SMEs are particularly exposed to rising economic and environmental pressures, including climate risks, shifting trade dynamics, and the wider transition to a green economy. This cluster evaluates policies that strengthen SME resilience and competitiveness in this context. It examines five broader areas, assessing frameworks for SME greening, disaster resilience mechanisms, access to financial support, non-financial support and the role of business networks, as well as innovation ecosystems in supporting the transition.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for North Macedonia
Abstract
While an increasing share (over 25%) of businesses in North Macedonia recognise competitive advantage and revenue growth as key benefits of a sustainable and green transformation, many small and medium-sized enterprises (SMEs) still feel ill-equipped to capture these opportunities (EIB, 2025[1]). In recent years, they have operated in an increasingly complex and uncertain environment shaped by global and regional disruptions.
The COVID-19 pandemic first exposed structural vulnerabilities, including a heavy reliance on global supply chains and outdated, inefficient energy systems that increases the economy’s exposure to commodity price shocks (IMF, 2025[2]). Export-oriented sectors have been particularly affected by these and subsequent challenges, including persistent inflation, energy and food price volatility, and changing external demand driven by broader global trends. Beyond the green transition, these megatrends include accelerated geopolitical realignments, evolving trade systems, shifting consumer preferences and the rise of the digital economy (OECD, 2023[3]). For SMEs in North Macedonia, these dynamics highlight the urgent need for strategic adaptability to increase future resilience and competitiveness.
This section will therefore shed light on government policies that aim to enhance SMEs’ ability to navigate the green transition and its related market and trade dynamics.
3.1.1. Smoothing SME pathways to a green economy
As SMEs are vital to both employment and economic growth in North Macedonia, they also play a key role in greening the economy. Yet, the economy’s progress on decarbonisation has been slow so far. Since 2015, its carbon intensity has dropped by just 5%, compared with an average reduction of 20% across peer economies such as Albania, Bosnia and Herzegovina, and Türkiye (World Bank, 2025[4]). After a temporary dip during the COVID-19-induced economic slowdown in 2020-2021, emissions have since rebounded, casting doubt on the long-term effectiveness of past greening policies.
Effectively, SMEs in North Macedonia continue to face significant challenges in greening their operations, largely due to high perceived costs and limited government support (European Commission, 2024[5]). This is compounded by the economy’s structural reliance on relatively cheap fossil fuels and exposure to price volatility. Between 2019 and 2024, electricity prices for SMEs increased by 28%, slightly above the Western Balkans and Türkiye (WBT) average (25%) but well below the European Union’s 91% rise (Eurostat, 2025[6]). Among other things, these cost pressures limit SMEs' ability to invest in green measures, forcing many to prioritise short-term survival over long-term competitiveness and resilience. This is reflected in the declining willingness of businesses to engage in greening efforts, which has not returned to the peak levels seen in 2019 (Figure 3.1).
Notes: n = > 165, representing 0.24% of the total SME population in 2023. Total counts exclude responses of “No/No steps have been taken” and “DK/refuse”. From 2019 to 2022 the question was: “Has your business taken any steps to reduce the environmental impact it makes, such as reducing energy consumption, waste reduction or switching to recycled/sustainable materials etc.?”. Since 2023 the question is “What steps has your business taken over the last 12 months to reduce its environmental impact?”.
Source: RCC (2024[7]).
In the 2024 Eurobarometer survey, one in four SMEs in North Macedonia stated that they offer green products and services (European Commission, 2024[5]). However, their market visibility, such as through the use of ecolabels, remains very limited. Although the legal framework is in place, there are no dedicated programmes supporting SME certification for green or eco labels, and currently, no data are available on consumer awareness or the overall adoption of such labels among businesses (OECD, 2024[8]). There is also no data on SME activities related to climate change adaptation, and the development of a National Adaptation Plan,1 intended to address business engagement, is still in its early stages (UNDP, 2024[9]). A key opportunity lies in centring SME needs in adaptation and just transition plans2 to prevent a potentially widening resilience gap for small businesses in climate-vulnerable sectors (see Sub-section 3.2).
Key national strategies currently supporting SME greening include the National Development Strategy 2024-2044, which guides North Macedonia’s economic, social, and environmental transformation (Table 3.1). It recognises SMEs as key drivers of innovation, employment, and growth, while addressing barriers such as access to finance and market visibility. The SME Strategy 2025-2030, Industrial Strategy 2018-2027, and Smart Specialisation Strategy 2024-2027 all include objectives to support a green industry, innovation, and SME participation in the green transition, especially in priority sectors, such as manufacturing, agrifood, construction, and information and communication technology (ICT). Additionally, the Long-Term Strategy on Climate Action and the National Energy and Climate Plan aim to boost SME involvement in the energy transition through financial incentives and technical measures. The Strategy for the Development of Social Enterprises 2021-2027 also supports green and circular models via social finance instruments. Lastly, North Macedonia’s Reform Agenda complements and aligns with these strategies, being particularly important for securing investments that can bring the economy closer to integration with the EU Single Market and its sustainability standards.
Note: Indirectly refers to the private sector being considered in the policy document, but no concrete SME-targeted measures are included.
Source: Information provided by the government of North Macedonia during the assessment period in 2025.
There are no consolidated data on the total budget allocated to SME-targeted green measures across these strategies. However, the SME Strategy Action Plan 2025-2027 proposes a budget of MKD 1.61 billion (approximately EUR 26.2 million) for activities supporting SMEs in the green transition over three years. In the absence of scaled-up action since the last OECD assessment, the SME Strategy offers renewed momentum for implementing targeted greening policies. It outlines specific plans to train 60 SMEs on green international standards, particularly in response to the Corporate Sustainability Reporting Directive (CSRD)3 and the Carbon Border Adjustment Mechanism (CBAM), by 2027. The strategy also proposes establishing ten specialised circular economy laboratories and delivering energy management training for the industrial sector, aiming to strengthen SMEs’ capacity to adapt to evolving sustainability requirements and domestic and global market demands. A new green grant programme launched by the Agency for Innovation, Scientific, and Technological Development and Entrepreneurship (INOVA) in February 2026 will be pivotal to driving implementation of the strategy’s green support (see Section 3.3).
Monitoring of relevant strategies since the last OECD assessment has been patchy, making it difficult to assess their impact. Still, some indirect progress can be observed: value added in the environmental economy4 more than doubled between 2019 and 2022, driven mainly by the manufacturing and energy sectors (Eurostat, 2025[10]). Although the specific contribution of SMEs is unclear, North Macedonia can build on this positive trend by strengthening support for high-performing sectors and better aligning strategic measures to boost weaker, climate-vulnerable sectors. Agriculture, for instance, began to register measurable value added to the environmental economy over 2019-2022, reaching about EUR 1.24 million in 2022. This emerging activity suggests that, with carefully targeted support, agriculture could potentially gradually expand its role in the environmental economy.
While systematic monitoring of implemented greening measures is weak, there are still some activities worth highlighting. As part of broader efforts, the Directorate for Technological Industrial Development Zones (TIDZs),5 with EU Western Balkans Investment Framework co-financing, launched a tender in early 2024 for a planned green zone in Gevgelija, the first of its kind in the Western Balkans. Aimed at attracting investment in advanced manufacturing and promoting sustainable industrial development, the zone is expected to draw climate-smart, circular businesses and foster local-international collaboration, supported by favourable regulations in such zones. However, SME involvement remains unclear, and the bill to amend the Industrial and Green Zones Act has stalled6 (Chamber of Commerce, 2022[11]).
North Macedonia is planning to reduce the administrative and regulatory burden on SMEs, including through a commitment envisaged in the SME Strategy 2025-2030 to conduct an “SME Test” on all new regulatory proposals starting in 2026. This would play an important role in anticipating how regulation could affect SMEs’ capacity to compete and invest in green business models as well as identify compliance costs to design accompanying support measures. An example of such support is the Ministry of Economy and Labor’s Programme for Support of Competitiveness of Manufacturing Industry and Social Responsibility that provides companies with co-financing for the preparation of sustainability reporting. This assistance not only eases compliance with evolving sustainability standards but also helps SMEs better position themselves to meet growing investor and market demands for transparency and green performance, while deepening their understanding of potential risks and enabling more effective planning of corrective actions.
3.1.2. Boosting SME competitiveness in sustainable value chains
As North Macedonia moves toward EU accession, aligning national regulations and market practices with the European Union’s sustainability framework will be essential to help companies integrate into sustainable value chains. With 77% of the economy’s exports in 2024 going to the European Union, mainly to Germany (WTO, 2025[12]), targeted government support is critical to strengthen SMEs’ competitiveness under key EU Green Deal legislation that will also affect trade, such as the CBAM and the CSRD.
The Government of North Macedonia has acknowledged this need and, through its new Export Promotion Strategy 2024-2027, identified priority export sectors (including agrifood, chemicals, manufacturing, metals, ICT and the electrical industry) based on their export potential, value added, innovation capacity, and alignment with EU sustainability standards. In the agriculture and food sector, planned measures focus on greening agriculture7 and ensuring sustainability in production. Similarly, the strategy promotes eco-friendly production in the textile and apparel industry and the development of eco-tourism.
To help SMEs adapt to emerging international sustainability standards, such as environmental, social and governance (ESG) and trade-related carbon footprint requirements, North Macedonia plans several targeted measures. These include awareness campaigns, training and technical support to align SME practices with EU Green Deal provisions, particularly regarding carbon border adjustments and sustainable production. Guidance for SMEs on obtaining key international certifications and labels, including eco-labels, is also foreseen, along with access to advisory services and partial financial support. Additionally, the use of supply chain traceability tools is being promoted, especially in high-risk sectors such as agri-food and textiles, to help SMEs comply with regulations, such as the EU Deforestation-free Products Regulation and increase transparency for global buyers.
More concretely, the Investment and Export Promotion Agency of North Macedonia continues to focus its support on high-export-potential sectors. In 2024, in partnership with the Swiss Import Promotion Programme (SIPPO), it facilitated the participation of seven domestic textile companies in the Circular Textile Days in the Netherlands, offering valuable opportunities for business-to-business (B2B) meetings and exposure to sustainable textile innovations. Although the scale of such programmes remains limited, this initiative demonstrates how government support can help integrate SMEs into sustainable value chains, enabling them to share experiences and resources and connect with potential business networks (see more in Section 3.4).
While these developments mark progress, a deeper analysis reveals that North Macedonia’s sectors most relevant to the CBAM are those with significantly higher Scope 1 emissions8 than their EU counterparts. This will likely lead to increased carbon-related export costs for domestic producers in key CBAM-covered sectors such as cement, iron and steel, aluminium, fertilisers, and electricity (World Bank, 2024[13]). Although SMEs are likely not heavily represented in these industries due to high entry barriers, they could be indirectly affected through supply chains and local employment. This underscores the need for export promotion strategies to also support greening in the most CBAM-exposed sectors to safeguard broader SME competitiveness and resilience, as around 20% of goods exported from North Macedonia to the European Union are estimated to be subject to EU CBAM taxation (IMF, 2024[14]).
Recent studies also suggest that business awareness of the CBAM remains low. According to the Vienna Institute for International Economic Studies (2024[15]), half of all companies in North Macedonia are still unfamiliar with the mechanism and its potential impact, an issue likely more pronounced among SMEs (see Figure 3.2). This lack of awareness represents a major obstacle to timely adaptation and could leave many SMEs unprepared for the European Union’s tightening climate regulations. In this context, a shortage of qualified consultants specialising in CBAM-related matters identified by the Chamber of Commerce stresses the need to expand professional certification and advisory capacity to help exporting SMEs comply with regulations (Chamber of Commerce, 2025[16]).
Notes: Of the businesses surveyed, 50 are SMEs, and 20 are large companies. The small sample size limits statistical significance.
Source: Vienna Institute for International Economic Studies and the Western Balkans 6 Chamber Investment Forum (2024[15]).
North Macedonia’s growing integration into EU value chains has made its economy more exposed to external shocks, such as the CBAM, affecting not only export-oriented businesses but also domestic operations. Inward foreign direct investment (FDI) for example, more than doubled between 2023 and 2024, rising by 117.5% (UNCTAD, 2025[17]), with key investments in sectors like renewable energy. This suggests a trend toward nearshoring, as firms aim to decarbonise while relocating supply chains closer to EU markets (wiiw and WB6CIF, 2024[15]).
These developments present important opportunities for SMEs in North Macedonia. However, while export-focused initiatives are gaining momentum, domestically oriented SMEs, particularly those looking to engage in nearshoring with multinationals, continue to face support gaps in becoming sustainable suppliers. In this context, green public procurement (GPP) remains underused, despite its potential to stimulate local demand for sustainable products and support SME integration into green value chains.
Although the Law on Public Procurement (2019) includes provisions that allow and promote GPP, it does not mandate environmental criteria in procurement processes. As a result, GPP has been rarely applied in practice since the law’s adoption (Center for Civil Communications, 2022[18]; OECD, 2024[8]). This limited use reduces opportunities for SMEs to supply sustainable goods and services to the public sector, particularly at a time when rising FDI in green industries could otherwise create stronger domestic demand and incentivise SMEs to upgrade and align with sustainability standards.
The way forward
Effectively implement greening activities under the SME Strategy 2025-2030, supported by a robust monitoring and evaluation framework. As the previous SME Strategy 2018-2023 was interrupted by pandemic-related recovery priorities, the government of North Macedonia should place strong emphasis on delivering the greening and resilience measures outlined in the new strategy. Monitoring and evaluation mechanisms need to be significantly strengthened to provide evidence of policy effectiveness and address gaps observed in the past. The newly established working group for the SME Strategy provides a solid foundation for maintaining the monitoring timeline and overseeing the implementation of greening measures, with evaluations planned for 2027 and 2030. North Macedonia could benefit from establishing a monitoring and reporting system to track progress, strengthen accountability, and identify areas for improvement, while ensuring that policies remain adaptable to future challenges. To develop this framework, North Macedonia could draw on the OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes (OECD, 2023[19]) and conduct evaluations in accordance with its principles. It could also build on monitoring practices used for environmental policies across OECD Member countries (OECD, 2025[20]). To assess firm-level measures such as investments in energy efficiency, a key pillar of SME greening, North Macedonia could draw on lessons from a recent OECD mid-term evaluation of the Czech SME Support Strategy 2021-2027, which offers targeted recommendations to improve the national energy audit system by using rationalisation plans that specify main energy-saving actions for audited firms and the payback period for each proposed measure (OECD, 2025[21]).
Identify the needs of the most climate-vulnerable and Green Deal-affected SME segments. The government should prioritise actions for SMEs most exposed to the adverse impacts of climate policies, climate change, and related trade consequences. One of these priority actions could focus on building capacity for enhanced advisory support to SMEs, particularly by certifying qualified CSRD or CBAM advisors who can support exporting SMEs. Further, building on insights from the 2025 Just Transition Annual Implementation Plan, North Macedonia could develop a multi-year Just Transition Strategy and scale targeted export promotion programmes that incorporate SME-specific measures to support adaptation and competitiveness. The Investment and Export Promotion Agency of North Macedonia should continue providing such tailored support to exporters.
Adopt mandatory green public procurement requirements to stimulate local demand and create sustainable product market opportunities for SMEs. North Macedonia should consider revising its legislation to include mandatory ESG criteria and develop an action plan identifying priority product categories with clear targets. To do so, North Macedonia could draw on experiences from good practices across OECD Member countries, such as Lithuania, which developed a roadmap for an ambitious reform of public procurement to increase the use of GPP criteria in tenders in 2021 (OECD, 2024[22]). Additionally, practical guidance is needed to facilitate small tenderers’ participation. Inspiration can be drawn from Austria’s experience, as illustrated in Box 3.1. To better level the playing field for SMEs in tenders, North Macedonia may consider practices such as dividing procurement processes into lots, a practice that is common among OECD Member countries (OECD, 2025[23]).
In 2021, Austria updated its naBe-Action Plan (first adopted in 2010) to strengthen environmental, social, and economic goals in public procurement. The plan is binding for federal contracting authorities and entities and recommended for the regional and local levels.
The plan sets GPP criteria for 16 product groups across three categories: 1) consumer products and events (e.g. electricity); 2) more durable products or capital goods (e.g. information technology equipment); and 3) building facilities (e.g. building construction). These criteria cover the entire procurement cycle, from technical specifications and award criteria to contract execution, and emphasise lifecycle costing to promote sustainability.
The naBe-Action Plan also defines specific targets, such as requiring all federal ministries to purchase green electricity certified with the Austrian Eco-label. These clear criteria guide public buyers toward eco-friendly solutions and help SMEs demonstrate compliance, with dedicated SME support embedded under the plan’s social procurement provisions.
North Macedonia could greatly benefit from adopting a similar approach by developing a national guideline for sustainable public procurement. Such a document would clarify policy objectives, enhance transparency and raise awareness among SMEs, helping them better understand requirements and actively participate in green tender opportunities.
Source: OECD (2024[24]).
Over the past two decades, economic losses from disasters and extreme climate events in North Macedonia have amounted to an estimated USD 667 million (World Bank, 2024[25]). As elsewhere, the most vulnerable sectors and smaller enterprises bear the brunt of these costs. SMEs in North Macedonia are highly exposed to such external shocks owing to their limited diversification of economic activities, restricted access to finance, and weaker crisis response capacity.
Beyond environmental shocks, economic crises such as the COVID-19 pandemic have further exposed structural weaknesses within the SME sector, where financial constraints and limited adaptability have directly affected firm survival and overall economic stability. As both natural and human-induced shocks are expected to intensify due to the growing impacts of climate change, this section will examine how the government develops targeted, forward-looking support measures to help SMEs better withstand and adapt to future disruptions.
3.2.1. Enhancing crisis-resilient strategies to prevent SME bankruptcies
The COVID-19 crisis revealed gaps in North Macedonia’s recovery-oriented insolvency mechanisms and the government’s ability to prevent and manage spikes in business failures during and after major shocks. While emergency measures, such as a temporary moratorium on insolvency proceedings, kept the number of concluded bankruptcies low during the pandemic, a notable increase followed in the post-COVID period (see Figure 3.3). This suggests delays in court proceedings and a backlog of cases, reflecting continued SME vulnerability amid the phase-out of pandemic support and ongoing economic instability, including inflationary pressures since 2022 (IMF, 2022[26]). Notably, reorganisations, an alternative to liquidation, remain severely underutilised, with fewer than one case per year on average between 2022 and 2024.
Note: Total number of entities in a concluded bankruptcy proceeding (including approved reorganisation) by year of enrolment in the Central Registry.
Source: Ministry of Economy and Labor (2025[27]).
The practical implementation of measures to prevent corporate insolvencies in North Macedonia remains extremely limited, leaving SMEs without structured support in the early stages of financial distress. Key gaps in this area include the continued delay in adopting a new insolvency law that allows for pre-insolvency restructuring, the impracticability of out-of-court debt settlement, and the narrow conditions for entering accelerated insolvency proceedings (see Dimension 2). On a positive note, the government has begun to address critical gaps by prioritising the development of an early warning system (EWS) to support timely interventions, as outlined in its SME Strategy 2025-30 and Action Plans and the Reform Agenda. The government expects to finalise the EWS by June 2026. However, progress remains contingent on the adoption of the insolvency law, which will provide the legal basis for necessary secondary legislation and the full implementation of the system.
Legal insolvency mechanisms are an important foundation that supports the efficient use of public resources and the preservation of a dynamic private sector, especially in light of increasing climate-related risks to businesses. However, the slow pace of implementation and the lack of effective monitoring and evaluation since the last OECD assessment in 2022 make it difficult to assess the impact of measures to strengthen SME resilience.
Critically, the government lacks contingency mechanisms to manage a potential surge in insolvencies, suggesting that any response would likely be reactive and ad hoc, as seen during the COVID-19 pandemic. In light of increasingly frequent climate-related disasters, such as the severe wildfires in 2024 and 2025, affected SMEs in North Macedonia face growing financial and operational strain. This is particularly concerning given that climate-related losses have exceeded USD 667 million over the past two decades, impacting key sectors, such as agriculture, forestry and tourism (World Bank, 2024[25]).
Yet, North Macedonia still lacks a multi-hazard EWS to inform SMEs about potential natural or climate-induced disasters in a timely manner. The use of such an EWS and support, as well as knowledge sharing about its use in business decision-making processes, could boost preventive action and increase response capacity to safeguard continuous economic activity during crises.
Awareness and understanding of climate change risks to business operations and the benefits of adaptation measures in reducing losses from environmental shocks remain low among firms in North Macedonia (GCF, 2025[28]). This limits private-sector engagement and investment in resilience-building actions, increasing exposure to climate-related disruptions. Strengthening private-sector involvement through cross-sectoral and institutional collaboration is therefore critical to identifying priority risk-prevention actions and building a clear business case for climate-resilient investments.
Achieving this will require stronger co-ordination at both national and municipal levels, including improved capacity of local authorities to plan and allocate consistent budgets for adaptation and emergency preparedness (World Bank, 2024[25]).
The National Development Strategy 2024-44 marks some progress by prioritising disaster risk reduction (DRR) and economic resilience, calling for a comprehensive national and sectoral risk assessment, an impact-based EWS, and increased funding, particularly for the private sector. However, these goals remain unanchored in a dedicated strategic framework, as no national DRR strategy or adaptation plan exists to co-ordinate implementation. The Long-Term Climate Strategy also lacks concrete DRR provisions. As a result, SMEs currently have no targeted funding, incentives or institutional guidance to support investments in resilience.
3.2.2. Increasing SME recovery capacity and second-chance opportunities
While prevention is essential to reducing insolvencies and easing pressure on institutions, enhancing SME resilience requires a wider lens, one that also addresses business survival and recovery during and after periods of disruption. Given their important role in employment, value creation and local demand, the ability of SMEs to rebound quickly from shocks is vital to sustaining economic momentum and long-term stability.
In contrast to the previous SME Strategy (2018-2023), which lacked concrete second chance measures, the SME Strategy 2025-2030 marks a notable shift by explicitly incorporating support for business restarts (see Dimension 2). Yet, these initiatives have limited reach and are not yet embedded within broader insolvency or crisis-resilience frameworks. It also remains unclear whether implementing institutions have adequately trained advisors or acquired long-term capacity to sustain second-chance measures.
Crucially, the insolvency framework in North Macedonia offers very limited support for second chance for SMEs, with long waiting periods for debt discharge and no clear distinction between honest and fraudulent bankruptcy, which further reinforces cultural stigma and could lead to financial exclusion. In the event of business failure due to natural or climate-related disasters, SMEs in North Macedonia face significant recovery challenges. There are no dedicated funding mechanisms or targeted incentives to support their restart. Unlike during the COVID-19 crisis, when the government secured concessional financing from institutions like the European Investment Bank (EIB) in 2021,9 no comparable sources of affordable capital have been mobilised to support recovery or resilience building in the face of climate-induced shocks.
Another key challenge to rapid, effective recovery for businesses following climate-related or natural disasters is the lack of recovery strategies at the national, regional and local levels for the most significant hazards. Past disasters have shown that North Macedonia still lacks a vision and guiding principles for recovery measures and often acts only on an ad hoc basis, without relying on estimated recovery needs or an analysis of response measures and the financial costs of interventions (FAO, 2018[29]). This hinders business involvement as key stakeholders in planning disaster response measures and sectoral priorities for building back better after major disruptions.
Currently, no data exist on SME awareness of climate risks or their potential to disrupt business operations in North Macedonia. The government does not co-ordinate with private-sector actors or local organisations to gather such information, limiting its ability to design targeted support, particularly for vulnerable sectors like agriculture. Recovery efforts are further constrained by an underdeveloped insurance market and the lack of accessible risk transfer options for SMEs, partly due to the absence of sufficiently large risk pools (UNDP, 2024[30]). Voluntary insurance uptake remains low,10 possibly driven by limited awareness, affordability concerns, and expectations of government assistance in the event of disasters.
Despite these gaps, some donor-led initiatives in North Macedonia are advancing climate-responsive measures, notably through actions supported by the United Nations Development Programme (UNDP). One example is the development of urban heat resilience in Skopje. During the summer of 2024, the city experienced extreme heat, with temperatures exceeding 40°C, highlighting the growing risks of heatwaves in urban areas (UNDP, 2025[31]).
The solution involved developing a detailed thermal map to identify urban heat islands and support evidence-based interventions. This analysis informed the implementation of more than 70 targeted cooling measures, including the installation of green roof cover on one of Skopje’s shopping centres, identified as the hottest location, with temperatures up to 9 °C higher than the city square.
This example illustrates how data-driven approaches can enable municipalities, in collaboration with private sector stakeholders, to design effective interventions that strengthen response capacity during extreme weather events. Such measures are particularly important given the negative effects of heat stress on labour productivity (World Bank, 2024[25]), which may disproportionately affect SMEs that already face structural productivity constraints.
Lastly, no co-ordinated efforts currently exist to ensure SME access to critical infrastructure, such as water, electricity and transport, during crises, which is essential for the rapid recovery of entrepreneurial activity (World Bank, 2024[25]). A key obstacle has been the continued delay in adopting the Draft Law on Critical Infrastructure (2022), which was intended to establish clearer oversight and accountability mechanisms during disaster events, and enable structured engagement of citizens and businesses in shaping resilience and recovery policies.
The way forward
Finalise the adoption of the draft Insolvency Act. The legislative framework governing insolvency and preventive restructuring has been pending since early 2022. The new law should expand the scope of simplified bankruptcy procedures for SMEs, incentivise the use of out-of-court settlements, and introduce SME-specific mechanisms for early restructuring. Advancing this legal reform is essential for enabling North Macedonia to effectively implement EWSs and preventive SME support measures outlined in the SME Strategy 2025-2030.
Scale planned SME-targeted second-chance polices. While North Macedonia’s SME Strategy now includes measures to promote a second chance for small businesses, efforts remain limited to outreach and exchange activities. There is significant scope to strengthen this area by expanding institutional capacities and ensuring sufficient resources for practical support to entrepreneurs during the upcoming strategy period.
Develop a comprehensive disaster risk reduction strategy and integrate SME needs into the upcoming National Adaptation Plan. North Macedonia’s current disaster risk management approach remains largely reactive, with limited targeted funding, incentives, or guidance to help SMEs strengthen their resilience to climate-related and other disasters. The government should consider prioritising proactive measures, including enhancing multi-hazard EWSs and building knowledge and capacities for business continuity for enterprises and local governments, which often serve as the first responders in their communities.
Develop tailored insurance solutions for SMEs, focusing on the most risk-prone sectors (including transport, agriculture, water, forestry and cultural heritage) (GCF, 2025[28]), and integrate these with broader financial services for disaster preparedness and recovery. The government should improve the availability and quality of public data, enhance financial literacy and adjust relevant policies or regulations to foster uptake. Insurance schemes need to be designed with SMEs’ needs in mind, ensuring clear communication of benefits and affordability through measures such as subsidised premiums or tax incentives. By increasing SME participation in insurance markets, the government can help businesses make more sustainable risk management decisions, avoid distress asset sales and strengthen their overall financial resilience. North Macedonia can look to the experiences of OECD Member countries that developed catastrophe risk insurance pools, such as the Spanish example presented in Box 3.2.
In Spain, the Consorcio de Compensación de Seguros (CCS) (Insurance Compensation Consortium) serves as a public catastrophe insurance pool that automatically protects SMEs against extraordinary events such as floods or severe storms through a small surcharge on standard insurance policies. This system ensures a reliable financial safety net, allowing businesses to recover more quickly after disasters.
The CCS compensates for damage and injuries to insured properties and individuals resulting from both natural and human-made extraordinary risks, provided that the affected assets are covered under insurance lines that legally include such guarantees.
As shown in Figure 3.4, compensation for commercial properties and industrial risks has risen notably since 2020. The sharp increase in 2024, driven by widespread flooding, especially in the Valencia region, accounted for 99% of the total EUR 4.85 billion paid that year, with roughly half (EUR 2.4 billion) of the compensation going to businesses and industry.
The CCS model demonstrates how a national insurance pool can distribute catastrophic risk efficiently and foster post-disaster economic resilience. Adapting similar mechanisms in North Macedonia could strengthen financial preparedness, support private-sector continuity, and reduce dependence on emergency state funding during large-scale natural events.
EUR billions, by risk class
Notes: Extraordinary events are currently defined by law as: 1) the following natural phenomena: earthquake and tsunamis, extraordinary flood, volcanic eruption, windstorm and falling space objects and meteorite impacts; 2) events caused by violence resulting from terrorist attack, rebellion, riots and civil unrest; 3) acts or actions taken by the armed forces or law enforcement agencies in peacetime.
Sources: Consorcio de Compensación de Seguros (2025[32]) and UNDRR (2025[33]).
SMEs in North Macedonia will increasingly require access to green and sustainable finance instruments to unlock their potential to advance both corporate resilience and the economy’s broader climate-neutrality goals. While market-driven initiatives have propelled sustainable finance to the forefront of national financial agendas worldwide, this trend is only beginning to take shape in North Macedonia, though with noticeable progress already. For instance, green loans now account for 8.8% of total loans to non-financial entities (RCC, 2024[34]), surpassing the EU average of 4.5% (European Banking Authority, 2023[35]).
Nevertheless, challenges such as knowledge gaps, complex reporting requirements, and the absence of a national taxonomy continue to hinder SME access to fit-for-purpose financing. Targeted policies, capacity building and regulatory support will be essential to address these barriers and ensure alignment with EU financing standards progresses in an equitable and effective manner.
This section will therefore examine how the national sustainable finance framework and programmes are addressing business needs and enabling donor-led project outcomes to spill over into systemic improvements in SME access to finance in the context of the green transition.
3.3.1. Supporting SMEs in an evolving sustainable finance framework
A sustainable finance framework for SMEs in North Macedonia requires clear national guidance that incentivises financial institutions to link financial flows to environmental, economic and social resilience goals. A key missing component is a green taxonomy to classify sustainable business activities. The National Bank’s 2023 Medium-Term Climate Change Action Plan recognises the importance of developing a taxonomy and calls for co-ordinated development with relevant institutions.
In 2023, the National Bank also issued guidance to help banks manage climate-related risks, aligning with international standards from the European Central Bank, the European Banking Authority, and Basel Committee. It also adopted two legal decisions requiring banks to report on green loans starting in 2026 and disclose climate risk-related11 data starting in 2025. However, without a functioning taxonomy, these measures risk inconsistent implementation, making its timely development essential for operationalising sustainable finance and enabling SMEs to access green funding more effectively.
In a positive development, the National Bank of North Macedonia signed an agreement with the EIB in 2024 under the Greening Financial Systems programme12 to strengthen regulatory and supervisory practices for managing climate-related risks and enhance climate risk reporting across the financial sector. This initiative complements the ongoing technical assistance provided by the EIB since 2023 to the Development Bank of North Macedonia (DBNM) and commercial banks, aimed at supporting the implementation of the EUR 100 million EIB green credit line for businesses in North Macedonia, as local banks often lack the technical expertise for implementing green loans.
This first joint credit line with a climate action component could offer valuable insight into local SME green financing needs and constraints, helping to shape and inform future government policies in this area (Box 3.3). Additionally, the DBNM has been disbursing funds for green and socially responsible investments in SMEs through a EUR 50 million loan from the French Development Agency. By the end of 2024, EUR 12.5 million were already secured for financing 58 projects, though the share of green projects is not known (Development Bank of North Macedonia, 2025[36]).
Policy context
Access to finance remains an issue in North Macedonia, with up to 40% of SMEs in need of a loan being credit-constrained. To support sustainable growth amid ongoing energy and economic crises, a new credit line aims to address liquidity and investment gaps for local businesses, with a focus on green and energy transition projects. This will contribute to climate-resilient growth in North Macedonia, aligned with the European Union’s Economic and Investment Plan and the Green Agenda for the Western Balkans.
Operational aspects
The EIB has mobilised a EUR 100 million credit line to the DBNM to provide SMEs with affordable, long-term financing for working capital and investment needs. Implemented through local commercial banks, the facility supports the government’s 2022 crisis response measures and allocates at least 30% to environmental sustainability projects, particularly energy efficiency. A dedicated technical assistance component will aid the DBNM and partner banks in project origination, meeting green finance criteria, and adopting new sustainability practices.
Policy impact
This project represents a vital step in strengthening the DBNM’s role as a key facilitator of green finance for SMEs. While specific data on the impact of this particular credit line are not yet available, the EIB has provided EUR 212 million in support for small businesses in the economy since 2019. This funding has contributed to the retention of over 46 000 jobs and the creation of 1 815 new positions.
Source: EIB (2023[37]).
While there is currently no dedicated national platform or co-ordination mechanism among authorities to shape a sustainable finance framework, partnerships with international financial institutions have helped lay the groundwork. These collaborations have enhanced the capacity and expertise of local banks involved in such initiatives in recent years.
Currently, governmental sustainable finance initiatives fall under the green transition priority of the SME Strategy Action Plan 2025-2027. The government aims to support this by subsidising 30 SME renewable energy projects, training 50 bank employees to introduce two new financial products aligned with the circular, digital and green economy, and co-financing grants for 50 green start-ups/spin-offs and 300 SMEs by 2027. A central initiative to support these objectives is a new green grant scheme, launched by INOVA with a budget of EUR 25 million for 2026-2030, of which EUR 18 million are funded by the European Union. The scheme will subsidise environmental investments by SMEs, offering up to EUR 40 000 for green start-ups, up to EUR 150 000 for green modernisation projects, and up to EUR 300 000 for industrial system transformations. The first call for applications is expected by mid-2026.
Yet, no measures have been introduced to strengthen financial competencies or literacy of SMEs in sustainable finance since the last OECD assessment in 2022, leaving a significant gap in the evolving policy framework for improving access to sustainability-related financing.
Although the Chamber of Commerce was consulted during the development of the SME Strategy 2025-30 and its 2025-27 Action Plan, representing the broader business community and SME interests, there is no concrete evidence that direct feedback from SMEs has been reflected since the conclusion of the previous SME Strategy 2018-2023, particularly regarding access to sustainable finance or related incentives. Additionally, government financial incentives are rarely subject to independent review, making it difficult to evaluate their effectiveness and targeting in supporting SMEs’ green transition.
3.3.2. Increasing SME access to sustainable (bank and alternative) financing
Given the diversity of SMEs in terms of size, sector, technological maturity, and location, firms require different financial solutions to drive the green transition, depending on their business models and stage of development. Broadly, three SME groups can be distinguished by role in the green economy: early-stage green start-ups (“innovators”) developing new technologies or business models; more mature green firms (“enablers”) scaling up innovative solutions; and established SMEs seeking to adopt greener processes, products or technologies (“adopters”) (OECD, 2025[38]).
Compared to traditional finance, sustainable finance instruments that integrate ESG criteria alongside financial performance are better suited to address the distinct needs of these groups and to improve access to finance for SMEs contributing to sustainable development goals. However, environmental costs are often not fully priced into markets, increasing uncertainty around the returns of green investments, while information gaps further constrain lenders’ and firms’ ability to assess project viability (OECD, 2025[38]). Combined with existing SME financing constraints (see Cluster 1), these factors continue to hinder investment in greening and long-term resilience, including adaptation projects, underscoring the need for concerted government action to improve the conditions for sustainable finance.
Aside grant schemes, such as the one mentioned in Section 3.3.1, bank credit remains the primary source of SME financing in North Macedonia, with 43% of small and 66% of medium-sized enterprises reporting the use of bank loans in 2023 (World Bank, 2023[39]). However, access is uneven. Local banks face several constraints in expanding green finance to SMEs, including limited technical expertise to operationalise green instruments and high transaction costs associated with small loan sizes, areas where government support through training and standardised tools could help. At the same time, green investments are often perceived as higher risk, which can further limit the supply of financing to SMEs. An estimated 9% of small firms are at least partially credit-constrained, compared to just 0.8% of medium-sized firms and none among large enterprises (World Bank, 2023[39]).
In this context, de-risking mechanisms, such as credit guarantees, represent a key policy tool to leverage public funds by sharing default risk with banks, thereby encouraging lending to SMEs, including those operating in newer markets related to environmental and climate-related services and products. North Macedonia currently lacks a dedicated credit guarantee scheme for green or sustainability-focused projects. While the SME Strategy Action Plan (2025-2027) proposes expanding SME access through the existing DBNM guarantee scheme and introducing a new guarantee for start-ups and women entrepreneurs, it remains unclear how these measures will support greening objectives. Without a targeted design, such instruments, primarily aimed at addressing collateral gaps, may fall short in serving SMEs pursuing sustainable investments.
A notable development since the last OECD assessment, however, is the implementation of DBNM credit lines in partnership with six local banks, aimed at improving access to bank finance for sustainable investments through green loans (Box 3.4). Still, demand-side constraints also need to be considered. SMEs could face difficulties in developing bankable projects or demonstrating eligibility for existing green grants and credit programmes. Evidence on these challenges remains limited, highlighting the need for better data to understand barriers to green finance uptake and improve the design of support instruments.
Policy context
While North Macedonia’s energy productivity remains well below the EU average (EUR 3.3 vs. EUR 9.4 per kg of oil equivalent in 2022) (Eurostat, 2024[40]), a recent survey indicates limited engagement by SMEs in energy transition efforts. In 2024, only an estimated 23% stated planning to implement energy-saving measures and only 16% to use renewable energy sources, compared with 58% and 34%, respectively, among EU SMEs in 2024 (European Commission, 2024[5]).
In line with the Fourth Energy Efficiency Action Plan, the government budget should increasingly be directed toward financial instruments that encourage households and SMEs to adopt small-scale renewable and energy-efficiency measures. This effort is also recognised as integral to the National Energy and Climate Plan.
Operational aspects
To mitigate the effects of the global energy and economic crisis, in 2022, the DBNM introduced two dedicated credit lines to finance investments in energy efficiency and renewable energy. Loans are available to micro, small, and medium-sized enterprises, as well as trade associations and artisans, through seven participating local banks.
1. Ministry of Finance-funded credit line: Financed entirely through the Ministry of Finance, with a total amount of MKD 610 million (~ EUR 9.9 million). It covers up to 60% of project costs (maximum of MKD 18.45 million [~EUR 300 000]), with the remaining 40% financed by partner banks or investor funds. The interest rate is up to 1.6% per year, with repayment terms of up to 8 years for energy efficiency and 12 years for renewable energy sources projects.
2. DBNM-funded credit line: Financed through the bank’s own resources, covering up to 80% of project costs (maximum of EUR 300 000), with the rest provided by partner banks or investor funds. Up to 30% of the loan may be used for working capital. The interest rate is up to 2.9% per year, with the same repayment periods as under the Ministry of Finance-funded credit line.
Policy impact
The DBNM’s green credit portfolio reached EUR 27 million in 2024, a 46.7% increase from EUR 18.4 million in 2023. This figure includes other credit lines within the bank’s portfolio, such as those financed by the French Development Agency and the EIB for green mid-caps. Consequently, it remains unclear how many SMEs have directly benefited from the credit lines introduced by DBNM and the Ministry of Finance. Improving project-level insights would help assess the effectiveness of these SME-targeted credit support schemes.
Source: Development Bank of North Macedonia (n.d.[41]).
Other forms of debt financing, such as asset-based financing remain underdeveloped, with no specific policies in place to promote leasing as a viable option for SMEs. Overall, bank finance remains one of the main options for firms to fund green projects, but it often lacks the flexibility needed to address constraints specific to a business’s stage of development. This is particularly limiting for innovator SMEs with unproven business models and higher risk profiles. As a result, bank lending alone is insufficient to support the full spectrum of green entrepreneurship.
Yet, other forms of financing, are virtually untapped. By contrast, many OECD Member countries are expanding the role of debt markets in sustainable finance through instruments such as green bonds and SME-linked securities (OECD, 2024[42]). Globally, start-ups and small enterprises are also turning to impact investors, including private equity and venture capital, while most underserved SMEs also explore alternative finance options such as crowdfunding and microfinance.
Market-based financing in North Macedonia is still constrained. Although a stock exchange and a sovereign bond market exist, both remain small and illiquid, limiting investor participation. This slow market development has constrained opportunities to diversify SME financing, despite the potential of such instruments to improve transparency and mobilise private capital for sustainable growth (OECD, 2022[43]). Currently, there are no concrete government initiatives to facilitate SME access to capital markets in support of the green transition. Scaling instruments such as minibonds, SME public offerings, or ESG-linked debt funds will depend on broader capital market development (World Bank, 2023[44]).
Equity financing, particularly relevant for innovator SMEs, is not prioritised in running government programmes and no market-based instruments have been deployed to stimulate equity finance in this area (World Bank, 2023[44]). Lastly, progress in expanding microfinance as a channel for financing SME sustainability and resilience has also been limited, with no reported regulatory reforms or systematic data collection on SME demand. While isolated products like the “green business loan” offered by Savings House Moznosti (n.d.[45]) exist, microfinance remains an underutilised tool for supporting most underserved SMEs’ green investments.
The way forward
Create a national sustainable finance platform, or a similar co-ordination mechanism, to drive the development of national sustainable finance frameworks and facilitate engagement with the private sector, particularly industry, banking, academia and civil society. This platform should, among other priorities, work towards developing a national taxonomy closely aligned with the EU taxonomy, continuing the standardisation of sustainable finance offerings and requirements, and advising the government on policies for strengthening SME access to sustainable finance, both through banks and alternative external financing mechanisms. The platform could also advance assistance to strengthen SMEs’ understanding and capacities for basic sustainability reporting, for example by offering advisory tools or developing simplified reporting frameworks, similar to the European Union’s voluntary standard for SME sustainability reporting (EFRAG, 2025[46]). Such assistance would help SMEs prepare investment-ready projects that meet the sustainability eligibility criteria of banks and other investors.
Evaluate existing green finance support and address gaps to scale private investment. The government should assess financial support provided through INOVA and the DBNM to determine whether current schemes are effectively mobilising sufficient investment in clean energy and energy efficiency among SMEs. Such an evaluation would help identify remaining financing gaps, particularly across different SME segments, and inform measures to better leverage and scale private finance.
Consider introducing a dedicated green credit line beyond renewable energy financing. SMEs in North Macedonia require a broader range of accessible and sustainable financing options. Based on the insights generated through evaluation mechanisms, expansion of instruments to broader green investment beyond energy projects could be introduced. Currently, available instruments focus mainly on renewable energy and energy efficiency, potentially leaving other critical areas, such as green technologies for mitigation, circular-economy solutions and climate change adaptation, underserved. Building on the National Development Bank’s emerging role in facilitating SME access to finance and its success with renewable energy and efficiency programmes, a green credit line or guarantee scheme incorporating sustainability criteria could be introduced to support a wider spectrum of green investments and scale finance to SMEs. An OECD good practice from Portugal is presented in Box 3.5.
Establish a targeted technical assistance programme to strengthen banks’ capacity to appraise green projects. Local banks often lack the technical expertise needed to assess green technologies and sustainability-focussed business plans, which constrains lending despite available demand. A government-led programme, supported by international donors, could provide structured training, access to independent technical experts, and standardised green appraisal tools for banks participating in green credit lines or seeking to expand sustainable finance. Co-ordination could be anchored in a planned sustainable finance platform, with the Banking Association of North Macedonia playing a central role in engaging commercial banks, identifying capacity gaps, and ensuring that banks’ operational constraints are addressed.
Through Banco Português de Fomento, the Portuguese government has allocated EUR 100 million in indirect financing to SMEs under the Credit Line for Decarbonisation and Circular Economy Programme.This initiative enables SMEs to access guaranteed financing for projects that enhance energy efficiency or promote circular-economy practices, such as upgrading equipment, optimising production processes, or investing in renewable energy solutions.
Eligible projects include initiatives related to energy efficiency, circular economy, and renewable energy infrastructure. SMEs can access financing of up to EUR 2 million by submitting a request through participating credit institutions, which evaluate the project and provide funding under the programme's favourable terms. Guarantees cover up to 80% of the outstanding capital per company and beneficiaries can also benefit from subsidised interest rates of 1.5%, with long repayment terms of up to ten years.
North Macedonia could replicate this best practice through the DBNM, establishing a similar financing mechanism to expand SME access to green and sustainable investments.
Sources: OECD (2025[38]) and Start PME (2025[47]).
To overcome business uncertainty in the green economy and adapt to evolving, interrelated market trends, particularly those related to internationalisation and access to green finance, SMEs in North Macedonia need co-ordinated non-financial support and strong partnerships. These should span public-private collaborations and co-operation among businesses and other market participants.
North Macedonia’s Industrial Strategy 2018-2027 highlights the importance of strengthening business ecosystems that can support SMEs at various stages by improving access to resources and fostering synergies for growth. However, cluster and value chain development, guided by the Cluster Development Strategy 2018-2025, remains relatively limited and falls short of international operational standards, with most industrial clusters functioning primarily as business associations. This underscores the need to combine government support with proactive facilitation of business networks to deliver strategic services that enhance SME resilience and sustainability.
In this context, this section assesses the success of government support programmes in enabling SMEs’ green transition as well as policies put in place to encourage B2B ecosystems that boost SME resilience.
3.4.1. Scaling up public non-financial support for SMEs in a green and resilient economy
North Macedonia has begun integrating green and resilient transformation into its SME policy framework, with capacity-building initiatives reflected in the SME Strategy 2025-203013 and the annual Programmes on Supporting Entrepreneurship, Competitiveness, and Innovation for SMEs, implemented by the former Entrepreneurship Support Agency (APPRM), that has been replaced by INOVA in 202514. While the economy does not yet have a dedicated business support programme exclusively focussed on these aspects, the measures introduced represent a step in the right direction.
According to implementation reports for the SME Strategy 2018-2023, no specific green transition support measures appear to have been delivered during this period. The last cycle noted that funding was redirected to COVID-19 relief efforts, hindering progress in this area. Available INOVA implementation reports from 2022 and 2023 show some progress in supporting SME greening efforts. Most initiatives targeted the development of green skills among teachers, students and the unemployed, with a smaller share focussed directly on SMEs or on their involvement in policy dialogue.
During 2022-2023, efforts to strengthen SME sustainability included training sessions on social entrepreneurship, energy efficiency and circular-economy practices, including the use of digital tools for resource efficiency,15 as well as advisory support through the Voucher Counseling System for International Certification. These activities reached a broad group of SME representatives, consultants and employees, while also engaging policymakers and practitioners through conferences and workshops. They also demonstrate a commitment to supporting SMEs in enhancing resilience and sustainability. However, the 2024 implementation report has not yet been published.
The INOVA’s latest 2025 programme features plans to hold workshops to boost productivity and support internationalisation in the green economy. Additionally, it includes training for local consultants on green economy trends relevant to SMEs, to enhance knowledge transfer and capacity building in this field. The total budget for this is MKD 650 000 (~ EUR 10 560), though some of it was planned for digitisation support. Positively, the INOVA green grant scheme, launched in February 2026, will also provide non-financial support, helping around 300 SMEs between 2027 and 2030 access technical and advisory assistance for the green transition. This includes support for standardisation, consulting on new technologies and product development.16
The annual SME Observatory report, intended as an ex post tool to assess the impact of SME policies, was produced up to 2023 and has not been published since. While it provides a snapshot of selected green support programmes, it offers limited analysis of their effectiveness. A key gap is the lack of systematic training needs assessments, which are essential to better align the supply of business support services (BSSs) with SME demand.
Although a formal feedback mechanism exists within the INOVA annual programmes, the government acknowledges limited stakeholder engagement and insufficient resources to conduct comprehensive evaluations. Notably, there are also no broader channels for SMEs that have never used these services to provide structured feedback on the relevance of support aimed at facilitating their transition to greener and more resilient business models. This gap limits the ability to adapt and scale programmes effectively to the wider needs of SMEs, beyond isolated implementation experiences.
On a positive note, the consultation process for developing support related to SME sustainability and resilience is being enhanced. As part of the EU-funded Green Business Facility project, providing technical assistance to INOVA, several consultation meetings were held in April 2025 with SME representatives to identify their specific needs. These insights informed the design of tailored financial instruments and support services aimed at helping SMEs transition to greener business models, increasing the likelihood of effective, targeted interventions through INOVA’s green grant scheme being rolled out in 2026.
Existing survey data suggest that non-financial support, such as education and awareness-raising programmes, are among the top three support incentives that businesses in North Macedonia expect from the government (see Figure 3.5).
More concretely, Eurobarometer data (European Commission, 2024[5]) suggests that 18% of SMEs in North Macedonia seek non-financial assistance specifically to identify potential customers and markets for green products and services, a share lower than the EU and WBT averages (29% and 20% respectively). The demand for other non-financial measures is higher, with 21% indicating a need for technical support and consultancy for developing products, services and production processes (26% in the European Union vs. 22% in the WBT region) and 22% look for consultancy services for marketing and distribution (27% in the European Union vs. 31% in the WBT region).
Notes: n= 172, representing roughly 0.24% of the total SME population. Total counts exclude responses of “DK/refuse”. The question was: “How can the government incentivise greening the business sector?”.
Source: RCC (2024[7]).
Yet, and similar to challenges limiting SME access to broader BSSs (see Cluster 1), available BSSs focused on sustainability and resilience face low visibility and limited promotion. This results in low awareness among SMEs about the existence and benefits of such services. Additionally, the reported scarcity of specialised support, particularly for complex topics in the green transition that require highly tailored advice, further restricts uptake. Despite these challenges, budget allocations for this area used to be limited. Previous INOVA (APPRM) programmes did not include any budget for green economy support services; the 2025 programme, for the first time, allocated around EUR 10 000, as mentioned above, which accounted for roughly 1.5% of the yearly budget.
To date, most support measures have concentrated on general mitigation and greening efforts, such as decarbonisation and energy efficiency, while broader resilience building, including long-term climate adaptation and initiatives to enhance business continuity during disasters and climate risk management, remains unaddressed for SMEs. Furthermore, tailoring business support to different stages of enterprise development or to the type of SME role in the green transition (e.g. innovators, enablers and adopters) is not evident in sustainability-focussed measures, as reflected in the INOVA annual programme and the SME Strategy.
In terms of private BSSs that specifically target business greening, the Chamber of Commerce in North Macedonia has become a key provider. In October 2025, it launched the economy’s first guide to greenhouse gas emissions reductions for companies, which is delivered through a digital platform.17 SMEs can access a carbon footprint calculator that covers nearly 60 energy sources and refrigerants and provides guidance on relevant EU and domestic climate regulations, as well as funding, such as subsidies. The platform also offers practical case studies and success stories from pioneering companies that highlight the benefits of decarbonising operations and products.
In addition, the Chamber’s Quality Center provides support for certification under the International Organisation for Standardisation (ISO) ISO 14001:2004 environmental management systems standard. However, data on certification costs and the availability of government incentives to expand SME access to these procedures remain limited.
3.4.2. Exploiting the power of networks for the sustainable growth of SMEs
Experience from OECD Member countries shows that targeted policies can successfully integrate SMEs into business networks18, enabling them to benefit from knowledge transfer, innovation, internationalisation and productivity gains (OECD, 2023[48]; 2019[49]; 2008[50]). In the context of the green economy, expanding and strengthening such networks is essential for SMEs to access key resources such as data, skills and technology, and to improve their adaptability and resilience (see Annex).
Within the SME Strategy 2025-2030, the priority of “building a competitive national entrepreneurial ecosystem”, the government has proposed measures to increase SME participation in networks. These include promoting new business cluster models, such as digital and virtual innovation clusters, focussed on sustainability, green transition, deep specialisation, micro-specialisation, and cooperative ecosystems for resource sharing. The strategy also emphasises the development of new infrastructure, including technology parks, accelerators, start-up centres and platforms for promising spin-offs.
These initiatives align with the Smart Specialisation Strategy (S3) objective of strengthening co-operation within a quadruple helix environment, where SMEs collaborate with other businesses, academia, government and civil society. Such collaboration is intended to increase product value added, support internationalisation and enable networking for resource pooling to enhance innovative capacities.
Yet, since the last OECD assessment in 2022, there is no concrete evidence of intensified efforts to promote cluster formation in North Macedonia, with progress under the SME Strategy 2018-2023 hindered by the COVID-19 pandemic. Explicit cluster development could encourage wider competition and co-operation among firms in the green economy (European Commission, n.d.[51]).
Still, only two clusters are currently active in North Macedonia: the Textile Trade Association, comprising 87 SMEs, 6 large firms, and 2 research organisations; and the ICT Chamber of Commerce, including 96 SMEs, 10 large firms, and 2 research organisations. The textile cluster has generated tangible sustainability and resilience benefits, most notably through trainings on the CBAM and circular economy, delivered in cooperation with SIPPO (see Sub-section 3.1.2). Sustainability-focussed initiatives have also been reported within the ICT cluster, which participates in the Green ICT Development project, a European Strategic Cluster Partnership in the field of smart green technologies (ICT Chamber of Commerce MASIT, 2025[52]).
Both existing clusters operate primarily as production and supply chain networks, linking SMEs with firms across the pre- and post-production stages of the value chain. Given their export orientation and strong ties to the EU Single Market, these clusters place significant emphasis on trade, while also fostering strategic partnerships and knowledge exchange with research institutions. Such linkages enable SMEs to meet foreign partners’ requirements, such as quality standards and logistics, thereby improving cost efficiency, streamlining operations, and creating opportunities for productivity gains and innovation spillovers. These services provide valuable market‑access support, often sought by SME enablers aiming to enter new industries or customer segments that could benefit from enhanced visibility, better connections, and dedicated assistance in navigating compliance in more regulated sectors, such as for example energy.
While it is encouraging that these clusters are active members of the European Cluster Collaboration Platform, linking SMEs to partners and opportunities across Europe, a more strategic approach is needed to deepen SME engagement in formal partnerships. This could be achieved through more B2B and business-to-academia collaborations, which can strengthen resilience and accelerate the green transition. Planned initiatives under the SME Strategy Action Plan 2025-2027, including the creation of a technology park, accelerators, incubators, and centres of excellence, present a timely opportunity to embed greening and resilience objectives into these structures, fostering more impactful collaborative ecosystems.
Finally, FDI in North Macedonia has grown significantly over the past decade, with net inflows rising from 2.9% of gross domestic product (GDP) in 2015 to 7% in 2024 (World Bank, 2025[53]). This represents a growing potential for SMEs to benefit from linkages with larger foreign subsidiaries. Realising these benefits, however, requires targeted government action to foster SME networks, including with domestic firms, and strengthen SMEs’ absorptive capacity. Prioritising greenfield investments, which are more likely to generate spillovers, is particularly important (Farole and Winkler, 2013[54]). At present, the only structured effort to develop such networks is an S3 measure targeting the agricultural sector, aiming to promote co-operation, provide technical assistance and foster strategic partnerships between local businesses, academia and foreign entities.
The way forward
Step up efforts to conduct systematic training needs analyses and strengthen monitoring and evaluation mechanisms. It is essential to base future support programmes on solid evidence of their effectiveness in achieving national objectives and in helping SMEs seize new opportunities, build resilience, and advance their green transition. To this end, the government should consider resuming regular data collection and analysis through the SME Observatory, while integrating a robust monitoring and evaluation framework aligned with the implementation cycles of current and future SME support programmes. To collect relevant data from SMEs, the Government of North Macedonia and key institutions, such as INOVA, could encourage the use of self-assessment tools that enable SMEs to track their environmental performance over time. For instance, the government could adapt to the context of North Macedonia various tools compiled by the OECD (2021[55]), including the Quick Company Assessment tool developed by Gesellschaft für Internationale Zusammenarbeit (GIZ) (2017[56]) that helps identify climate-related risks, such as transitional and regulatory challenges, and determine the types of support measures needed.
Increase the budget for business support services focussed on greening and resilience building. SMEs in North Macedonia still have limited awareness of available support measures and their benefits, underscoring the need for stronger government-led awareness-raising efforts. At the same time, many relevant areas require specialised knowledge and tailored guidance, demanding well-trained mentors and advisors. The new INOVA green grant scheme marks an important step in scaling up greening-related support that has been relatively limited in recent years. It also creates an opportunity to integrate broader sustainability topics, such as climate change adaptation, ESG management, and resilience building, into INOVA’s portfolio. Depending on the outcomes the scheme’s initial calls, financial resources could be allocated to expand non-financial services and strengthen institutional capacity for effective delivery. One way North Macedonia could improve performance in this area is through setting up an SME greening support centre (Box 3.6).
Develop a strategic approach to supporting SME networks. North Macedonia should ensure the full implementation of the activities outlined in its Cluster Development Strategy 2018-25, and continue or complete those that remain pending. Most importantly, the government should consider establishing the envisioned co-ordination mechanism and the National Center for Clusters to comprehensively map existing and potential clusters, and to develop a monitoring and evaluation framework. These measures would help strengthen SME participation in the green transition and enhance overall national resilience. Such efforts need to be closely aligned with the SME Strategy Action Plan 2025-2027, which aims to further integrate SMEs into collaborative and innovation-driven ecosystems.
In 2021, the Basque Environmental Agency launched the Basque Circular Hub, a key instrument supporting the Basque Country’s 2030 Circular Economy Strategy. With three regional locations, the hub focusses on building SME capacity for the circular economy by addressing two main barriers: the shortage of professionals trained in circular and lifecycle thinking, and SMEs’ limited resources to anticipate and respond to circular challenges.
It provides four core services: learning (targeted training and education), working (technical projects with companies and experts), observatory (monitoring of circular-economy trends and policy developments), and tools (methodologies and practical instruments for applying circular principles, particularly for SMEs).
The Basque Circular Hub operates with an annual budget of around EUR 300 000, mainly allocated to consultancy services, mentoring and scholarships. While data on achieved targets, such as training 1 200 professionals and engaging 1 500 companies by 2024, remain limited, the breadth of ongoing activities and training programmes suggests that the model remains on track.
As such, it could provide a relevant template for North Macedonia, at the national or regional level, to raise sustainability awareness and strengthen SME support services through improved co-ordination among institutions such as the INOVA, the Chamber of Commerce and the ministries responsible for the economy and the environment.
Source: Basque Circular Hub (n.d.[57]).
Business research and innovation activities are key indicators of an enterprise’s adaptive capacity to meet growing demands for low-carbon production and to strengthen resilience against external shocks. For SMEs in North Macedonia, the strategic adoption of innovative practices will be essential to enhance productivity, improve value chain integration, and prepare for future challenges. Regarding product innovation, the performance of SMEs in North Macedonia stands at around 50% of the EU average, highlighting substantial gaps (European Commission, 2024[58]).
One way to strengthen innovation capacity is to expand knowledge networks that connect SMEs with research institutions, academia and other innovators for collaboration. Encouragingly, such linkages increased by 40 percentage points between 2017 and 2024 (European Commission, 2024[58]). However, additional support infrastructure and stronger incentives for co-creation are needed to sustain and accelerate progress in this area (OECD, 2024[59]).
This section examines how well government strategies are translated into advanced innovation infrastructure, effective incentives and strengthened SME knowledge networks that enable sustainable transformation.
3.5.1. Advancing strategic innovation for a green and resilient economy
North Macedonia’s innovation policy framework is anchored in several strategic documents, including the National Development Strategy 2024-2044 (NDS), the SME Strategy 2025-2030, the S3 2024-2027, and the Industrial Strategy 2018-2027.19 Against the backdrop of a steady decline in productivity since 2011 and the persistently low contribution of total factor productivity to economic growth (World Bank, 2020[60]), the NDS sets out a vision for transforming the economy into one driven by knowledge, innovation and digitalisation, with sustainability at its core. This vision is echoed in the objectives and SME-focused measures of the other strategies.
Aside from the S3, other innovation-related policies do not explicitly link innovation capacity to the green transition or the broader resilience-building needs of SMEs. The current policy framework also does not prioritise innovation support specifically aimed at enhancing resilience to environmental risks or long-term climate adaptation. The foundational understanding of how transformative innovation contributes to climate resilience is emerging. However, place-based approaches to fostering such innovation have not yet been fully prioritised.
Crucially, to date, there has been no evaluation to date of how national innovation policies have impacted SME productivity, suggesting that there is no evidence of effective green innovation measures implemented. This limits the ability to refine policy interventions, allocate resources effectively and design targeted support measures that enhance innovation-driven growth and resilience of SMEs, particularly innovators.
On a positive note, there have been gradual developments within North Macedonia’s innovation ecosystem. Among the three operational accelerators supported financially by INOVA, namely X Factor, Seavus, and the Business-Technology Accelerator UKIM (BAU), the BAU stands out as the primary connector between local stakeholders, including SMEs, and the European Institute of Innovation and Technology (EIT) Community. BAU actively pursues local funding opportunities to support innovation and organises events to raise awareness and foster innovation-focussed collaboration.
Although there is currently no dedicated accelerator for the green economy or sustainability, BAU has the capacity to invest its own funds in promising companies and to promote relevant funding calls, such as the EIT Jumpstarter 2025 programme, which included two green-themed application categories, and LIFE programme calls.20 Additionally, BAU offers its Knowledge Hub, which provides SMEs and local businesses with access to valuable resources, training materials and other support tools needed to scale innovative practices (Box 3.7).
Policy context
North Macedonia’s innovation capacity is significantly hampered by chronically low research and development (R&D) investment, averaging around 0.4% of GDP, well below the EU average of 2.25% (World Bank, 2025[61]), and by a limited private-sector role, which accounts for only 26% of total R&D spending (Assembly of North Macedonia, 2024[62]). As a result, the economy achieves just 45.1% of the EU average on the European Innovation Index (European Commission, 2024[63]).
Operational aspects
Established in 2019 and hosted by Ss. Cyril and Methodius University in Skopje (UKIM), BAU connects academia, entrepreneurs, and investors. It supports start-ups, spin-offs and scale-ups through acceleration programmes, equity funding, and Green Deal-linked initiatives. Its Knowledge Hub provides SMEs with tailored resources, training, financing information, and collaboration opportunities.
Policy impact
While there are no concrete data on SME uptake of the hub, BAU’s track record includes delivering ten programmes, evaluating 400 business ideas, and making ten direct investments. These activities indicate its potential as a key platform for strengthening SME innovation capacity, though systematic monitoring would be needed to assess its reach and impact on scaling sustainable and resilient business models.
Source: Business Accelerator UKIM (2023[64]).
Lastly, North Macedonia lacks indirect support for innovation, such as R&D tax incentives. Public procurement of innovation is also not applied, leaving untapped potential to use it as a lever for green and resilience-oriented transformation. The intellectual property (IP) framework similarly offers no targeted mechanisms to stimulate sustainable innovation by SMEs; there are no fast-tracked patent processes, expedited technology approvals for sustainable solutions, or incentives that could accelerate market uptake of green technologies developed by SMEs. Open innovation frameworks that encourage voluntary licensing or patent pools for sustainable technologies are also missing, constraining collaboration and slowing the potential for diffusion of climate-smart innovations.
3.5.2. Capitalising on knowledge networks for driving SME innovation
Addressing the global megatrends discussed in Section 3.1 requires SMEs to be deeply integrated into knowledge and innovation networks that enhance their adaptability and capacity for sustained value creation. Building their engagement within resilient ecosystems is crucial for maintaining growth in a rapidly changing environment. Enabling SMEs to access vital resources, including university research and public R&D, will be crucial to supporting technology transfer and accelerating the adoption of sustainable practices.
North Macedonia currently lacks publicly provided technology-extension services for SMEs. While INOVA has supported three private providers, none offer services specifically aimed at enhancing SME sustainability or resilience through climate action or broader greening initiatives. The economy hosts seven technology transfer centres; however, their activities do not include specialised support for SME greening. The government acknowledges that co-operation between public research institutions and industry remains ad hoc, a key challenge behind efforts to improve the overall technology transfer process. However, sustainability objectives are not prioritised within these efforts or in co-ordination with private-sector actors engaged in SME knowledge networks.
There are still no comprehensive data on SME engagement with technology transfer centres, making it difficult to assess the impact of government interventions in this area. On a positive note, the Ministry of Economy and Labor’s Competitiveness, Innovation and Entrepreneurship Programme adopts a cluster-oriented approach, funding projects from businesses within cluster associations. In 2024 the Ministry of Economy and Labor (2024[65]) also introduced the measure on “Development and implementation of innovative and collaborative projects related to smart specialization, green and digital transformation in a quadruple helix” through its the Programme for Supporting the Competitiveness of the Manufacturing Industry and Social Responsibility. While this activity targeted collaborative projects for green innovation in line with smart specialisation priorities, no results have been publicly reported.
Similarly, in 2025, the Ministry of Education and Science (2025[66]) funded five collaborative science-business research projects in alignment with smart specialisation areas, with a budget of MKD 30.4 (~ EUR 495 000). However, none of the supported projects fell into a green innovation category. Still, such initiatives offer avenues to expand practices that could strengthen SME contributions to a greener, more resilient economy in strategic sectors, although the green transition would have to be a core priority of these programmes.
Critically, in this regard, INOVA piloted an innovation voucher scheme that would also cover sustainability-related areas of innovation, signing 17 contracts between April and May 2024. However, concrete data linking these vouchers specifically to SME greening remains unavailable, as impact assessments are still ongoing. Additional notable initiatives include INOVA’s co-financed grants that promote collaboration between the private sector and higher education or research institutions. In 2023, three calls were published: “Co-financed Grants for the Commercialisation of Innovations,” “Co-financed Grants for Newly Established Start-ups and Spin-offs,” and “Support Instrument Co-financed Grants for Technological Development for Accelerated Economic Growth.” Collectively, these programmes co-financed 186 projects, of which 21 explicitly targeted sustainability through energy efficiency, the circular economy, or other green solutions.
Moreover, following INOVA’s consultation series, which included group and public discussions since the last assessment, aimed at strengthening business-academia networks, the collaborative Maker Space project was launched. This incubator provides a platform for young creatives to engage in industry and research partnerships, facilitating knowledge and technology exchange. Preference is given to laboratories that include aspects of green transformation, i.e. the circular economy. It thereby, simultaneously supports green skills development (see Cluster 4) and helps expand SME knowledge networks. However, companies must already apply as part of a consortium or be predominantly owned by a higher education institution to participate.
While these initiatives highlight the potential to strengthen business-academia collaboration, particularly for young entrepreneurs and small firms developing advanced technologies, their overall economic impact has yet to be enabled by a comprehensive framework that expands SME access to knowledge networks beyond financial support. Although not explicitly linked to the green transition, the INOVA is currently developing a collaborative grant scheme that could enhance non-financial assistance in this area.
In this regard, the Law on Innovation Activity Scientific and Technological Development and Entrepreneurship, adopted in September 2025, is expected to build the basis for a more holistic approach, enabling greater SME participation in R&D. Based on the provisions of the law, INOVA will be co-financing grants for newly established start-ups and spin-offs, as well as co-financing grants and offering conditional loans for commercialising innovations and co-financing grants for establishing, operating and investing in business-technology accelerators. This would align with the S3’s aim to establish institutional infrastructure that supports the sustainable and resilient growth of SMEs, especially within strategic sectors critical to the economy’s green transformation. It also complements activities under North Macedonia’s Reform Agenda, including efforts to integrate SME funding mechanisms for the implementation of the S3 and facilitate access to European Institute of Innovation and Technology (EIT) opportunities through INOVA co-financing.
The way forward
Establish a comprehensive incentive system for green R&D and innovation. In line with the 2025 adopted Law on Innovation Activity, Scientific and Technological Development and Entrepreneurship, which provides a legal basis for incentives to support innovative activities, the government should develop a balanced policy mix addressing both supply- (incl. government-sponsored R&D, tax credits for companies to invest in R&D, enhanced capacities for knowledge exchange and support for education and training) and demand-side measures (e.g. tax credits and rebates for consumers of new technologies, technology-oriented government procurement, technology mandates, and innovation-specific regulations and standards) (OECD, 2011[67]). This mix should target strategic sectors, such as green energy, and other areas that foster low-carbon, resilient SME development, while balancing support for sectoral growth with the needs of a complex innovation system. North Macedonia could draw inspiration from approaches adopted in OECD member countries, such as Portugal's Sectoral Decarbonisation Roadmaps, which promote green technology upgrades through collaborative stakeholder efforts. For the Portuguese plastics industry, the roadmap focuses on four key axes: demand management, energy efficiency, decarbonisation of production and raw materials, with the aim of boosting research and innovation to enable lower-carbon plastic production (OECD, 2025[68]).
Conduct systematic impact assessments of SME innovation support measures. The government should evaluate programmes such as the piloted innovation voucher scheme to understand their effects on SME productivity and long-term resilience. Insights from these assessments could guide the refinement of policy interventions, optimise resource allocation, and integrate considerations of green transition and resilience into innovation support. Relevant indicators the government could consider to assess the impact of innovation support on SME environmental performance include total SME greenhouse gas emissions, total energy consumption, emissions and energy intensity, as well as indicators capturing potential vulnerabilities, such as the energy price burden faced by SMEs. In this regard, the OECD has developed a pilot dashboard of SME greening indicators that North Macedonia could use as inspiration (OECD, 2023[69]).
Strengthen SME technology-extension services and technology transfer engagement. The government should consider developing SME-tailored technology-extension services that support the adoption of new and sustainable innovations. Engagement with existing and emerging technology transfer offices could be improved, with cluster- and sector-specific approaches that reflect the distinct needs of SMEs. These services should be aligned with S3 priorities to ensure coherence with national innovation objectives, promote collaboration between research institutions and SMEs, and facilitate the commercialisation of R&D outputs. North Macedonia can again draw on the Portuguese Sectoral Decarbonisation Roadmaps, in which industry-based technology centres have enabled a rapid rollout of key activities. For example, the Technological Centre for the Textile and Clothing Industry offers companies in the sector, mainly SMEs (90%), a range of services including laboratory testing, product certification, technical and technological consulting, R&D+ innovation, training, and fashion and design (OECD, 2025[68]).
Introduce a collaborative grant scheme or innovation voucher for sustainable innovation ventures. North Macedonia still lacks adequate infrastructure and incentives to foster research-business co-creation. A collaborative grant programme supporting innovation partnerships with a specific green or climate-technology focus could stimulate activity in this area. It would also help SMEs enhance productivity and expertise by integrating research and knowledge capabilities within their networks. In the short term, the government could, building on the results of the piloted innovation voucher scheme, institutionalise a targeted voucher focused on green and climate-innovative solutions. Innovation vouchers are typically easier to manage and administer due to their flexibility and streamlined implementation (European Commission, 2019[70]), making them well-suited for early-stage support. A sector-specific approach could be particularly effective; for example, inspiration could be drawn from the Netherlands-based non-profit Foodvalley, which launched an agrifood innovation voucher in 2023 offering 50% co-financing and access to expertise, facilities and networks to support SMEs and start-ups in developing and demonstrating sustainable food innovations (Foodvalley, 2023[71]; OECD, 2022[72]).
Networks play a major role in increasing resilience as a certain degree of redundancy and diversification across nodes helps to reduce interdependence, promote risk management culture, reduce the cost of shock mitigation and allow for easier recovery and adaptation (Brende and Sternfels, 2022[73]). SME networks can take different forms comprising various actors that exchange products, services, knowledge, and other resources. They can be divided into four main types, with the according typology illustrated in Figure 3.A.1 below.
Sources: Based on OECD (2023[3]), drawing on EC/OECD (2023), Unleashing SME Potential to Scale Up, https://www.oecd.org/cfe/smes/sme-scale-up.html, Phase II on Network expansion; EC/OECD (2023), Fostering FDI-SME Ecosystems to Boost Productivity and Innovation, https://www.oecd.org/industry/smes/fdi sme.html, Phase II on FDI-SME linkages and ecosystems.
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← 1. On 27 August 2025, North Macedonia’s State Audit Office (2025[79]) published the report “Preparedness of the Republic of North Macedonia for Addressing Climate Change,” confirming the absence of a National Adaptation Planning document. The Readiness Proposal defining UNDP’s role in supporting the development, adoption and implementation of such a document was approved in September 2025 (GCF, 2025[28]).
← 2. North Macedonia currently lacks a multi-year just transition plan, though one is expected to be developed simultaneously to the upcoming SME Strategy Action Plan 2027-30. In the meantime, the government adopted a Just Transition Annual Implementation Plan for 2025, aiming to support economic diversification and green investment. Key actions include launching green startup programmes, identifying investment opportunities in sectors like recycling, eco-tourism, and climate-smart technologies, and establishing an energy excellence centre to support SMEs in coal regions. Implementation progress is unclear. Although working groups have been established and the Annual Implementation Plan 2025 outlines actions, timelines and some resource allocations, it does not function as an operational tool for planning, monitoring progress against 2025 targets, or clearly guiding institutional responsibilities.
← 3. Non-EU SMEs may be indirectly affected by the CSRD because large EU companies, and large non-EU companies exporting to the EU, must report on sustainability impacts across their entire value chain, including Scope 3 emissions and supply chain social risks. To meet these obligations, they are likely to pass their data requirements on to suppliers, asking them for detailed information on emissions, labour practices, and governance so they can complete their mandatory reports (Sustainability Directory, 2025[78]).
← 4. The environmental goods and services sector, also referred to as environmental economy or eco-industries, consists of a heterogeneous set of producers of goods and services aiming at the protection of the environment and the management of natural resources (e.g. preventing or minimising pollution, degradation or natural resources depletion; repairing damage to air, water, waste, noise, biodiversity and landscapes, etc.) (Eurostat, n.d.[77]).
← 5. There are an estimated total of 15 operational TIDZs in North Macedonia.
← 6. The Law on Industrial and Green Zones, adopted in 2013, is being amended to include new provisions for regulating the benefits and opportunities for zone users, unifying applicable provisions for industrial and green zones, and better defining the conditions for performing activity in these areas. The amendment law has a specific focus on carrying out activities in line with circular economy principles in the green and industrial zones.
← 7. The Food and Agriculture Organization of the United Nations defines sustainable agriculture as the “management and conservation of the natural resource base, and the orientation of technological and institutional change in such a manner as to ensure the attainment and continued satisfaction of human needs for present and future generations. Such development... conserves land, water, plant and animal genetic resources, is environmentally non-degrading, technically appropriate, economically viable and socially acceptable” (FAO, 1988[76]).
← 8. Scope 1 emissions are direct emissions from owned or controlled sources of a firm (OECD, 2024[81]).
← 9. In 2021, as part of efforts to accelerate post-COVID-19 recovery, the European Investment Bank (EIB) allocated EUR 100 million to the Development Bank of North Macedonia JSC Skopje (DBNM). Provided under the Team Europe initiative, this financing was extended on favourable terms to support SMEs and mid-caps, forming part of the EIB’s broader financial package aimed at helping the Western Balkans rebound from the pandemic’s economic impact (EIB, 2021[75]).
← 10. In 2023, a draft Law on Compulsory Insurance in Agriculture was prepared which would oblige agricultural firm to insure their crops, livestock, bee colonies or fish farms for which they are requesting support, in an insurance fund before applying for financial subsidies from the government. The draft law stipulates that 20% of the premium amount will be borne by the Insurance Fund, and that agricultural holdings would pay from 30% to 80% of the insurance premium, but activities were put on hold in 2024 (BRIF, 2023[74]).
← 11. Decision on the methodology for credit risk management, Official Gazette of the Republic of North Macedonia No. 57/23 & Decision on reports and data disclosure by banks, Official Gazette of the Republic of North Macedonia No. 36/23.
← 12. The Green Financial Systems (GFS) programme is designed to facilitate the transition toward net-zero, climate-resilient financial systems that can unlock climate action and stimulate green investment among small businesses. Funded by the German government via the EIB’s International Climate Initiative Fund, the programme is implemented in partnership with the NDC Partnership, a global coalition working to advance climate goals through coordinated support to countries and institutions (North Macedonia joined in 2022).
← 13. Under the specific area of action: Improving business development services (BDS) for SMEs, the government plans to implement 6 targeted measures: (1) Development of a system for accreditation of consultants, (2) Strengthening the capacities of trainers/consultants delivering capacity building programmes to SMEs, (3) Internationalisation of SMEs, (4) Increasing the participation of SMEs in key international value chains, (5) Providing training for SMEs and potential entrepreneurs, and (6) Support for SMEs in introducing international quality systems and standards.
← 14. In August 2025, this organisation was merged with the Fund for Innovation and Technology Development to create the Agency for Innovation Activity, Scientific and Technological Development and Entrepreneurship (INOVA).
← 15. In 2022, 80 participants, mostly consultants but also local SME employees were trained in three locations. In 2023, a total of 69 participants attended four trainings (Agency for Entrepreneurship Support, 2024[80]).
← 16. Full details are not available at the time of writing, as the programme’s first call is scheduled for mid-2026.
← 18. Networks are systems of connected actors that enable the exchange of information, products, services, assets and or resources. They may be supported by physical infrastructure, formal agreements, or remain informal relationships (OECD, 2023[3]).
← 19. The Draft SME Strategy Action Plan 2025-2027 outlines measures to strengthen the innovation infrastructure for SMEs, including expanding networking opportunities through business associations and EU-funded projects starting in 2025, and commissioning feasibility studies for innovation zones and hubs by 2027. In parallel, the Industrial Strategy prioritises boosting productivity, innovation, and technology transfer in manufacturing, with a focus on building institutional frameworks for technology transfer, supporting innovation in high-growth enterprises (“gazelles”), and deepening linkages between international firms and domestic businesses in TIDZs. Complementing these efforts, the S3 policy mix targets sustainable development objectives by promoting an innovation-driven, low-carbon, digital, and knowledge-based transformation in priority sectors.
← 20. The LIFE programme is the EU's funding instrument for the environment and climate action, that co-finances projects in nature, biodiversity protection, and the fight against climate change. Since 2021, LIFE also fund actions related to energy efficiency and renewable energy.