 8b.1: Policy framework for innovation

Performance in the policy framework for innovation has improved since the last assessment, rising from 3.42 in 2022 to 3.87 in 2026. Although the next Smart Specialisation Strategy (S3) is not yet operational, implementation has become more effective in practice, reflecting the Innovation Fund’s stronger delivery capacity and the Innovation and Smart Specialisation Council’s active role in coordinating the overall policy framework.

Montenegro’s strategic approach to innovation for SMEs is anchored in the Smart Specialisation Strategy 2019-2024, which remains the overarching framework for science, technology and innovation policy. The S3 defines national priority domains for innovation support, notably around the green transition (e.g. sustainable agriculture and food value chains, energy and sustainable environment, and sustainable/health tourism) alongside digital transformation, with ICT positioned as a key sector. At the time of writing, the 2025 S3 implementation plan serves as a bridging instrument, while the next Smart Specialisation Strategy 2026-2031 is under preparation and is expected to be adopted in the second quarter of 2026. The S3 is complemented by the Science and Research Strategy 2024-2028, which focuses on strengthening science–industry collaboration by supporting joint projects, introducing proof-of-concept support to help bring research closer to market, and improving technology transfer arrangements. In addition, the Strategy for the Development of MSMEs 2023-2026 combines upgrading innovation and technology-support infrastructure, direct programmes to strengthen SME innovation implemented through the Innovation Fund and measures to promote and improve SMEs’ access to European Union (EU) funds. Overall, while Montenegro’s innovation framework is comprehensive, strategy-level evaluation is still limited, leaving evidence on SME key outcomes, such as productivity, fragmented and restricted mainly to programme-level monitoring.

On the implementation side, operational delivery relies heavily on the Innovation Fund, which is designated as the lead institution for SME-oriented innovation support. Implementation reporting for the Smart Specialisation Strategy 2019-2024 indicates a relatively solid execution record, which has been increasing across years: of 53 planned activities in 2023-2024, 39, or 74%, were implemented, while 65% were in 2021-2022 and 60% in 2019-2020 (Government of Montenegro, 2025[39]).

Strategic coordination of innovation policy is organised through the Innovation and Smart Specialisation Council, which brings together relevant public institutions and key stakeholders to set priorities and monitor implementation. The council is reported to meet at least twice per year, with thematic working groups supporting follow-up work between meetings and helping to maintain continuity on specific priority areas. At the same time, while the coordination set-up is active, communication and visibility remain weaker and broader stakeholder engagement could be strengthened to ensure the strategy is fully understood and owned across the ecosystem (Government of Montenegro, 2025[39]).

Sub-dimension 8b.2: Government institutional support-services for innovative SMEs

Montenegro achieved a score of 3.32 on Sub-dimension 8b.2, substantially up from 2.36 in 2022. This progress reflects the continuous development of incubation, acceleration and technology extension services for SMEs.

Montenegrin SMEs can access a growing range of incubators and accelerators. While initial efforts mainly focused on business incubation, Montenegro’s start-up ecosystem has become more diversified, now comprising seven incubators and four accelerator programmes,33 most of which are publicly owned and concentrated in Podgorica. However, information on these programmes remains fragmented, as no central platform provides a comprehensive mapping of Montenegro’s incubation and acceleration landscape, and the effectiveness of public support instruments has yet to be evaluated.

Montenegro has also expanded its offer of technology extension services. The Innovation and Entrepreneurship Centre Tehnopolis in Nikšić has strengthened its services by providing prototyping facilities, innovation advisory services and agro-technology laboratories. Moreover, the newly established Science and Technology Park in Podgorica provides complementary ICT and engineering-focused technology transfer services, creating a clearer pathway for SMEs seeking more advanced technical support. In addition, emerging regional hubs in Bar and Pljevlja are beginning to offer services related to digital transformation, process optimisation, and green technology pilots, helping to extend support beyond the capital.

Sub-dimension 8b.3: Government financial support for innovative SMEs

Montenegro scored 3.61 on Sub-dimension 8b.3, up from 3.06 in the previous assessment, reflecting stronger direct financial support for SMEs engaged in innovation activities, although schemes for indirect financial support to SMEs remain limited.

Montenegro’s direct financial support for innovative SMEs has expanded significantly since the last assessment through the operations of the Innovation Fund of Montenegro, established in 2021 to support the implementation of the S3. Since its creation, the fund has implemented 10 programmes, financing 155 projects for a total value of around EUR 6 million by the end of 2024 (Table 1.21).34 The fund’s resources have grown steadily, with its annual budget rising from EUR 700 000 in 2022 to EUR 3.2 million in 2024, largely financed by the government. Key support instruments include the Early-Stage Start-up Development Program, the Program for Strengthening Innovation of Micro, Small and Medium Enterprises and the Collaborative Innovation Grants Program, which promote early-stage innovation, innovation for established SMEs and business–academia collaboration. In addition, two public calls were launched to encourage innovation in support of industrial energy efficiency, resulting in 21 projects being awarded contracts totalling EUR 3.4 million in 2024 and 2025.35 However, despite the fund’s growing portfolio, no impact evaluation has been conducted to assess the effectiveness of its programmes, leaving the overall contribution of public innovation finance to SME performance and innovation capacity unknown.

Montenegro’s indirect financial support for innovation remains nascent. One recent step is the introduction of a corporate income tax credit under the Law on Incentive Measures for the Development of Research and Innovation (adopted in May 2025), which grants eligible beneficiaries a credit equivalent to 100% of the corporate income tax due on profits reinvested in approved research and development or innovation projects. However, no other tax-based schemes currently support innovation activities in Montenegro.

Table 1.21. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 8b, Sub-dimension 8b.3

2022 recommendation	Main developments during the assessment period	Progress status
Swiftly operationalise the newly established Innovation Fund	The Innovation Fund’s portfolio has substantially expanded over the last assessment cycle, financing 155 projects for a total of around EUR 6 million by the end of 2024.	Strong

Sub-dimension 8b.4: SME and research institution collaboration and technology transfer

Montenegro scored 3.14 on Sub-dimension 8b.4, up from 2.68 in the 2022 assessment. Overall, this increase stems from a more institutionalised collaboration ecosystem, mainly through the opening of the STP and more active intellectual property rights (IPR)-promoting policies.

Funded by the Innovation Fund, Montenegro’s voucher support for patent protection and invention development remains modest in scale. Allocated a total of EUR 20 000 in 2024, the Vouchers for Patent Protection and Invention Development program supported 7 projects. Moreover, three supported projects have covered the costs of World Intellectual Property Organisation patent examination, and one project covered the cost of the national protection tax, leaving the link to innovation activities indirect (Innovation Fund of Montenegro, 2025[40]).

Montenegro’s institutional infrastructure for business-academia cooperation is increasingly structured around three complementary pillars. First, the Innovation Fund provides the main operational bridge through its Collaborative Grants for Innovation, which finance joint research and development projects between SMEs and research organisations, supporting six projects with a total budget of EUR 1 million in 2024.36 Second, the STP is Montenegro’s core institution for cooperation between SMEs and research institutions (Table 1.22). Opened in June 2024, it had already admitted 18 tenants by the end of 2024, with further intake rounds planned. The establishment of a technology transfer office within the STP is a key step in facilitating the commercialisation of research and strengthening structured linkages between businesses and research institutions (Table 1.22). The STP’s 2025 work programme also envisages expanding service depth beyond incubation, including developing laboratory capacities and tailored support to help innovators protect inventions, develop prototypes, conduct tests, and prepare for market entry. Third, the innovation ecosystem’s connectivity is supported by collaborative platforms. Alongside Montenegro’s European Digital Innovation Hub, which helps SMEs access relevant expertise and facilities and supports digital testing, technology adoption and skills development, the National Competence Centre for Supercomputing links firms to high-performance computing expertise and infrastructure and provides training and advisory services to help SMEs develop and scale compute-intensive solutions and manage large datasets.

Lastly, Montenegro’s IPR system continues to rely on specialised legislation broadly aligned with the EU acquis, including the Law on Patents, the Law on Trademarks, the Law on Industrial Designs, and the Law on Copyright and Related Rights. Regarding the promotion of IPR, the Intellectual Property Directorate has stepped up awareness-raising and advisory outreach through partnerships with innovation hubs and business organisations, and strengthened cooperation with the European Patent Office, including the establishment of a Patent Library37 function to facilitate access to patent information for SMEs. Overall, Montenegro’s IPR system's main caveat remains the absence of SME-specific procedural simplifications or fast-track litigation in IP disputes, as well as a designated national out-of-court complaints body for IP infringement, leading SMEs to rely on general court channels and non-tailored alternative dispute resolution options.

Table 1.22. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 8b, Sub-dimension 8b.4

2022 recommendation	Main developments during the assessment period	Progress status
Progress with the construction of the four-pillar network of the Science and Technology Park, with a strong focus on business-academia collaboration	The Science and Technology Park of Montenegro was officially opened in June 2024, marking a significant boost to the development of Montenegro's innovation infrastructure. The 2025 action plan includes developing laboratory capacities and a programme to promote competitiveness through intellectual property protection, demonstrating efforts to go beyond traditional incubation services.	Strong
Introduce measures to stimulate collaboration between research institutions and the private sector	With the launch of Montenegro’s technology transfer office in 2025, Montenegro has taken steps to promote collaboration between research institutions, but collaboration with the private sector remains limited. The newly established Science and Technology Park includes several activity-based initiatives (events, networking, projects) that address research–industry collaboration, as well as more systematic initiatives, such as a financial scheme that provides intellectual property protection services for innovators to facilitate commercialisation.	Strong

Dimension 9: SMEs in a green economy in Montenegro

Overview of Montenegro’s performance on Dimension 9

Montenegro scored 3.82 on Dimension 9 (Figure 1.15), improving from 3.65 in the previous cycle and maintaining its position as the second-best performer among Western Balkans and Türkiye (WBT) economies in this dimension. This increase primarily reflects stronger implementation of measures outlined in strategic frameworks for small and medium-sized enterprise (SME) greening, while some gaps remain in policy monitoring and evaluation. This dimension is among Montenegro’s average performance.

Figure 1.15. Overview of Montenegro’s score on Dimension 9 and evolution since 2019

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Montenegro’s stable score since 2022 reflects ongoing challenges in strengthening policy planning and design with clear operational direction, as well as in improving monitoring and evaluation systems needed to restructure programmes for greater effectiveness and scaling of SME greening support.

Sub-dimension 9.1: Framework for greening policies targeting SMEs

Performance in this sub-dimension has increased, from 3.77 in 2022 to 3.84 in 2026. Progress was mostly observed in planning and design and implementation.

Montenegro has several key strategies governing the development of the green economy. While the Climate Change Strategy has lacked multiannual action plans, the National Energy and Climate Plan (NECP), adopted in 2025, is seen as progress, particularly for advancing carbon pricing and its alignment with the demands of the EU Carbon Border Adjustment Mechanism. This could further enhance the effectiveness of concrete measures in the updated Micro, Small and Medium-sized Enterprise (MSME) Strategy, the Industrial Policy, and the Circular Economy (CE) Transition Strategy, by strengthening synergies across them. For this, co-ordination across institutions is facilitated through the Competitiveness Council that involves key ministries, such as those overseeing environmental protection and energy, alongside clearer guidance for just transition efforts provided by the newly established Just Transition Council (Box 1.2)

Box 1.2. Spotlight: A Just Transition Council – Building a resilient economy amidst the climate and energy transition

Policy context

Montenegro remains highly dependent on a single, outdated coal plant, making a just, well-planned, and inclusive transition essential to achieving its climate-neutrality goals. The establishment of the Just Transition Council marks a key step toward modernising the economy and strengthening social and economic resilience by engaging institutions, businesses and local communities in the green transition.

Operational aspects

Chaired by the Minister of Energy and Mining, the Just Transition Council serves as the central body for directing and co-ordinating the transition process in line with national development priorities, EU standards and local community needs. It includes representatives from key ministries, such as those responsible for finance, labour and social dialogue, European affairs, ecology, and public works, as well as management from the coal mine, the Montenegrin electric power industry, the municipality of Pljevlja, and the business sector. The Just Transition Council will guide policy planning and implementation, co‑ordinate institutions and stakeholders, and oversee the monitoring of the Just Transition Plan while enhancing the legal and institutional framework for its execution.

Policy impact

As the Just Transition Council was only established in mid-2025, concrete outcomes regarding its role in advancing SME interests within the just transition agenda have yet to emerge. However, its creation provides an important institutional platform to integrate business perspectives into transition planning, ensure fair support measures for affected sectors, and align SME policies with Montenegro’s broader low-carbon and social resilience goals.

Source: Ministry of Energy and Mining of Montenegro (2025[41]).

Picking up in the post-COVID‑19 context, implementation is progressing at an average rate of around 62% across major strategies,38 supported by constant budgeting for SME-targeted activities. Other positive developments include the institutional co-ordination ensured by clear working group structures and continuous staff training39 to strengthen environmental expertise within the business support system.

Monitoring is well established, but evaluation continues to lag (Table 1.23). Annual assessments exist for some programmes, such as the Improving Competitiveness of the Economy programme, though their green focus is only partial. Broad strategies and action plans still lack regular evaluations.

Table 1.23. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 9, Sub-dimension 9.1

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Conduct regular monitoring and evaluation of different SME greening support programmes – particularly financial – to better adapt them to SMEs’ actual needs and harmonise the programmes offered by different institutions	All relevant strategies, including the Micro, Small and Medium-sized Enterprise (MSME) Strategy, the Industrial Policy, and the Circular Economy Transition Strategy, are regularly monitored, and progress toward targets is well documented. However, budgeting for greening measures is not always clearly identified in strategies such as the Industrial Policy or the MSME Strategy. Despite a solid monitoring basis, evaluation has not advanced since the last assessment. There is still no analysis of programme impact on SME development indicators over time, making it difficult to link government interventions to SME greening outcomes. These qualitative assessments remain missing, though the planned 2026 evaluation of the Circular Economy Transition Strategy could help refine greening policies in the next period.	Limited	See Cluster 2: “Fostering SME sustainability and resilience”

Sub-dimension 9.2: Incentives and instruments for SME sustainability

Montenegro scored 3.80 on Sub-dimension 9.2 on incentives and instruments for SME sustainability, up from 3.55 in 2022. This progress reflects better implementation and slightly improved monitoring and evaluation of SME greening incentives.

With the adoption of the NECP in 2025 a major barrier to fully operationalising green incentives for businesses has been removed. This plan now sets clear targets through 2030 on energy security, efficiency and decarbonisation, supported by government-led measures. Climate change adaptation policy has also advanced, with priority measures identified for key sectors such as tourism, guiding support instruments in the coming period. Still, more work is needed to anchor regulatory tools within the SME greening policy framework.

Implementation has gained traction, particularly in terms of financial incentives offered through the Programme for Improving the Competitiveness of the Economy,40 as well as other government support, e.g. through the Kigali Implementation Plan (KIP),41 Innovation Fund and sustainable finance products from the National Development Bank. In addition, green public procurement (GPP) is gradually expanding (Table 1.24). However, efforts to ease administrative and regulatory burdens on SMEs remain limited,42 with some small-scale actions focused on waste and donor-led initiatives,43 but no coherent, long-term approach.

Monitoring of greening instruments and incentives has improved since 2022, with more systematic reviews through annual reports for the MSME Strategy and the CE Transition Strategy. However, there is still no consolidated dataset across strategies to show how many SMEs benefit, raising concerns about data interoperability and institutional responsibilities for collecting SME feedback. Regarding evaluation quality, the ex post evaluation of the SME Strategy 2018-2022 provides a solid basis to further strengthen efforts to capture the real impact on SMEs in the green economy.

Table 1.24. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 9, Sub-dimension 9.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Consider introducing regulatory instruments into the SME greening policy mix	With Montenegro’s National Energy and Climate Plan adopted, key regulatory instruments crucial for business decarbonisation, including targets on energy security, efficiency, market operation, and emissions reduction can now be further advanced. The 2019 Law on Protection against the Negative Impacts of Climate Change, however, still requires further amendments to align with EU and Paris Agreement standards, forming the basis for a long-term Low-carbon Development Strategy. On the climate change adaptation side, the new National Adaptation Plan introduces regular monitoring and review processes for regulations and compliance, including for private-sector stakeholders, providing a framework to guide improvements in SME greening policies in key sectors such as tourism going forward.	Moderate	See Cluster 2: “Fostering SME sustainability and resilience”
Facilitate the transition to a circular economy through green public procurement	Training on green public procurement (GPP) began in 2023, with 30 civil servants trained on legal options for applying GPP, although no training took place in 2024. The electronic public procurement system, needed to track the use of green and social criteria can now also generate reports, meaning statistical data would be collected to show where green criteria have been applied. Additional activities are planned under the Circular Economy Transition Strategy’s action plan, including new administrative guidelines to be adopted in 2025 and 2026.	Moderate	See Cluster 2: “Fostering SME sustainability and resilience”

Dimension 10: Internationalisation of SMEs in Montenegro

Overview of Montenegro’s performance on Dimension 10

Montenegro received an overall score of 3.53 on Dimension 10 in the 2026 assessment, compared to 3.66 in the previous cycle, indicating a broadly stable level of performance with a slight downward trend (Figure 1.16). Montenegro’s score remains below the Western Balkans and Türkiye (WBT) regional average of 3.76 and places the economy in the lower tier of WBT performers for this dimension.

Figure 1.16. Overview of Montenegro’s score on Dimension 10 and evolution since 2019

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Compared with Montenegro’s performance across other dimensions, internationalisation remains a relative weakness, highlighting persistent structural challenges in supporting SMEs’ access to foreign markets. The modest decline since 2022 reflects uneven progress across the components of the dimension. While targeted improvements have been observed in areas related to digitalisation and the enabling framework for access to international markets, these gains have been offset by continued weaknesses in implementation depth, co-ordination and monitoring mechanisms in other areas of SME internationalisation. As a result, the gap between the current state of play and international good practices has not narrowed significantly, underscoring the need to shift from predominantly framework-driven and project-based approaches toward more systematic delivery and results-oriented monitoring.

Sub-dimension 10.1: Export promotion

Performance on this sub-dimension has remained broadly stable since 2022, with Montenegro’s score declining marginally from 3.98 in 2022 to 3.90 in 2026 (Figure 1.16). This limited change reflects offsetting developments across assessment blocks: incremental strengthening in policy design, including clearer strategic articulation of internationalisation and expanded international co-operation, has been balanced by persisting weaknesses in implementation and monitoring and evaluation. While delivery mechanisms have continued to function through existing programmes and partnerships, the absence of further institutionalisation and outcome-oriented monitoring has constrained overall progress, resulting in no major change in performance since the previous assessment cycle.

Although Montenegro has maintained a formally solid strategic basis for SME export promotion through the MSME Development Strategy 2023-2026 and its 2025-2026 Action Plan, which articulate a dedicated objective on access to new markets and internationalisation (Government of Montenegro, 2023[42]), the coherence and depth of the design framework have weakened over the assessment period. The economy’s accession to the European Union (EU) Single Market Program in 202344 re-established and expanded the activities of the Enterprise Europe Network (EEN MontEENegro), providing SMEs with enhanced access to EU support schemes, cross-border partnerships and advisory services. However, Montenegro does not yet operate dedicated digital tools specifically designed for export promotion, nor mechanisms to track digital engagement or outcomes. Export-related assistance has been further mainstreamed within the Programme for Improving the Competitiveness of the Economy (PICE), which now includes training on export readiness and co‑financing for participation in international fairs, such as Agro Belgrade, Anuga FoodTec, Mostar Fair and Hannover Messe45 (Government of Montenegro, 2024[15]). However, a dedicated internationalisation support line was available only under PICE 2023 and was not retained in the 2024 and 2025 programmes.The Chamber of Commerce has intensified its role in promoting SME participation in regional and EU trade fairs and missions, providing market intelligence, and networking opportunities (Chamber of Commerce of Economy of Montenegro, 2024[43]). Nevertheless, progress remains gradual: Montenegro still lacks a dedicated export promotion agency, systematic monitoring and multiannual funding, leaving export support largely project-based and centrally managed. The framework is, therefore, entering a consolidation phase, with stronger co-ordination and institutionalisation needed to translate recent policy advances into measurable export growth.

Implementation of export promotion measures has become more structured and interconnected since 2022, reflecting closer co-ordination between the Ministry of Economic Development, the Chamber of Commerce and EEN MontEENegro, as well as the expanded use of digital access points such as the Single Access Point Portal46 and the Point of Single Contact47 for SME information, regulatory guidance and networking. However, these co-ordination gains have not translated into stronger delivery capacity or more consistent implementation outcomes. PICE continues to serve as the principal delivery mechanism for SME internationalisation, complemented by EU and donor-funded partnerships, notably through Instrument for Pre-accession Assistance (IPA)-funded technical assistance and European Bbank for Reconstruction and Development programmes, which provide additional capacity building and co-financing for SME upgrading and market readiness (Government of Montenegro, 2024[15])48. Implementation has increasingly relied on these partnerships and inter-institutional co-operation to offset staffing and budgetary constraints, yet the absence of dedicated monitoring tools, digital performance tracking and regional outreach continues to limit effectiveness. Export support remains fragmented, operating through multi-purpose SME instruments rather than a coherent export framework. While delivery has become more outward-looking, the framework still requires stronger institutional capacity and predictable funding to ensure consistent implementation and lasting impact. Export performance data confirm this gap, with SMEs’ share in total goods exports declining from 47.5% in 2021 to 20.5% in 2024, and the SME export performance index dropping by 15 points relative to the EU average since 2019 (OECD, 2025[44]), underscoring the need to convert improved co-ordination and donor engagement into tangible competitiveness gains.

Monitoring of export promotion in Montenegro has strengthened since the previous assessment. It remains largely embedded within the annual reporting of PICE, co-ordinated by the Ministry of Economic Development. Indicators mainly track budget execution, the number of supported firms, and participation in fairs or training activities, aligned with institutional reporting cycles (Government of Montenegro, 2024[15]). Moreover, independent annual review is conducted in the context of PICE. However, this does not assess the effectiveness or cost-efficiency of export promotion measures. The Statistical Office of Montenegro regularly publishes foreign trade data, but these are not linked to programme beneficiaries and lack disaggregation by firm size or ownership. Administrative transparency has been advanced through annual implementation reports containing programme beneficiary lists, yet monitoring remains predominantly output-oriented, with no independent evaluation of export promotion effectiveness, cost-benefit analysis, or outcome indicators assessing export performance or diversification. As a result, evidence-based assessment of programme impact and efficiency remains limited.

Sub-dimension 10.2: Integration of SMEs into global value chains

Performance on this sub-dimension has declined marginally from 3.58 in 2022 to 3.17 in 2026 (Figure 1.16), reflecting a gradual weakening in the coherence, depth and evaluability of policies supporting SME integration into global value chains (GVCs). While activity levels remain relatively high, the absence of a dedicated and results-oriented GVC framework has limited the effectiveness and strategic direction of support.

The integration agenda continues to be primarily driven by cross-cutting competitiveness and investment programmes rather than a stand-alone GVC strategy. PICE and the Investment Support Programme,49 with a combined annual budget exceeding EUR 4 million, provide financial and advisory support for production upgrades, digitalisation and green transition, all of which enhance firms’ ability to meet international supplier standards (Government of Montenegro, 2024[15]). The inclusion of GVC-related objectives in the new SME strategy and participation in the EU Single Market Programme have strengthened alignment with EU policies on market access and sustainability. However, these objectives remain broad and insufficiently operationalised. The absence of a dedicated GVC integration framework has reduced policy coherence and limited the ability to articulate clear pathways linking SME upgrading, supplier development, and export or investment outcomes. Priority sectors – manufacturing, agrifood, tourism, ICT and renewable energy – remain unchanged from previous cycles (Government of Montenegro, 2023[42]), suggesting limited strategic recalibration despite evolving regional value-chain dynamics.

Implementation has remained active but has weakened in strategic focus and co-ordination. Delivery continues to be anchored in PICE’s targeted programme lines supporting digitalisation, production enhancement, and women- and youth-led entrepreneurship. In 2024, 94 SMEs benefited from EUR 2.6 million in support, while in 2023, 380 SMEs received EUR 2.4 million, including mentoring and advisory components (Montenegrin Ministry of Economic Development, 2024[45]). EEN MontEENegro has complemented national efforts through parallel delivery channels by facilitating business-to-business matchmaking and supplier partnerships, hosting 20 events with 500 participants and resulting in 8 co‑operation agreements in 2024 (Montenegrin Ministry of Economic Development, 2024[46])50. The rollout of the EBRD-EU SME Go Green programme further integrates sustainability into competitiveness support, encouraging technology adoption and supplier diversification within regional value chains (EBRD, 2025[47]). Despite these advances, programmes remain largely centrally managed, with limited inter-institutional co‑ordination beyond consultation stages, and no systematically developed or monitored cluster or regional network development (Table 1.25). Administrative streamlining and the use of online public call platforms have improved accessibility, but SME participation remains concentrated among more established firms that have the capacity to co-finance investments.

Monitoring mechanisms for SMEs’ integration into GVCs remain fragmented and predominantly output‑oriented, with reporting limited to financial disbursement and beneficiary counts under PICE. Unlike the export promotion area, there are no dedicated tools for tracking supplier relationships, value chain positions or spillovers from foreign investment, and no systematic feedback mechanisms specific to SMEs’ integration into GVCs. The Statistical Office of Montenegro’s (MONSTAT) data continue to focus on aggregate foreign trade statistics without linking export activity to programme beneficiaries or firm size, constraining analysis of integration outcomes. While incremental administrative improvements such as simplified application cycles and periodic co-ordination meetings have emerged from programme reviews, no independent audits focused specifically on SMEs’ integration into GVCs, SME feedback loops or cost‑effectiveness evaluations are yet in place.

Table 1.25. Montenegro’s implementation of the SME Policy Index’s 2022 recommendations for Dimension 10, Sub‑dimensions 10.1 and 10.2

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Facilitate access to information on support services available to SMEs, encouraging their internationalisation	The Single Access Point (biznis.gov.me) and Point of Single Contact (psc.gov.me) portals were further developed as central information hubs for SME support and administrative guidance, while the Chamber of Commerce and EEN MontEENegro have strengthened outreach through events, online resources and matchmaking activities. Awareness-raising has improved but remains uneven among microenterprises.	Strong	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Reduce reliance on external development programmes	National ownership has increased with the annual Programme for Improving the Competitiveness of the Economy (PICE), which integrates export and global value chain (GVC)-related support under a government-funded framework (EUR 3-3.5 million per year). However, implementation still depends on technical assistance from the European Union and the European Bank for Reconstruction and Development and Instrument for Pre-Accession Assistance (IPA) co-financing.	Moderate	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Broaden the export offer of SMEs and enhance the supplier base in the economy to match the inflowing foreign direct investment	Export and GVC programmes (PICE, Investment Support Programme, SME Go Green) have prioritised the manufacturing, agri-food and renewable energy sectors, supporting production upgrades and certification. The EEN MontEENegro network facilitated 20 events and 8 co‑operation agreements in 2024, but supplier development initiatives and foreign direct investment-SME linkage programmes remain limited.	Moderate	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”
Introduce non-financial support for SMEs aiming to form a cluster	Advisory, mentoring and digitalisation support was integrated into PICE lines and EEN MontEENegro activities provided networking opportunities; however, no dedicated cluster-formation or cluster-governance programme has been introduced since 2022. Cluster policy remains at a conceptual stage.	Limited	See Cluster 1: “Creating an enabling environment for SMEs and entrepreneurs”

Sub-dimension 10.3: Promoting the use of e-commerce

Montenegro’s performance on Sub-dimension 10.3 has improved substantially, with the weighted average score increasing from 2.93 in 2022 to 3.41 in 2026. This reflects progress in policy planning and implementation, driven mainly by stronger legal alignment with EU e-commerce standards, upgrades to the digital payments framework, and the expansion of indirect and partner-led support mechanisms for SME digitalisation.

In policy planning and design, Montenegro has advanced its legal and strategic alignment with EU norms relevant to e-commerce. The Payment System Law has been harmonised with the EU Revised Payment Services Directive, enabling payment-initiation and account-information services and strengthening transparency and competition in the payments market (Central Bank of Montenegro, 2023[48]). Since November 2024, Montenegro has also joined the SEPA schemes, improving cross-border payment interoperability.51 Consumer protection legislation is being updated to align with EU rules on digital goods and services, while a new Law on General Product Safety aligned with EU Regulation 2023/988 strengthens product safety oversight (Table 1.26). These reforms are complemented by strategic frameworks such as the Digital Transformation Strategy 2022-2026 and the MSME Development Strategy 2023-2026, which highlight digitalisation and online market access as enablers of competitiveness and internationalisation. However, Montenegro still lacks a dedicated e-commerce strategy, and existing measures remain more general rather than SME-specific. Moreover, while a Law on Electronic Commerce has long been in place, it has not been substantially updated to reflect newer platform-based business models and implementation gaps persist.

Implementation of policies supporting SME use of e-commerce has improved since 2022, mainly through indirect instruments and partner-led delivery. While there are no dedicated public programmes focused exclusively on SME e-commerce adoption, digitalisation support is provided through broader schemes such as PICE, which offers grants and advisory services for digital tools and internationalisation. In 2024, the programme supported 94 SMEs with a budget of EUR 2.6 million; in 2023 it supported 380 SMEs with a budget of EUR 2.4 million, including lines for digitalisation, marketing and mentoring (Government of Montenegro, 2024[15]). However, no dedicated digitalisation line was included in the 2025 programme cycle, with support redirected towards equipment procurement and smart manufacturing capacity. Additional capacity is delivered through partner initiatives, notably EEN MontEENegro and the EBRD’s Advice for Small Businesses Programme, which provide tailored advisory services on digital transformation and platform use (EBRD, 2025[47]). Awareness-raising efforts have also advanced, with the Chamber of Commerce of Montenegro, the E-commerce Association and the Balkan eCommerce Alliance organising a roundtable in 2024 to discuss regulatory and logistical bottlenecks, followed by a free training programme on e-commerce fundamentals and AI for digital entrepreneurs in March 2025 (Montenegro Business News, 2025[49]). In parallel, Montenegro has modernised its digital payments infrastructure and is preparing for participation in TARGET Instant Payment Settlement (TIPS), further strengthening the foundations for online transactions. Nevertheless, proactive government measures targeting cross-border e-commerce operations, logistics integration or platform interoperability remain limited, and implementation continues to rely heavily on partner and donor‑supported initiatives.

Monitoring and evaluation of SME e-commerce and online platform policies remain weak. While selected digitalisation and postal services strategies are subject to annual administrative reporting, monitoring focuses mainly on implementation progress rather than outcomes or business impact (Government of Montenegro, 2024[50]). MONSTAT collects data on enterprise ICT use, including website ownership and Internet access, but does not systematically track SME online sales, platform participation or cross-border e-commerce activity, nor are indicators fully aligned with Eurostat standards. Although broader digital performance is assessed through regional benchmarks such as the Western Balkans DESI, these are not yet linked to national programme targets or used to guide policy adjustments.

Table 1.26. Montenegro’s implementation of the SME Policy Index’s 2022 recommendation for Dimension 10, Sub-dimension 10.3

2022 recommendation	Main developments during the assessment period	Progress status	Way forward
Develop a legal framework governing e-commerce and online services	Since 2022, Montenegro has substantially strengthened the legal and regulatory framework for e-commerce through alignment of the Payment System Law with the EU Revised Payment Services Directive, accession to SEPA in 2024, and ongoing updates to consumer protection and product safety legislation. These reforms have improved payment interoperability and digital trust, but a dedicated e-commerce governance framework and institution remain absent, and small and medium-sized enterprise-specific capacity building is largely delivered through partner-led initiatives.	Strong	See Cluster 3: “Digital Transformation of SMEs”

Dimension 11: Digital transformation of SMEs in Montenegro

Overview of dimension performance

Montenegro’s achieved a score of 2.81 on the new Dimension 11 (Figure 1.17), placing it slightly below the Western Balkans and Türkiye (WBT) regional average of 3.00 and indicating moderate stage policy maturity in small and medium-sized enterprise (SME) digital transformation. Performance across the three sub-dimensions varies: results are the strongest in Sub-dimension 11.1 on digital policy foundations, reflecting the presence of several strategic frameworks that reference digitalisation, albeit with limited SME-specific operational depth. Sub-dimension 11.2 on digital safety shows intermediate development, with basic regulatory structures in place but weak adaptation to SME needs and limited practical support. Sub-dimension 11.3 on the use of advanced technologies records the weakest performance, reflecting the very early stage of policy development for SME uptake of artificial intelligence (AI), automation and sustainably deployed digital technologies. Compared with other dimensions, Dimension 11 ranks among Montenegro’s weaker areas of policy reform, indicating that in the area of SME digital transformation, strategic ambition has yet to be matched by effective coordination and sustained delivery capacity.

Figure 1.17. Overview of Montenegro’s score on Dimension 11, 2026

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Sub-dimension 11.1: Digital policy foundations

Montenegro has achieved an overall score of 3.24 on Sub-dimension 11.1, reflecting a solid strategic orientation toward SME digital transformation, but limited operational depth and coherence in policy design. This performance largely reflects the presence of multiple strategic references to digitalisation without a dedicated, fully articulated SME digital transformation framework.

Policy planning and design for SME digitalisation are spread across several national strategies, including the Digital Transformation Strategy 2022-2026, the Strategy for the Development of MSMEs 2023-2026, the Smart Specialisation Implementation Plan 2025, and the Industrial Policy 2024-2028. Among these, only the MSME Strategy explicitly focuses on SMEs, while the Digital Transformation Strategy remains primarily oriented toward public sector reform and digital government, with business-related objectives formulated at a general level and without clearly defined instruments, financing windows, or delivery mechanisms tailored to SMEs. Similarly, the Smart Specialisation Implementation Plan and the Industrial Policy incorporate digitalisation as a horizontal priority, but actions are embedded indirectly within broader innovation and competitiveness measures rather than framed around SME digital uptake. As a result, domestic strategic frameworks do not systematically address the adoption of core digital tools, advanced technologies or the organisational changes required for enterprise-level transformation. While policy documents increasingly acknowledge the importance of SME digitalisation, the way objectives are distributed across several strategies without clear operational linkages reduces the clarity and practical impact of government support for SME digital transformation.

On the implementation side, institutional responsibilities remain fragmented and shared across multiple actors with overlapping or parallel mandates. The Ministry of Public Administration leads on digital governance, cybersecurity and e-government, while the Ministry of Economic Development is responsible for SME policy, competitiveness and innovation. However, coordination between these institutions remains limited, and no single body is tasked with delivering an integrated SME digital transformation programme. The Programme for Improving the Competitiveness of the Economy has been the main government-led instrument to explicitly support SME digitalisation, but its digitalisation component was modest (EUR 300 000 in 2024), implemented on a one-off basis, and the programme itself is now outdated (Government of Montenegro, 2024[51]). Consequently, SMEs continue to rely heavily on donor-supported initiatives, including European Bank for Reconstruction and Development regional programmes, EU-funded projects and ad hoc advisory schemes, rather than on stable, nationally anchored support. This reliance on externally financed, project-based delivery creates uneven coverage, limits scalability and continuity, and risks reinforcing gaps between digitally advanced firms and smaller or less connected ones.

Monitoring and evaluation mechanisms are in place but remain limited in scope and depth. Progress is tracked mainly through annual reporting on the Digital Transformation Strategy and activity monitoring under the MSME Strategy Action Plan, with a strong emphasis on implementation outputs rather than enterprise-level outcomes. Evaluation practices rely largely on qualitative reporting, and Montenegro does not yet operate a systematic framework to assess SME digital maturity, barriers to adoption or the effectiveness of support instruments. Although the Industrial Policy 2024-2028 foresees the introduction of an annual enterprise digitalisation survey, this tool has not yet been fully institutionalised or integrated into a broader monitoring architecture. SME consultations occur sporadically through electronic surveys and programme-specific feedback forms, but they are not embedded in a continuous evidence-gathering process linked to policy adjustment. The absence of harmonised indicators, centralised data collection and SME-specific baselines constrains the authorities’ ability to assess progress, identify structural gaps and recalibrate policy measures toward more targeted and impactful SME digital transformation support.

Sub-dimension 11.2: Digital safety

Montenegro scored 2.62 on Sub-dimension 11.2, which indicates moderate progress in establishing the regulatory foundations for digital safety, but limited SME-oriented policy design, implementation and support. This performance largely reflects partial legal alignment with EU standards and the absence of tailored instruments to help SMEs manage data-protection and cybersecurity obligations.

Policy planning and design for digital safety are anchored in the Cybersecurity Strategy 2022-2026, which provides the core strategic framework and defines objectives related to prevention, incident response and critical-infrastructure protection. These priorities are reinforced by the new Law on Information Security (2024), which establishes the legal basis for a dedicated Cybersecurity Agency and the national computer emergency response team. The Agency was established at end-2024 and is expected to become fully operational by June 2026. However, the strategy does not explicitly address SME needs, risk profiles or resource constraints. In parallel, data-protection regulation remains only partially aligned with the EU General Data Protection Regulation (GDPR): the Law on Personal Data Protection, most recently amended in 2024, remains only partially aligned with the GDPR, and a fully compliant law is under preparation. While supervisory bodies such as the Agency for Personal Data Protection and Free Access to Information have clearly defined mandates, limited institutional capacity, incomplete legislative alignment and the lack of practical business-oriented guidance reduce the effectiveness of the framework. Overall, strategic and legal structures are in place, but they do not yet provide clear, accessible or proportionate pathways for SMEs to establish sound data-governance practices or meet evolving compliance requirements.

On the implementation side, support remains fragmented and offers only indirect or reactive assistance to SMEs. Montenegro does not operate dedicated SME-focused programmes for data protection or cybersecurity, and existing initiatives are largely project-based, donor-funded or designed for public sector capacity building rather than enterprise-level needs. SMEs report limited access to practical tools such as standardised templates, compliance checklists or subsidised advisory services, and often rely on private consultants due to the absence of affordable government support mechanisms. While initiatives such as the Western Balkans Cyber Capacity Centre that was established with support from France, Slovenia, the Government of Montenegro and the EU, awareness workshops organised by the Agency for Personal Data Protection and Free Access to Information, and activities hosted by the Science and Technology Park contribute to general risk awareness, they do not provide structured, continuous or SME-targeted advisory support. A Government Security Operations Centre was established in response to major cyber incidents in 2022 and 2024 (EEAS, 2024[52]; eGA, 2025[53]), but its mandate focuses primarily on public administration systems rather than SME preparedness or resilience. As a result, many SMEs continue to face elevated cyber risks and limited incentives to invest in mitigation, alongside persistent gaps in practical guidance on how to prevent, detect and respond to cyber threats.

Monitoring and evaluation of digital safety policies is present but is yet to be fully developed, particularly in the SME context. While implementation of the Cybersecurity Strategy is reported annually, assessment remains largely descriptive and focused on activities rather than outcomes. Montenegro does not operate a dedicated SME-level monitoring framework to track data-protection compliance, cybersecurity readiness or the effectiveness of awareness and support initiatives. Feedback from SMEs is gathered only sporadically through consultations, event-based surveys or donor-supported assessments, limiting the authorities’ ability to identify structural gaps or recalibrate interventions based on firm-level evidence. The absence of regular SME digital-safety indicators, combined with limited enforcement capacity within the Agency for Personal Data Protection and Free Access to Information, weakens the deterrent effect of the regulatory framework and constrains the development of risk-informed and evidence-based policy responses.

Sub-dimension 11.3: Use of advanced technologies

Montenegro scored 2.02 on Sub-dimension 11.3, indicating weak performance and an early stage of policy development and implementation for ethical and sustainable SME uptake of advanced digital technologies. This performance largely reflects the absence of a dedicated strategic framework for emerging technologies, limited SME-specific policy instruments; and reliance on fragmented, project-based implementation.

Policy planning and design for advanced and sustainable digital technologies remain at an early stage. Emerging technologies such as artificial intelligence (AI), big data, cloud computing and automation are referenced in the Digital Transformation Strategy 2022-2026 and the Strategy for Scientific Research Activity 2024-2028, but mainly as broad enablers of digital transition and research excellence rather than as areas with SME-specific objectives, budgets or delivery mechanisms. The sustainable use of digital technologies is acknowledged in horizontal policy documents through links between innovation, energy efficiency and the green transition, yet this is not operationalised through concrete instruments targeting SMEs. In 2025, a working group was established to prepare an Artificial Intelligence Strategy 2026-2030 and an initial Artificial Intelligence Action Plan, but at the time of assessment, no dedicated AI strategy or risk-based governance framework had been adopted. As a result, Montenegro lacks a coherent policy architecture to guide SMEs from basic digitalisation toward the adoption of advanced and environmentally sustainable technologies.

On the implementation side, support for SME use of advanced technologies is driven by a small number of programmes and donor-backed initiatives with limited reach and a strong concentration on start-ups and early-stage innovators. The Smart Specialisation Implementation Plan 2025 introduced a regional accelerator for sustainability and AI, implemented by the Innovation Fund with a budget of around EUR 1.5 million, while the Innovation Fund Support Plan 2025 aims to strengthen existing instruments and launch GovTech- and AI-related initiatives. Phase II of the GovTech Programme, with a budget of EUR 2 million and a public call for funding of innovative solutions planned for 2026, is expected to further expand this support. The newly established MontEDIH hub (MontEDIH, 2025[54]),, the Science and Technology Park of Montenegro (STP, 2025[55]), and the UNIDO-Slovenia Tourism 4.0 project provide testing facilities, advisory services and pilot applications using tools such as virtual reality/augmented reality and 3D simulation (Box 1.3) (UNIDO, 2025[56]). Participation, however, remains limited to a relatively narrow segment of firms. Moreover, community-led initiatives, including the Montenegro AI Association, the IT Spot conference (ADRIA, 2025[57]), and the Oxiom FinBot pilot (VOP, 2025[58]) illustrate emerging experimentation with AI, but these activities are fragmented and are not embedded in structured government support mechanisms. Support for the sustainable use of digital technologies is only indirect, channelled through instruments such as the Innovation and Energy Efficiency Programme 2024 (IFM, 2024[59]) - under which 14 manufacturing companies were contracted in 2024, receiving approximately EUR 2.2 million for investments in production modernisation, smart solutions and automation, with a new public call expected in 2026 - and green lending facilities which rarely integrate digital and environmental upgrading as a single policy objective.

Box 1.3. Spotlight: Tourism 4.0: Piloting Immersive digital technologies in Montenegro’s tourism sector

Montenegro’s participation in the UNIDO-Slovenia Tourism 4.0 project marks one of Montenegro’s most concrete examples of sector-specific digital innovation. Through this initiative, small and medium-sized enterprises (SMEs) in the tourism sector and local stakeholders are piloting virtual reality, augmented reality, 3D simulation and photogrammetry tools to enhance visitor experiences, reinterpret cultural heritage and modernise service delivery. These technologies allow tourism operators, many of which are micro or family-run businesses, to experiment with low-carbon, digitally enriched products that can increase competitiveness without major infrastructure investments.

A key strength of Tourism 4.0 is its emphasis on hands-on experimentation, enabling SMEs to test cutting-edge tools they would otherwise be unlikely to access. The project also promotes collaboration between technology experts, tourism operators and heritage institutions, helping SMEs to understand how emerging technologies can be embedded into real business models.

However, participation remains limited to selected pilots, and the initiative currently operates without a structured mechanism to scale lessons across the broader tourism ecosystem. Many SMEs still lack the skills, equipment or financial capacity to adopt immersive technologies independently, and the project’s reliance on donor funding raises questions about its long-term continuity.

Despite these limitations, Tourism 4.0 demonstrates the potential of targeted, sector-oriented initiatives to introduce SMEs to emerging technologies and stimulate early adoption in a key industry. It highlights how immersive tools can support both digital transformation and sustainable, experience-based tourism development in Montenegro.

Source: UNIDO (2025[56]).

Montenegro has not developed monitoring and evaluation mechanisms for SME use of advanced and sustainably deployed technologies. It does not operate a dedicated SME-level monitoring framework to track the uptake, depth of use or sectoral distribution of AI, automation or other advanced tools, nor to assess their environmental implications. Evidence on SME adoption of emerging technologies relies mainly on one-off surveys and project-level reporting from donor-funded initiatives rather than on regular, government-led indicator collection. The economy does not have any formal processes to systematically capture SME feedback on the accessibility, relevance or impact of advanced-technology support measures, and current strategies do not define measurable targets or outcome indicators related to SME AI adoption or green-digital transformation. This lack of structured monitoring constrains the authorities’ ability to assess what works, identify sectoral or firm-size gaps and recalibrate policies accordingly, reinforcing the early and fragmented nature of support in this sub-dimension.

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Notes

← 1.  It is worth noting that tailored career guidance is explicitly foreseen under the new Career Guidance and Counselling Strategy 2025-2030.

← 2.  This criterion assesses strategies for relevance, coherence, effectiveness, efficiency, impact and sustainability.

← 3.  Key stakeholders who were surveyed included members of the Working Group on Women’s Economic Empowerment, representatives of NGOs involved in supporting women entrepreneurs and women owners of SMEs.

← 4.  This programme was implemented by 35 qualified mentors, running between 2022 and 2024.

← 5.  Aligned with the Programme of Economic Reform 2023-2025, the Digital Transformation Strategy 2022-2026, the Regional Development Strategy 2023-2027.

← 6.  The Industrial Policy 2024-2028 is available at: https://www.gov.me/en/documents/e2c8c270-e810-4072-8576-5242f713c6a6.

← 7.  The Ministry of Economic Development and Tourism, through its Directorate for Improving Competitiveness, leads co‑ordination efforts in partnership with the Employment Agency, the Innovation Fund, Tehnopolis, and the Science and Technology Park.

← 8.  Including the Training Needs Assessment and the Gender Analysis of the Competitiveness Programme 2024.

← 9.  PICE is a national support instrument of the government, implemented by the Ministry of Economic Development since 2017 to enhance the productivity, innovation and sustainability of micro, small and medium-sized enterprises. It is adopted and updated annually, reflecting current economic conditions, national development priorities and alignment with EU strategic frameworks. Each yearly edition defines specific programme lines and financial measures designed to strengthen business competitiveness and stimulate inclusive, green and digital growth.

← 10.  The 2024 iteration of PICE consolidated nine fragmented measures into four strategic lines – production capacities, small investments, digitalisation, and vouchers for women and youth – and expanded individual grant intensity nearly fourfold (from around EUR 5 000 in 2023 to about EUR 20 000 in 2024).

← 11.  Through the programi.gov.me and biznis.gov portals.

← 12.  By enabling automatic eligibility checks and ex officio data retrieval.

← 13.  By centralising programme rules and guidance.

← 14.  Including BoostMeUp, Enterprise Europe Network Montenegro, and voucher-type innovation support delivered through the Innovation Fund and PICE digitalisation measures. The voucher-type innovation support instruments co-finance the use of external expertise and services – including research and development, collaboration, digital solutions, testing, prototyping, and mentoring – and are targeted at specific groups such as innovative SMEs, start-ups, and women- and youth-owned enterprises. By design, they require or incentivise co-operation with universities, research institutions, innovation centres or accredited private consultants, thereby strengthening linkages within the innovation ecosystem.

← 15.  The Business Development Services (BDS) Helpdesk was established with support from the EU-funded project “Advanced Business Development Services for Improving the Capacities of SMEs”. It provides advisory services to SMEs in areas such as business planning, loan applications, marketing, internationalisation, mentoring and intellectual property rights. The initiative also included capacity-building for local stakeholders and upgrades to the single access point portal, expanding access to advisory support at the local level.

← 16.  With high absorption for production capacity support (96%) but markedly lower uptake for digitalisation (58%) and vouchers for women and youth (59%).

← 17.  The strategy explicitly calls for “the creation of conditions for the development of a market of business services through private sector involvement in training, mentoring, digitalisation and innovation support”.

← 18.  The Industrial Policy 2024-2028 promotes the role of private BSS through measures encouraging public-private co‑operation in consulting, mentoring and innovation support. The policy strengthens the ecosystem for private service delivery by expanding clusters, innovation hubs and voucher schemes, and by engaging intermediaries such as the Innovation Fund, the Science and Technology Park, and Tehnopolis to connect enterprises with private consultants and experts.

← 19.  PICE offers 50-80% co-financing for consultancy, digitalisation and investment projects, with additional incentives for women- and youth-led firms and those operating in less-developed municipalities.

← 20.  The Innovation Fund has strengthened and broadened its voucher-based programmes for energy efficiency, research and development collaboration, and start-up incubation, mobilising private consultants and technical experts through public calls such as the Innovation Voucher Scheme and Early-Stage Start-up Support Programme.

← 21.  The Action Plan reporting for 2024 indicates high delivery activity (83.09% of planned activities implemented or ongoing), yet a notable share of measures was not implemented.

← 22.  Information provided during the assessment cycle.

← 23.  Dimension 6 has undergone significant structural and methodological changes to reflect the emergence of new policy instruments supporting access to bank finance, the diversification of financing instruments available to firms, and the increasing policy emphasis on monitoring, evaluation and effective implementation. These changes were also introduced to ensure closer alignment with the latest OECD and EU standards and good practices in assessing access to finance policies.

As a result of these changes, scores from the 2022 and 2026 assessment cycles are not directly comparable. However, to preserve the benchmarking nature of the exercise and ensure analytical continuity, the 2022 scores for Dimension 6 and its sub-dimensions were recalculated using the 2026 assessment framework and structure. This enables an illustrative assessment of score evolution between the two cycles and allows the 2026 scores to be used as benchmarks, subject to the limitations arising from the revised structure and methodology of the dimension.

← 24.  The original 2022 Dimension 6 score calculated using the previous methodology was 3.63.

← 25.  The original 2022 bank finance score, calculated using the previous methodology and comprising the 2022 bank finance thematic blocks, was 2.12.

← 26.  The original 2022 non-bank finance score, calculated using the previous methodology and comprising the 2022 non-bank finance thematic blocks, was 3.38.

← 27.  In June 2025, Parliament adopted amendments to the Law on Capital Markets, further aligning it with the EU Acquis. For more details, see: https://zakoni.skupstina.me/zakoni/web/dokumenta/zakoni-i-drugi-akti/549/3712-21340-04-1-25-5.pdf.

← 28.  For more details on the listing criteria of the MTP Grow Market, see (CEE Legal Matters, 2020[62]).

← 29.  The segment is for financial instruments which do not meet the conditions for admission to any of the regulated market segments. Admission approval is made by the Executive Director of MNSE (rather than the full board) based on a written application.

← 30.  For more details, see Innovation Fund of Montenegro (2025[60]).

← 31.  Data provided by the Government of Montenegro for this assessment.

← 32.  The thematic blocks “Financial literacy” and “Microfinance institutions” were part of different sub-dimensions in 2022. Their underlying scores remained unchanged; they were simply recalculated using the methodology of the 2026 edition.

← 33.  Incubation services are provided by the BSC Bar (2026[1]), the Regional Business Centre Berane (2025[2]), the Innovative Entrepreneurship Centre Tehnopolis Nikšić (Ministry of Economic Development of Montenegro, 2024[3]) and the Business Incubator Cetinje. The Science and Technology Park of Montenegro Podgorica (2025[8]), the Digital Den hub (Government of Montenegro, 2023[14]) and the University of Donja Gorica (University of Donja Gorica, 2025[61]) provide incubation and acceleration services. The Wave Accelerator Program (2025[17]) provides acceleration services.

← 34.  Between 2021 and 2024, approximately EUR 5.2 million were allocated to 86 grants for SMEs, including EUR 2.25 million for start-up development.

← 35.  Information provided by the Government of Montenegro for this assessment.

← 36.  Grants typically range from EUR 50 000 to EUR 200 000 (up to 80% co-financing), with project selection combining expert assessment and an international panel review.

← 37.  In practice, a PATLIB centre is a public-facing support point (usually hosted by a technology park, university, or IP office partner) that helps businesses use patent information and navigate early IP steps.

← 38.  In 2024, 33% of greening-related activities under the 2023 MSME Strategy were completed, increasing to 50% by 2024. The Industrial Policy achieved an overall implementation rate of 80.9% of its measures in 2023, while the CE Transition Strategy reached 75% completion in the same year, and 72% in 2024. However, for both of these strategies, the figures include measures not exclusively related to greening or SMEs.

← 39.  For example, in 2023: Workshop on Just Transition held within the framework of the Coal Regions in Transition Initiative in the Western Balkans and Ukraine; 2024: Two-day workshop on the topic “Governance Transformation for More Efficient Implementation of the Sustainable Development Goals”.

← 40.  A total of 414 SMEs benefitted from financing programmes implemented as part of the Programme to Improve the Competitiveness of the Economy in 2023 and 2024, although not all of them are directly relevant to greening.

← 41.  KIPs are strategic plans aimed at reducing hydrofluorocarbon (HFC) use in line with the Kigali Amendment. Under the Hydrochlorofluorocarbons (HCFC) Phase-Out Management Plan (HPMP) Stage II, the Environmental Protection Agency supported 25 companies in 2023 and 2024 by providing equipment for maintaining refrigeration and air conditioning systems. Dedicated funding from international partners covers equipment, training, and public awareness materials, directly supporting SMEs and incentivising their adoption of greener technologies.

← 42.  In 2023, the Institute for Standardization of Montenegro through the Instrument for Pre-accession Assistance (IPA) 2020 project, Increasing the Capacity of Institutions Responsible for Harmonization and Implementation of the EU Legal Framework in the Field of Competitiveness and Innovation, organised a panel on “The Role of ISO 14001 in Waste Management”. This highlighted the need to raise awareness of the application of standards in all business systems dealing with waste issues, thus creating a basis for sustainable business.

Around 70 business representatives participated in four events organised with the Chamber of Commerce on topics related to the circular economy and plastic waste management, related to the ban on lightweight plastics (adopted in 2024). Activities included presentations of the Study on Packaging and Packaging Waste Management, roundtable discussions and a meeting between business representatives and the prime minister focused on waste management and green business, as reported in the Chamber’s 2023 and 2024 annual reports.

← 43.  In April 2025, the United Nations Development Programme and the International Labour Organization, together with the Ministry of Economic Development, launched the project, Circular Transition and Responsible Business Conduct in Montenegro, which will run until 2027. The overall objective of the project is to strengthen the circular economy in Montenegro by promoting responsible business conduct at the SME level and promoting industrial symbiosis, a co-operative approach in which SMEs recycle waste and byproducts from their processes.

← 44.  Montenegro formally joined the EU Single Market Programme 2021-2027 in 2023, following the signature of the Agreement on Montenegro’s Participation in the EU Single Market Programme with the European Commission. Participation enables Montenegrin institutions and SMEs to access EU-funded instruments for competitiveness, entrepreneurship and internationalisation, including EEN MontEENegro, and to align national SME support schemes with EU standards and best practices. See: https://www.gov.me/en/article/montenegro-signs-agreement-on-participation-in-eu-single-market-programme.

← 45.  The government of Montenegro did not provide quantitative data including funding and the number of beneficiaries on these activities.

← 46.  The Single Access Point portal (biznis.gov.me) was developed by the Ministry of Economic Development (formerly the Ministry of Economic Development and Tourism) with the European Bank for Reconstruction and Development (EBRD) and EU IPA 2014-2020 funding. It serves as a one-stop information platform for micro, small and medium-sized enterprises (MSMEs), centralising guidance on business registration, financing and support programmes. The portal also promotes mentorship initiatives, showcases SME success stories, and facilitates access to training and networking opportunities, thereby indirectly supporting SME internationalisation.

← 47.  The Point of Single Contact portal (psc.gov.me) provides information and administrative guidance for cross-border service provision, business registration and licensing in line with the EU Services Directive’s principles. Managed by the Ministry of Economic Development (formerly the Ministry of Economic Development and Tourism), the portal simplifies procedural requirements for SMEs operating across borders and supports alignment with EU internal market standards.

← 48.  Also based on information provided by the government of Montenegro during the 2026 assessment.

← 49.  The Investment Support Programme is a national scheme implemented by the Ministry of Regional Development, Investments and Cooperation with NGOs, with about EUR 1.2 million per year allocated for SME investment grants, mainly regional or sustainability-focused, but indirectly contributing to GVC readiness through equipment modernisation and production upgrades.

← 50.  Also based on information provided by the government of Montenegro during the 2026 assessment.

← 51.  Information provided by the government of Montenegro during the 2026 assessment.