SMEs depend on a supportive business environment to start, operate and grow, making sound policies, fair competition, access to finance and effective support services essential to their development. This cluster examines whether the policy, regulatory and institutional environment enables SMEs to start, operate, grow and exit the market under clear, predictable and proportionate conditions. It assesses how effectively SME considerations are embedded in policy design, as well as whether SMEs operate on a level playing field, including efforts to reduce informality, protect competition, ensure fair access to public procurement, and provide timely access to justice.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Serbia
Abstract
A strong institutional and regulatory framework is the basis for effective small and medium-sized enterprise (SME) policymaking. Owing to their more limited financial and administrative capacities, SMEs are often disproportionately affected by complex procedures and compliance costs, making predictable, transparent, and SME-sensitive policies essential for their success. In Serbia, SMEs accounted for 53.7% of value added and 65.7% of employment in 2023 (SORS, 2025[1]). Although these shares remain below the average of the six Western Balkan (WB6) economies, SMEs represent nearly the entirety of the business population, accounting for approximately 99.7% of all firms, and thus remain central to the structure and functioning of the economy.
An enabling environment for SME investment, innovation and growth depends on clear and predictable legislation, well-targeted support measures and effective inter-institutional coordination. In this context, this section assesses government initiatives to promote an enabling environment for SMEs, in line with OECD principles on regulatory quality, better regulation and SME policy (OECD, 2022[2]). It examines measures to facilitate market entry and exit, ensure that legislative and policy frameworks are evidence-based, proportionate and responsive to SME needs, minimising administrative and compliance burdens. The section also considers the effectiveness of consultation mechanisms and the extent to which structured stakeholder engagement supports transparent, accountable and predictable policymaking.
2.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support
Supporting an SME’s entire life cycle, from establishment to growth and possible phasing out, requires a solid institutional and regulatory environment. In recent years, Serbia has made progress in reforming and modernising this framework, notably through the renewal of SME-specific strategic and legal frameworks, structured efforts to simplify the regulatory environment and the digitalisation of administrative services for business. As a result, Serbian businesses perceive public administration and licensing processes as comparatively lower burdens on growth than those of their regional peers (RCC, 2024[3]). These developments are reflected in international benchmark indicators on the regulatory environment for private sector development, in which Serbia has shown a noticeable uptick from 2021 after a decade of decline, now performing broadly in line with the Western Balkan economies and Türkiye (WBT) average (WIPO, 2025[4]; World Bank, 2024[5]). However, despite some progress in environmental simplification, further policy efforts are needed to ensure transparency and accountability in the regulatory framework, such as consultation mechanisms, secure, sustainable funding, and the addressing of structural barriers, such as lengthy insolvency procedures.
In 2025, this trajectory was reinforced by the adoption of a new Regulation on Regulatory Impact Assessment (RIA), which introduced a dedicated SME Test as a mandatory component of ex-ante impact assessments to ensure that the potential effects of proposed legislation on SMEs are systematically considered, in line with the OECD Council’s recommendation (OECD, 2022[2]). The new regulation requires identification of affected SMEs, consultation with stakeholders, evaluation of mitigation measures, and the quantification of administrative and compliance costs using a standardised cost-calculation tool. While this represents a welcome improvement compared to previous practice, when SME aspects were addressed in only a limited number of impact assessments, participation by SME representatives is not yet institutionalised and consultation practices remain less transparent than in mature EU systems. Moreover, while the framework provides detailed operational tools for assessing impacts, implementation quality varies, and the results of the SME Test are not systematically disclosed or subject to structured review.
With the adoption of the SME Development Strategy 2023-2027, Serbia renewed its overarching policy framework for the SME sector. Although delayed by almost three years, the new document was designed through a participatory process, drawing on lessons from the previous SME Strategy (2015-2020) and seeking further alignment with EU standards, and consistency with broader national agendas. To help anchor the strategy in business realities, the Ministry of Economy organised 11 structured dialogues between private sector representatives and public officials, during which the input from entrepreneurs and business associations directly informed the policy measures and the action plan. However, despite its role in the design and approval of enterprise-related programmes and fiscal incentives, the Ministry of Finance did not participate in the working group and is not referenced in the final document, suggesting limited institutional commitment to the SME policy agenda.
In mirroring elements of the EU SME Strategy for a Sustainable and Digital Europe, the SME Development Strategy sets concrete but relatively modest targets that align with EU green and digital policy priorities (see Dimension 3). In terms of policy architecture, the Strategy primarily focuses on ensuring policy continuity, largely consolidating existing measures and programmes. Although this approach supports implementation stability and coherence, tailoring objectives to current delivery capacity may limit scope for matching sectoral development potential. Despite the limited ambition of its targets, the review of the 2023-2024 Action Plan shows that implementation of planned activities has progressively weakened over time due to financing shortages (see Dimension 3), particularly as global trade frictions and domestic political uncertainty redirected attention and resources away from SME policy. Several measures were left underfunded and increasingly reliant on donor financing, raising doubts about the strategy's longer-term sustainability and credibility. In response, the forthcoming Action Plan (2025-2027), whose adoption has been delayed and is now expected by March 2026, is expected to adopt more realistic implementation scheduling and prioritise measures aligned with available financial resources, potentially further narrowing the scope of policy objectives.
In parallel to the SME Development Strategy, a targeted strategic document has been conceived for startups. Serbia’s 2021-2025 Strategy for the Development of the Startup Ecosystem focuses specifically on innovative businesses with high-growth potential, providing a formal, systemic framework to align public institutions and initiatives with a shared vision for entrepreneurial growth. This modern strategy defined key concepts such as a startup, a unicorn, and a business angel1 for the first time in Serbian policy and set clear goals, including introducing startup entrepreneurship education at all levels (see Cluster 4), improving infrastructure and support programmes (see Section 2.4), and targeting a scale-up to 800-1 200 active startups by 2025. In addition, it also set in motion the Serbia Ventures programme, a co-investment by the Innovation Fund into venture capital funds with backing of up to EUR 5 million.
The progress Serbia has made was reflected in a 2024 review that showed that the startup ecosystem of Serbia’s two largest cities (Belgrade and Novi Sad) reached the highest total value to date – USD 1.1 billion, making it the leading startup ecosystem in the WB6 region (NITRA, 2024[6]). The dominating sectors are in line with the objectives set in the 2020-2027 Smart Specialisation Strategy and the Strategy for the Development of Artificial Intelligence 2020-2025 – 41% of Serbian startups work in the field of AI, about 19% are in data processing and analytics, and 24% are in either biotech, medtech, foodtech or agritech (Digital Serbia Initiative, 2025[7]). Despite an overall welcoming environment for new firms, challenges persist. Since 2024, the start-up ecosystem has seen a 20% decrease in the number of active start-ups, and nearly half (45%) still lack monthly recurring revenue, a typical feature of early-stage ventures (Digital Serbia Initiative, 2025[8]). Supporting access to international markets (see Section 2.4), and entrepreneurial skills (see Cluster 4), and reducing grant dependency (see Section 2.3) are all essential to turning the tide. At the same time, the absence of information on a follow-up to the current Startup Ecosystem Strategy raises concerns about the continuity of this policy approach beyond 2025.
Efforts to reduce the administrative burdens of obtaining business licences continue to advance through the ePapir Programme, launched in 2019 by the Public Policy Secretariat (PPS). The programme reflects an attempt to institutionalise a systematic review of administrative procedures, questioning their necessity, proportionality and sequencing. Since its inception, the initiative has simplified, digitalised or abolished 762 procedures, including 227 in 2024 alone, while the 2025 Action Plan contains recommendations to optimise close to 1 000 procedures for businesses and citizens. Beyond overall simplification efforts, data interoperability has also advanced, with more than 520 authorities now connected through the Government Service Bus, over 587 institutions integrated via the unified eDelivery system, and over 400 institutions integrated via the Pisarnica system.2 The government has also strengthened open data provision, publishing over 6 200 machine-readable datasets on the national Open Data Portal and establishing the Open Data Hub as a support tool for SMEs. Additionally, a draft Law on eGovernment, currently under preparation, aims to fully transpose the EU Open Data and Reuse of Public Sector Information Directive, prioritising the publication of high-value datasets in business-relevant sectors such as geospatial, mobility, and environment.
At the operational level, Serbia has increasingly translated these strategic commitments into concrete reforms aimed at simplifying business entry, registration and licensing procedures, notably through the expansion of digital government services. As of 2023, the registration of SMEs of all types is streamlined and fully digital through the eUprava portal. The government has further expanded the portal to include over 180 digital services for legal entities, with more than 45 of them being fully transactional. Since 2024, businesses can be automatically registered for access to e-services, further reducing initial administrative steps for newly established firms, yet digitalisation has largely focused on transferring existing procedures online rather than redesigning them around business life events. Post-registration guidance remains generic, with limited automatic provision of activity-specific information on licensing obligations, tax requirements and available support measures.
As part of the simplification effort, one key objective relevant to new SMEs is streamlining the Register of Administrative Procedures (RAP), which serves as a centralised, publicly accessible repository of all licence-related processes across more than 100 institutions, currently providing one-stop-shop access to over 3 300 procedures for businesses. Specifically, the RAP is to be updated with clear descriptions of the required documents, timelines, and fees for all types of licenses, with the longer-term goal of converting RAP services from informational to fully operational. The Entrepreneurship Portal (preduzetnistvo.gov.rs), designed to serve as a one-stop platform providing SMEs with information on available support programmes, has not been regularly updated since mid-2025, limiting entrepreneurs' timely access to information on public support measures and business development opportunities. In addition to new business creation, these policies are driving SME transitions from the informal to formal market (see Section 2.2.1). While this allows requirements to be increasingly transparent, further integration between registration data, RAP and sector-specific digital systems, including certain tax and closure-related procedures that remain only partially digitalised, would strengthen end-to-end interoperability and improve user navigation across the business lifecycle. In practice, incomplete interoperability continues to require firms to interact with multiple institutional interfaces, limiting the full realisation of the once-only principle.
Recent tax policy developments in Serbia have aimed to ease pressures on SMEs and self-employed individuals, although structural constraints remain evident (see Section 2.2.1). Temporary relief measures introduced in 2022 to counter the high labour tax burden, driven by mandatory social security contributions, allow employers hiring new staff to claim partial refunds of paid payroll tax and contributions. However, as these measures are in force only until the end of 2025, their time-bound nature limits long-term predictability and their structural impact on employment decisions. In parallel, clarity and compliance costs for self-employed workers were improved through the introduction of a new taxation framework for freelancers in 2023, supported by a dedicated online portal, and through amendments to the lump-sum regime (paušalci), including a 50% tax reduction in the first year of operation. Nevertheless, the income eligibility threshold for lump-sum taxation has remained unchanged for over a decade despite inflation and wage growth, raising concerns regarding smooth regime transitions and tax stability as firms expand.
To support SMEs' exit from business operations, which for Serbian start-ups during 2024-2025 reached 20%, the SME Development Strategy has set clear measures to enhance the efficiency of bankruptcy procedures and incorporate early warning principles (See Cluster 2). The Chamber of Commerce and Industry plays a crucial role in alleviating the challenges SMEs face by providing free mentoring services and expert advice. Beyond the Chamber’s public calls for mentoring and advisory support, the government does not provide SMEs with broader, economy-wide insolvency data that could help identify emerging business risks and inform preventive action. Well-developed insolvency procedures and regimes can protect both debtors and creditors and are particularly relevant for smaller firms that lack resources.
On a positive note, Serbian SMEs have access to protection schemes that temporarily shield them from creditor enforcement, allowing space for restructuring. Additionally, the Law on Consensual Financial Restructuring allows SMEs to utilise prebankruptcy alternatives to settle their debts. According to the 2025 data provided by the Bankruptcy Supervision Agency of Serbia, the average duration of active, suspended and concluded bankruptcy proceedings in Serbia, totalling 9 584, is 3.2 years. The duration is significantly longer than in many EU Member States, including Croatia, where liquidation takes an average of 1.5 years (World Bank, 2024[9]). This gap underscores the need for Serbia to strengthen its insolvency framework to reduce costs, improve creditor recovery, and ultimately foster a more dynamic SME environment.
2.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs
Systematic, comprehensive and transparent public-private dialogue is crucial for a predictable business environment and for effective SME policy development. As is the case with mainstreaming RIAs, Serbia has made limited progress in institutionalising regular public-private consultations (PPCs) prior to and during the drafting of SME regulations. Instead of systematic dialogue, SMEs tend to be involved in PPCs on an ad hoc basis, mainly as part of broader national strategies. For example, in 2022, the Ministry of Economy collaborated with the German Society for International Cooperation (GIZ) and the Chamber of Commerce and Industry (CCIS) to organise 11 structured consultations with SMEs across the country to help shape the 2023-2027 SME Development Strategy (PKS, 2022[10]). The dialogues involved SMEs, business associations, ministry officials, and donors. They used a strength, weakness, opportunity, and threat (SWOT) analysis to identify to determine real SME needs and put the Think Small First principle at the centre of the discussions. However, such good practice examples continue to be sporadic and largely inconsistent, in part due to the absence of a central authority to oversee the quality and coordination of PPCs.
In 2023, 45% of adopted laws were subject to public consultation, a percentage which both the European Commission’s Enlargement Report for Serbia and the OECD Support for Improvement in Governance and Management (SIGMA) Public Administration in Serbia 2024 report deemed insufficient (European Commission, 2024[11]; OECD, n.d.[12]). In 2024, this share rose to 58.3% of adopted laws (European Commission, 2025[13]), signalling progress, though still leaving room for improvement. With no formal evaluation system in place, the real contribution of SMEs to the consultations is unknown. The low level of PPCs is linked to Serbia’s legal framework for conducting PPCs, which has remained unchanged since the last assessment in 2022. Notably, Article 41 of the Government’s Rules of Procedure (RoP) mandates reporting on conducted public consultations for all draft laws submitted to the government, while the parliament's RoP do not require the submission of consultation reports (OECD, n.d.[12]). Such discrepancies undermine regular, legally binding public consultations and their consistent impact assessments. They also undermine trust as reflected in the 2024 Balkan Barometer, where 49% of surveyed businesses in Serbia perceived that they cannot trust parliament to scrutinise the government to make it accountable to the public (RCC, 2024[14]).
Another factor undermining trust and the quality of PPCs is the limited timeframes allocated to them. While the legal framework requires early notification of drafting activities and sets indicative deadlines for collecting comments, it does not prescribe a uniform mandatory minimum duration for all consultations. Civil society organisations frequently report insufficient time to provide substantive input (European Commission, 2024[11]), a concern echoed by the business community as well. For example, the Foreign Investors Council criticised the allocation of only nine days for comments on a set of draft bylaws on Competition Law published during the summer of 2024. During the same summer period in 2023, the Ministry of Finance allocated nine days to a consultation on a draft law amending the Public Procurement Law, a policy area with a significant impact on SMEs (see Dimension 5b). The decision to shorten PPC windows and schedule them during summer recess effectively excludes most stakeholders from the consultation process. By contrast, consultations exceeding 20 days, such as the Ministry of Finance’s 2025 consultation on the draft Law on Amendments and Supplements to the Law on Special Procedures for EXPO 2027, suggest a readiness to facilitate constructive engagement and secure higher-quality stakeholder feedback. Consistently implementing the minimum legally binding consultation period, in line with international good practice, is a critical step towards PPC formalisation.
Embedding PPCs within formal structures is key to ensuring continuity, transparency and accountability to SMEs. The Ministry of Economy is well-positioned to lead by example and leverage Serbia’s established business networks. The National Alliance for Local Economic Development (NALED) and the Chamber of Commerce and Industry of Serbia (CCIS) offer strong platforms for dialogue that could serve as institutional anchors. In 2023, NALED’s Grey Book received over 450 SME-generated proposals for administrative reform, leading to 100 recommendations across 17 institutions (NALED, 2025[15]). Similarly, the CCIS played an important role in securing the participation of local businesses in the consultations surrounding the 2023-2027 SME Development Strategy. These consultations also informed the Strategy’s 2024 Action Plan, which foresees the need to build PPC capacity on both the public and the private side. This is key to moving away from an overreliance on donor-driven initiatives, as are the good practice examples outlined so far. To date, international partners have been instrumental in anchoring public-private dialogue, but ensuring national ownership will be critical to long-term institutionalisation.
With the digital transition well underway, unlocking the full potential of public-private dialogue will require public institutions to harness the power of digital tools and existing e-governance infrastructure. Launched in 2021, Serbia’s e-Consultation Portal is a tool that offers an accessible alternative to traditional formats, such as focus groups and roundtables. It has the potential to reach a large number of SMEs, including those in rural areas, and tap into Serbia’s high digital adoption rate (see Cluster 3). In fact, Serbia is the only WB6 economy to have converged with and surpassed the EU average in citizens’ use of the Internet to interact with public authorities, reaching 51.1% in 2022 compared to the EU average of 50.7% (OECD, 2024[16]). Despite the portal’s potential, it was used for only a subset of proposed legislation in 2023, none of which were directly related to SME policy.
The need for the government to improve the business environment, specifically through e-PPCs, was recently underlined in Serbia’s Enlargement Report (European Commission, 2024[11]). The report noted that gaps remain in usability, outreach, and inter-ministerial coordination. On the positive side, the portal has helped keep SMEs informed by providing full online access to primary and secondary legislation, as well as a robust infrastructure in key business areas, such as e-procurement. In addition, the institution that oversees the portal, the PPS, has announced the rollout of a new programme to improve public involvement in local budget design. It is also implementing updates to enable easier content management and faster response time to comments and feedback.
The way forward
Reinforce the financial and institutional foundations of SME policy implementation with the adoption of a new action plan. Serbia is encouraged to leverage the preparation and implementation of the forthcoming 2025-2027 Action Plan to strengthen inter-institutional co-ordination, notably by ensuring the systematic involvement of the Ministry of Finance in the design and financing of SME policy measures. Aligning the scope and sequencing of actions more closely with confirmed budgetary resources would enhance implementation credibility, reduce reliance on ad-hoc donor funding and support more predictable delivery. In parallel, embedding structured dialogue with SME stakeholders into action-plan reviews would improve policy effectiveness and ownership.
Strengthen the resilience and growth potential of Serbia’s startup ecosystem. Serbia may wish to consider complementing existing financial support instruments with targeted measures that reduce dependency on grants and strengthen the commercial sustainability of start-ups. Building on evidence from the 2025 Startup Scanner, policy efforts should focus on improving revenue-generating capacity, expanding access to international markets and strengthening entrepreneurial and financial skills. The Innovation Fund’s Katapult Accelerator Programme provides a strong model combining intensive mentoring with targeted financial support. Scaling similar performance-oriented and expanding their international linkages could further improve start-ups’ commercial readiness and growth potential. Complementary measures could include co-financing for pilot export or market-entry projects to support early internationalisation and revenue diversification.
Enhance the effectiveness and credibility of the SME Test within RIA by introducing regular review and learning mechanisms. Serbia should build on the introduction of the SME Test by consolidating its operational use through a periodic national-level review of its application, modelled on the EU National SME Test Report. Such a review would assess how frequently and at what stage the SME Test is applied, the analytical quality of assessments, and the extent to which findings influence regulatory design and final legislation, helping to identify gaps between formal requirements and practice. By illustrating how SME associations, chambers of commerce and other representative bodies contributed to policy design and how their input was reflected in outcomes, the review would support policy learning and strengthen accountability.
Strengthen the insolvency framework by enhancing the efficiency and effectiveness of bankruptcy proceedings. The government could invest in increasing the capacity of commercial courts and insolvency administrators by providing specialised training and performance monitoring; introduce stricter, enforceable timelines for key stages of proceedings, supported by digital case management tools; and promote pre-insolvency and simplified restructuring procedures for SMEs and startups. In this context, Latvia offers a good example of fully digital insolvency register and court case management system (Box 2.1).
Strengthen the institutional and operational foundations for public-private consultations to ensure consistent SME engagement in the policymaking process. Serbia may wish to consider reinforcing the legal basis for PPCs by ensuring their systematic application across executive and parliamentary procedures for SME-relevant legislation. Greater alignment between the government’s and the parliament’s RoP would help reduce fragmentation and address persistent perceptions of weak parliamentary scrutiny and accountability. At the operational level, the public consultation portal should be established as the default channel for conducting and documenting consultations, supported by clearer obligations to publish draft acts, supporting documents and consultation reports in a timely manner. Assigning institutional responsibility for portal oversight and cross-ministerial co-ordination would improve consistency, reporting quality and follow-up. Taken together, these steps would strengthen transparency, build trust with the business community and address shortcomings noted in the European Commission’s 2024 Enlargement Report.
Latvia has significantly improved the efficiency and transparency of its insolvency framework by introducing a fully digital insolvency register and court case-management system. The Insolvency Register, maintained by the Enterprise Register of Latvia, contains comprehensive, publicly accessible information on insolvency proceedings, administrators and creditor claims. All stakeholders, including courts, insolvency practitioners, businesses and creditors, are required to use the digital platform for case filings, notifications and document submissions. In May 2017, data from the register were linked to the European Union’s e-Justice portal, making insolvency information available across the European Union.
By removing manual bottlenecks, Latvia has shortened average insolvency durations (currently 1.5-2 years), reduced administrative costs and increased predictability for businesses. Introducing a similar fully digital insolvency register and case-management system in Serbia would both speed up bankruptcy proceedings and improve trust among creditors and entrepreneurs by enhancing transparency and accountability.
Source: Latvijas Republikas Uzņēmumu reģistrs (2025[17]).
Ensuring a level playing field in which rules apply equally to all businesses is essential for SMEs, while tolerance for special treatment of dominant or informal firms risks severely undermining the market. SMEs are particularly vulnerable to an uneven playing field, facing disproportionate harm from informal competition, exclusion from public procurement opportunities, and limited access to effective legal and out-of-court remedies.
In Serbia, the 2024 Balkan Barometer showed that 75% of businesses consider informality and unfair competition as barriers to business growth, with 54% identifying them as major or moderate obstacles (RCC, 2024[3]) . Recent assessments by the European Commission reflect a similar picture, noting that Serbia continues to exhibit factors contributing to high levels of informality, including a high tax burden on low wages and limited enforcement capacity (European Commission, 2025[18]). Although Serbia has maintained a solid competition framework in recent years, systemic barriers persist in public procurement due to parallel practices that undermine the level playing field and limit SME opportunities (OECD, n.d.[12]). Meanwhile, Serbian SMEs’ limited access to timely legal remedies compounds these challenges, as awareness of out-of-court dispute settlement remains low despite a relatively well-developed alternative dispute resolution (CEPEJ, 2024[19]). The following section will evaluate the efforts of the Serbian authorities to create a more competitive, transparent and efficient business environment for SMEs by examining the measures adopted to tackle the informal economy, foster fair competition, improve SMEs’ access to public contracts, and ensure timely dispute‑resolution mechanisms.
2.2.1. Tackling informality for a more competitive business environment
Unregistered companies that escape taxation and state regulations are the drivers of the informal economy. They are usually very small in size and turnover, but collectively can be significant for the economy (OECD, 2023[20]). In Serbia, the size of the informal sector has remained unchanged since the 2022 SME Policy Index assessment, sitting at around 21% of its GDP (Ministry of Finance, 2023[21]). The informal economy is mostly composed of unregistered consumption and a growing share of undeclared income, generated primarily by non-registered self-employment and freelancers (FREN, 2024[22]). Serbia has also maintained a significant level of informal employment, estimated at 17.8 % of the employed population in 2024, below the regional average of 20.6%: (ILO, 2026[23]; OECD, 2025[24]). Despite tangible results in reducing the informal economy in the last decade, with the informal sector shrinking from 29.1% to 21.1% of Serbia’s GDP since NALED launched the first National Programme for Combatting the Grey Economy in 2015,3 progress plateaued in recent years, with signs of renewed growth in 2022-2023 (FREN, 2024[22]; NALED, 2025[25]).
The 2015 Programme for Combatting the Grey Economy in 2015 was followed by the 2019-2020 Programme, which built on the foundations of the first, and most recently by the comprehensive Strategy for Countering the Informal Economy 2023–2025 (Box 2.2) (Ministry of Finance, 2023[21]). The strategy is overseen by the Coordinating Body for Combatting the Grey Economy, headed by the Ministry of Finance, and supported by an Expert Group led by NALED.
Adopted in 2023, the Strategy for Countering the Informal Economy 2023–2025 sets the framework for reducing Serbia’s informal economy to around 20% of GDP by 2025. It compounds and solidifies the gains already achieved in previous cycles, while expanding the scope of action through broader coverage of inspections, fiscal relief, simplified registration, and targeted awareness campaigns.
Main measures adopted as part of the strategy
Reforms in inspection oversight: It enforces the nationwide use of the e-Inspector system, now covering 36 out of 43 inspectorates, which standardises inspections and increases efficiency. Furthermore, the strategy maintains the Republic Inspections Contact Center, established in March 2020, as a centralised platform for collecting petitions from both citizens and businesses alike.
Fiscal and labour measures: It commits to further reducing the tax wedge on wages, building on earlier increases of the non-taxable salary threshold (from approximately EUR 127 to EUR 185 in 2023) and contribution rate cuts, which lowered the burden on average wages by about 3.1 percentage points. Furthermore, it foresees the expansion of the Seasonal Workers Portal, an online platform introduced during the previous Programme in 2019, allowing employers to electronically register seasonal employees in just a few minutes, thereby formalising short-term work. While it initially covered agricultural labour, its use will be extended to other sectors prone to informality, such as construction, hospitality, and domestic services.
Awareness-raising through the continuation of national campaigns: Building on five campaigns already implemented (on illegal construction, incentives for legal business, cashless payments, the inspector’s profession, and seasonal worker registration), the strategy provides for new cycles of campaigns directed at citizens, businesses, and the media. These are intended to encourage citizens to demand receipts and pay electronically, to inform employers of the benefits and tools for legal operation, and to strengthen media coverage of the grey economy through specialised training.
Policy impact
Since its launch in 2023, the strategy has been implemented in several areas. The expansion of the e‑Inspector system has enabled increasingly targeted and co-ordinated oversight, resulting in more successful inspections. Additionally, the newly expanded Seasonal Workers Portal significantly increased the number of registered workers, rising from 49 000 in 2022 to approximately 100 000 in 2024, with an estimated EUR 16 million collected in taxes and social contributions in the same year. Raising awareness activities also expanded, for example, through the Uzmi račun i pobedi (Take the receipt and win) website and mobile application, two platforms that serve as tools to publicise formalisation by accepting submissions of fiscal receipts through prize draws, among other activities.
As the strategy is set to conclude its implementation in 2025, NALED and the Ministry of Finance are developing a new programme with a 2030 horizon.
Sources: Ministry of Finance (2023[21]); NALED (2025[26])
Key actions to encourage SMEs to formalise include strengthening inspectorates and misdemeanour court capacity, adjusting the regulatory framework for certain types of non-standard work (such as freelancing, occasional jobs, and self-employment), running awareness campaigns to promote formal businesses, providing financial support (for instance, SME grants for point of sale cashless payment systems), and creating a freelancers’ portal for simplified income reporting. The freelancers’ portal was established in 2023, allowing workers to quickly and easily report earned income and use an online calculator to estimate their tax and social security obligations. This measure is particularly significant given that close to 120 000 self-employed workers in Serbia, or around 29% of total registered self-employed workers, hold freelancer status (NALED, 2023[27]). Importantly, freelancer status has been taken up by groups traditionally dominant in the informal economy, including tradespeople, craftspeople, hairdressers, and information technology consultants who work for both domestic and foreign companies.
While evidence suggests that many of these initiatives have been implemented, an evaluation report for the 2023-2024 Action Plan has yet to be published, and the Action Plan has not been renewed for 2025. Moreover, the Strategy for Countering the Informal Economy 2023-2025 lacks measurable performance indicators and stronger coordination mechanisms among implementing institutions, limiting the ability to assess its impact (FREN, 2024[19]). These gaps raise concerns about policy continuity and highlight the need for sustained political commitment to ensure that long-term informaliy efforts to reduce informality do not lose momentum. Catching up on reporting and evaluation will be essential for Serbia to continue shrinking its informal economy and moving closer to the EU average of 17.2% of GDP (European Parliament, 2022[28]).
While Serbia has developed a comprehensive policy framework to curb informality, the persistence and recent stabilisation of informal activity continue to generate competitive distortions for compliant SMEs by reducing their market share, lowering their profitability and loan repayment capacities (Hlioui, Gabsi and Omri, 2022[29]). The informal status of businesses is also detrimental to unregistered businesses, as it denies them access to finance earmarked for SME scale-ups and innovation, or to help them stay afloat during times of crisis. This was the case during the COVID-19 crisis when Serbia's policy response combined fiscal relief (debt holidays, deferred taxes), guaranteed credit lines, and enhanced business support services such as training and e‑commerce facilitation (OECD, 2022[30]) – which were inaccessible to unregistered businesses. The impact on unprotected workers cannot be overlooked either. A United Nations survey conducted in Serbia during the pandemic found that most respondents working for firms in the informal economy were left without income due to being either furloughed (45.2%) or made redundant (17.5%). Among informal freelancers, over half (54.3%) worked periodically, and 30.4% had no work at all during the state of emergency (FCD, 2020[31]).
In addition to offering incentives available only to formal SMEs, streamlining business registration can encourage businesses to exit informality. The Serbian Business Registers Agency (SBRA) plays a central role in the design and implementation of simplification regulations, which have improved since the last assessment. As of 2023, the company registration process is fully digitalised and available for all company types and processes (e.g. the incorporation of all legal forms of companies, changes, liquidation, issuance of electronic excerpts, etc.). The registration fee has marginally increased since the last assessment, totalling RSD 6 150 (~EUR 52), and payment is done exclusively online. To support users, the SBRA’s website offers information and instructions on business registration procedures and requirements, application forms, templates for supporting documents and a glossary of terms.
Moreover, the government has made significant improvements in reducing informality among gig workers and micro enterprises through tax and legal reforms. Gig workers can legalise their status through simplified self-employment regimes, with options for lump-sum taxation (paušalac) or for standardised income-based taxation. In 2023, the flat-rate taxation scheme for entrepreneurs with the paušalac status was amended to reduce the rate by50% for the first year of operation, making self-employment more predictable and cost-effective, especially during the critical first year of business. Gaining access to social security is another important benefit of switching from informality to a registered micro business.
A challenge that has emerged is ensuring that entrepreneurs do not return to the informal economy or underdeclare income due to the low income threshold. Evidence suggests a potential risk for partial re-informalisation, particularly among medium-sized firms, due to persistently high social contributions on lower wages, among other factors. Currently, the Law on Citizens' Income Tax stipulates that if a paušalac earns more than RSD 6 million (~EUR 51 000) per year, they lose the right to flat-rate taxation. Increasing the threshold to reflect the realities of inflation, which in 2022 and 2023 reached an unprecedented 12% in Serbia, would help resolve the policy dilemma between encouraging formalisation and preventing tax avoidance.
2.2.2. Protecting and monitoring fair market competition
One important aspect of a level playing field is competitive neutrality, which guarantees that no entity operating in the market is subject to distortions in market competition, and that every actor has equal market access, whether it is large or an SME, whether it is public, state-owned or private (OECD, 2024[32]). Since the previous assessment, Serbia has improved its competition framework through continued monitoring activities and increased awareness of anti-competitive behaviour. However, fair market competition in the economy remains constrained by limited advancements in the public procurement market, despite a relatively high presence of SMEs in public tenders. Furthermore, the business environment continues to be affected by a substantial presence of state-owned enterprises (SOEs), which benefit from state-backed loans and financial support, thereby gaining unfair advantages over SMEs and destabilising the playing field.
Serbia’s Law on Protection of Competition (LPC) and the Law on Public Procurement (LPP) are two important pieces of the domestic legal framework that serve distinct roles in maintaining and promoting the level playing field. The LPC aims to safeguard competition by prohibiting anti-competitive behaviour such as collusion and bid rigging, including in public procurement. On the other hand, the LPP governs how public tenders are conducted, ensuring transparency, non-discrimination, and equal treatment of bidders. The Commission for the Protection of Competition (CPC) is responsible for enforcing the LPC, while the Public Procurement Office (PPO) oversees compliance with the LPP.
While the CPC does not have a dedicated SME programme, its mandate is designed to help SMEs overcome barriers in accessing markets and tenders, protect them through a formal complaints mechanism and keep them informed through awareness-raising activities. For example, following the OECD Guidelines for Fighting Bid Rigging in Public Procurement, the CPC published an updated instruction for detecting bid rigging in public procurement in 2022, and a video campaign in 2025 to help detect situations in which it is needed to contact the CPC (CPC, 2022[33]; 2025[34]). CPC’s sector inquiries on the state of competition in different markets are likewise important for SMEs participating in those sectors. In 2024 and 2025, CPC submitted its findings from the inquiries to the government on improving competition in the private health sector, among pharmaceutical companies and pharmacies, retail chains and textbook publishers. In addition, the CPC’s enforcement capacity has improved significantly over the past decade, with staff numbers rising from 39 in 2015 to 60 in 2024 and the budget doubling from EUR 2.7 million to EUR 5.4 million over the same period (CPC, 2025[34]).
With Serbia’s public procurement expenditures growing year after year, from 8.14% of GDP in 2019 to 10.87% in 2024 (Figure 2.1) (Government of Serbia, 2024[35]; PPO, 2022[36]; 2025[37]), public contracts represent an increasingly lucrative opportunity for SMEs to grow their businesses. The PPO plays a central role in improving SME access to these opportunities by monitoring the drafting and implementation of public procurement legislation, providing expert assistance to contracting authorities and economic operators, and managing the digital Public Procurement Portal. The portal enables fully electronic, cost-free procurement procedures, streamlining SME participation. To build SME capacity, the CCIS provides regular training on using the portal and placing successful bids.
Source: PPO (2025[37]).
Efforts to enhance environmental, social and governance (ESG)-compliant procurement have gained traction under the 2024-2027 project funded by the Swedish International Development Cooperation Agency and implemented by NALED, which also launched an e-learning platform in 2023 to train both suppliers and buyers. Additional measures were implemented under the EU-funded Public Finance Management Facility, including the organisation by the PPO of training workshops for public procurement officers, attended by more than 600 participants (PPO, 2025[38]).
Both the PPO and CPC work with the government and international partners to safeguard fair market competition and ensure that public procurement procedures are implemented efficiently and in accordance with high standards of conduct. A breakthrough for SMEs occurred in 2024 when the LPP was amended to expand data collection on the Public Procurement Portal to include data on low-value contracts and purchase orders made under Article 27, i.e. those exempt from the full application of the law because they are below value thresholds.4 This change increased the PPO’s ability to ensure more transparent procurement by shedding light on previously underreported contracts that SMEs are more likely to bid for.
However, despite improvements such as a drop in negotiated procedures without prior publication on the Public Procurement Portal (1.21% in 2024, down from 7.42% in 2020), competition in public procurement in Serbia remains low (see Dimension 5b). The average number of bids per procedure decreased slightly to 2.5 in 2024, and around half of tenders (50.75%) received only one bid. Survey responses collected during the OECD SIGMA 2024 assessment further reinforce these findings, indicating that in 2024, many businesses still refrained from participating due to perceived favouritism or pre-arranged outcomes due to perceived favouritism or pre-arranged outcomes (OECD, n.d.[12]).
Nonetheless, SMEs continue to have a strong presence in the market, receiving 75.82% of contracts by share and 73.41% by value in 2024. This, however, marks a decrease from 2023, when SME participation accounted for approximately 79% of total awarded contracts, driven by a sharp decline in construction-related tenders, underscoring the interdependence of SMEs with public investment cycles. The share of contracts awarded based on the best price-quality ratio, a criterion that generally advantages SMEs due to their ability to differentiate themselves through service quality rather than price, gradually increased to 9.78% in 2024, nearly double the share in 2020 (5%) (PPO, 2022[36]; 2025[37]). However, systemic barriers persist. A key misalignment with the EU 2014 Directive is the continued exemption of large-scale infrastructure projects and contracts from the LPP, authorised under the 2020 Law on Special Procedures for the Implementation of the Project of Construction and Reconstruction of Line Infrastructure Structures of Particular Importance to the Republic of Serbia. This practice undermines SME access to major public contracts and weakens public trust in public procurement.
Protecting fair market conditions requires not only strong competition and procurement frameworks but also balanced allocation of public financial support across market actors. In Serbia, SMEs can benefit from direct financial support to fund their operations and growth, including support for innovation, internationalisation, greening and digitalisation (see Section 2.3.3). However, these resources remain limited and dependent on international donors. According to NALED, 85% of businesses in Serbia are started from personal funds, and 64% rely primarily on retained earnings for further development (NALED, 2025[25]).
In contrast, SOEs receive subsidies that are significantly larger than SME grants and credit lines, sourced from the state budget, and often reward negative returns rather than innovation and profitability (OECD, 2024[16]). In 2024 alone, SOEs were granted nearly EUR 800 million,1% of GDP, despite weak returns, with 14 of the 36 SOEs founded by the Republic of Serbia operating at a loss (Ministry of Economy, 2025[39]). In comparison, between 2001 and 2024, the European Union’s support for innovation and competitiveness in Serbia, including SMEs, totalled EUR 250 million (EIB, 2024[40]). While the Ministry of Economy continues to work on 42 foreseen privatisations (Ministry of Economy, 2025[41]), improving fair market conditions in the short to medium term will require a parallel shift in public spending, away from inefficient SOEs and towards innovation and growth-oriented SMEs.
2.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms
Timely and cost-effective dispute resolution is a fundamental aspect of a level playing field. Yet SMEs are particularly vulnerable to lengthy court procedures due to their limited legal and financial resources and their often-limited knowledge of available ADR mechanisms. Disputes most commonly associated with SMEs are related to unpaid or delayed invoices – the cause of one out of four bankruptcies among SMEs in the European Union alone (European Commission, 2025[18]), as well as intellectual property (IP) infringements, foreign investment and trade issues, public procurement decisions and tax disagreements. In Serbia, judicial inefficiencies remain a key barrier to effective dispute resolution for SMEs, which are most often required to seek justice through one of Serbia’s 16 commercial courts.
Several international institutions have noted inefficiencies in Serbia’s judicial system, such as long delays in cases reaching trial in Serbian commercial courts. Inefficiencies in Serbia’s judicial system have been noted by several international institutions, such as long waiting times for cases to reach trial in Serbian commercial courts. Even though between 2020 and 2024, the total number of pending backlog cases in the commercial courts declined from 3 233 to 1 879 cases, their share compared to the overall caseload remained almost the same, at 2.30 % and 2.14 % respectively (Figure 2.2) (Ministry of Justice, 2021[42]; 2025[43]). This means that the significant reduction in the total backlog of cases is driven by a decrease in the overall caseload and not by improved judicial efficiency. Data for the commercial appellate court follows the same trend – a stable backlog of 8.05 % in 2020 and of 8.60 % in 2024 of the court’s overall caseload. To address the burden of standard proceedings, SMEs benefit from streamlined, shortened procedures for small claims up to EUR 30 000, which allow self-representation. However, a significant limitation of the small claims pathway is that parties have no right to appeal decisions in small-value disputes, even when they are based on incorrect or incomplete facts (Foreign Investors Council, 2024[44]).
Sources: Ministry of Justice (2021[42]; 2025[43]).
According to the European Commission, there is significant scope to raise awareness among both citizens and businesses in Serbia of available ADR mechanisms, including mediation5 (European Commission, 2023[45]). Despite the potential benefits of mediation for SMEs, uptake remains extremely limited in Serbia, accounting for less than 1% of civil court proceedings (OECD, 2024[16]), and its use in commercial disputes is even more negligible. This underutilisation stands in contrast to the institutional capacity already in place – Serbia has almost twice the regional average of mediators per 100 000 inhabitants, at 24.7, compared to the WB6 average of 14 (CEPEJ, 2023[46]).
Furthermore, while the Law on Mediation is yet to be harmonised with the European Union’s, it offers a solid framework for implementation in practice. For example, a mediation settlement agreement is directly enforceable and has the legal force of a writ of execution. Mediators may be chosen from the list of the Serbian National Association of Mediators or from an official registry within the Ministry of Justice. Mediation offers tangible advantages for SMEs, generating estimated cost reductions of 35% to 60%, while procedures that are legally capped at 60 days are, in practice, resolved within 5 to 7 days in most cases (Serbian Chamber of Commerce, 2022[47]; Serbian Chamber of Mediators, 2026[48]). However, without increasing awareness and building trust, mediation is unlikely to reach the firms that need it the most.
Arbitration6 is another flexible, cost-efficient and reliable method of dispute resolution. While some SMEs avoid it, believing it is primarily designed for large, multinational businesses entering high-value disputes, arbitration in Serbia is well-suited to businesses and claims of all sizes. The main arbitral institution in Serbia is the Permanent Arbitration at the CCIS. The second available one is the Belgrade Arbitration Centre. The duration of the arbitral proceeding before the Permanent Arbitration is limited to six months. A key feature relevant to SMEs that significantly shortens proceedings is the rules for expedited arbitration, which apply when the amount in dispute does not exceed EUR 50 000 (Official Gazette, 2016[49]). In this scenario, the duration is 15 days and may be extended to 45 days in exceptional circumstances. Permanent arbitration fees are lower than those of proceedings before the courts, and there is an initial EUR 200 registration fee for the claimant. In line with the good practice established by the International Chamber of Commerce, the Chamber of Commerce of Serbia introduced an online calculator to help predict procedural costs.
The Republic Commission handles public procurement disputes for the Protection of Rights in Public Procurement Procedures, which the LPP designates as the independent first-instance authority for reviewing complaints. The Republic Commission plays a critical role in empowering businesses to challenge irregularities, including late payments and discriminatory specifications. Positively, the average time to Commission decisions has been decreasing, reaching 18.51 days in 2023 (Republic Commission, 2024[50]). While resolving a public procurement dispute through the Republic Commission is open to all bidders, SMEs with limited resources may be discouraged from submitting a claim due to limited guidance for smaller bidders and the relatively high procedural fee that starts at RSD 120 000 (~EUR 1 000). A limitation to keep in mind is that, because the commercial court lacks specialisation in public procurement, appeals beyond the Commission fall under the general administrative court system. This is particularly relevant in cases where the Commission rejects an SME's complaint or where the contracting authority ignores or circumvents a Commission decision in favour of an SME. In these cases, SMEs’ only recourse is to take the case to the administrative court, which can further delay resolution and increase litigation costs.
Infringement of intellectual property rights (IPR) is another source of dispute for SMEs. The primary responsibility for adjudicating IPR disputes lies with the Commercial Court and the Higher Court in Belgrade, which have jurisdiction over disputes related to patents, trademarks, industrial designs, and copyright. In 2024, Serbia’s considerable advancements in reinforcing the IPR framework were noted, most notably with the establishment of a new unit within the Intellectual Property Office (IPO) tasked with consolidating co-operation and improving IPR enforcement (OECD, 2024[16]). Introducing simplified procedures tailored to SMEs, however is, a missing link that would increase access to swift and cost-effective justice for smaller players.7 While there is no designated ADR with exclusive competence in IPR, parties may resort to mediation handled by the Ministry of Justice and supported by the IPO.
The Chamber of Commerce of Serbia also hosts a specialised ADR that is easy for SMEs to access – the Commission for Resolving National Internet Domain Disputes. The procedure is single-instance and lasts 60 days. On the awareness-raising side, the IPO plays a central role, offering SMEs training, guidance materials, and support for understanding how to register and manage intellectual assets. The IPO also participates in the EU-funded IP Helpdesk initiative and, in 2024 alone, held 47 capacity-building events to improve public understanding of IPR and reduce tolerance for infringement (IPO, 2025[51]). One of these events focussed on IP in innovation and supporting SMEs specifically.
The way forward
Strengthen the implementation and monitoring of the framework for combatting the grey economy by ensuring the timely evaluation and renewal of the 2023-2024 Action Plan, alongside further modernisation of inspection practices. Publishing evaluation results and updating the Action Plan would help sustain policy momentum, enhance transparency and reinforce political commitment. At the same time, continued investment in inspection capacity – particularly through the full operationalisation of the e-Inspector system and greater use of digital and risk-based approaches – could improve the effectiveness and consistency of enforcement. Linking monitoring outcomes more closely to inspection priorities would support more targeted compliance efforts and contribute to further reductions in informality.
Align the public procurement framework with the EU 2014 Directive by removing exemptions for large-scale infrastructure projects and contracts from the Law on Public Procurement. Ensuring that all major projects are subject to transparent, competitive procedures would strengthen SME participation in public tenders and reinforce public trust in procurement processes. Revising the 2020 Law on Special Procedures to integrate large-scale infrastructure projects into the standard procurement regime would help address systemic barriers and reduce perceptions of favouritism.
Consider ways to enhance the effectiveness of public spending by gradually rebalancing support towards innovation- and growth-oriented SMEs, while reviewing the scale and objectives of subsidies to state-owned enterprises. Exploring options to redirect part of the resources currently allocated to SOEs towards well-designed, competitive and transparent SME support programmes could help strengthen market efficiency, stimulate entrepreneurship and crowd in private investment. Such an approach would be consistent with the Fiscal Council’s recommendations to rationalise SOE support and contribute to a more level playing field.
Leverage Serbia’s high rate of mediators to mainstream mediation as an SME-friendly alternative dispute resolution mechanism. Committing funds to the targeted promotion of the Serbian Chamber of Mediators among SMEs and business associations would not only benefit small businesses but also lower commercial court backlogs and contribute to Serbia’s EU accession pathway, which calls for the wider application of mediation in line with judiciary reform.
Access to finance is a critical enabler of SME establishment, growth, and resilience, allowing firms to invest in innovation, expand operations, and manage cash flow; limited access can disproportionately constrain smaller businesses compared with larger firms. Overall, following recent policy rate cuts, SME borrowing costs have eased in most OECD Member countries, but they remain above pre-COVID levels. Reflecting still-tight financing conditions, 25 of 39 OECD Member countries recorded a lower share of outstanding SME loan stocks in 2024 than in 2023 (OECD, 2026[52]). Serbia has also been affected by this trend, as in 2024, 21% of Serbian businesses indicated that access to finance is a significant obstacle for their growth, a figure even higher than the Western Balkan average of 17% (RCC, 2024[3]).
Key factors behind this performance include difficulties in accessing corporate credit and the lack of alternatives to bank financing, particularly for SMEs. The government can play a pivotal role in addressing these barriers by facilitating more favourable lending conditions, such as credit guarantees, well-functioning secured transaction frameworks, or streamlined application procedures, which can reduce banks’ risk exposure and encourage lending to smaller firms. Additionally, direct support measures, such as targeted investment grants (e.g., for greening or innovation), can help SMEs strengthen their operations, enhance their competitiveness in response to global challenges, and undertake growth-oriented projects that financial constraints might otherwise limit.
In this context, this section assesses the effectiveness of policies in enabling SMEs’ access to bank finance and alternative financing avenues, as well as the direct financial support implemented to encourage SME establishment, operations and growth.
2.3.1. Incentivising bank lending to SMEs
Access to bank finance is crucial for Serbian SMEs to sustain operations and drive growth. Like its WBT peers, Serbia’s financial system relies heavily on the banking industry, constituting 90.2% of total financial system assets in 2025 (National Bank of Serbia, 2025[53]). The Serbian banking sector is generally well-capitalised, therefore resilient to economic shocks: in June 2025, the core capital adequacy ratio8 was 19.7%, surpassing the euro area (16.1%) (European Central Bank, 2025[54]). The banking sector is also broadly liquid, profitable and compounded by high liquidity assets, with non-performing loans falling to 2.3% of total gross loans in 2025, the lowest level since 2008 (National Bank of Serbia, 2025[53]).
Serbian banks operate within a robust credit infrastructure, supported by a comprehensive asset registration system that includes a nationwide cadastre and a long-standing pledge registration system for movable assets. Serbia has only one credit bureau, managed by the Association of Serbian Banks (ASB) and supervised by the National Bank of Serbia (NBS) and the Data Protection Office. Although it requires a membership fee, the ASB’s credit bureau includes all Serbian financial institutions engaged in credit activities It covers 100% of natural and legal persons, providing comprehensive information for banks’ creditworthiness assessments.
While the banking sector demonstrates relative stability and strength, it continues to fall short in adequately serving business financing needs.9 Difficulties arise from rising borrowing costs driven by tighter monetary policy and heightened macroeconomic uncertainty. In line with the surge of inflationary pressures from 2022, average lending interest rates for non-financial businesses jumped from 4.7% in 2019 to 7.9% in 2024 (National Bank of Serbia, 2025[55]). Outstanding loans from commercial banks sharply decreased from 44.3% of GDP in 2019 to 33.1% in 2023, while having been stable at 33% in 2024 (International Monetary Fund, 2025[56]), a level remaining below the Western Balkan average of 42.6%. SMEs have been particularly affected, as their share of total outstanding commercial bank loans fell from 36.2% to 30.7% in 2024 (International Monetary Fund, 2025[56]), below the WBT average of 35.5% (Figure 2.3).
Notes: The WBT average excludes Montenegro due to insufficient data.
The EU-27 average has not been reported due to insufficient data coverage across economies.
Source: International Monetary Fund (2025[56]).
Combined with tighter credit conditions and the detrimental effects of uncertainty on investment projects, these structural challenges have further exacerbated SMEs' access to bank finance. One major barrier is the stringent collateral requirements adopted by banks. In 2024, 43.2% of firms in Serbia were required to provide collateral for a new loan, up from 37.2% in 2022 (OECD, 2026[52]) . The use of stringent collateral requirements by Serbian banks for SME lending originates from challenges regarding collateral enforcement and liquidation processes (Statovci et al., 2023[57]). Notably, the absence of simplified insolvency procedures for SMEs, such as fast-track proceedings or lighter requirements for restructuring plans, can raise expected recovery costs and, in turn, banks’ perceived credit risk. This is compounded by the high transaction costs of assessing SME creditworthiness, which reinforce collateral-based lending and increase the share of SMEs required to pledge collateral to mitigate risk. These factors are reflected in higher borrowing costs for SMEs than for large firms (5.1% vs. 3.1% in 2022) (OECD, 2024[58]). Moreover, Serbia has not yet fully digitalised liquidation proceedings, resulting in costs for creditors during the seizure of collateral. The absence of e-auctions and e-distribution mechanisms during liquidation procedures hinders the resolution of potential conflicts between creditors and debtors, thereby providing another incentive to increase collateral requirements.
Finally, despite prudential incentives by the National Bank of Serbia (NBS) to support SME lending10, policies to compensate for SMEs' lack of collateral, such as a national-level public credit guarantee scheme (CGS), are largely absent in Serbia. At the time of writing, Serbia lacks a sizeable CGS capable of structurally improving SME access to bank finance, as existing initiatives remain very limited in scale, not exceeding 0.1% of GDP in 202411 (Table 2.1), a level substantially below the majority of OECD Member countries (OECD, 2026[52]).
Note: WB EDIF: Western Balkans Enterprise Development & Innovation Facility. Active credit guarantee schemes also include the EBRD’s HI-BAR program, the EBRD’s Risk sharing for ESG projects program, the EBRD’s Credit Enhancement of Green Bonds, the EBRD’s Growth for All program, KfW’s MSME Guarantee Platform, the EBRD’s Digital Transformation Platform Guarantee and the EU-KfW Western Balkans Guarantee – Supporting Entrepreneurs’ and MSMEs’ Resilience program. For more details, see Western Balkans Investment Framework (2026[59]).
Sources: 1. Garancijski fond AP Vojvodine (2025[60]); 2. EIF (2024[61]); 3. EIF (2025[62]).
2.3.2. Providing alternatives to bank finance to SMEs
In addition to ensuring an adequate supply of bank credit, governments should enable SMEs to diversify their sources of external financing to support growth, including emerging digitally enabled alternatives such as crowdfunding (OECD, 2025[63]). Overall, Serbian SMEs can rely on only a limited number of alternative funding sources, such as banks, for their operations.
Established SMEs in Serbia have limited access to capital markets for financing investment. Overall, equity and bond markets in Serbia have lost momentum over the past few years. The Belgrade Stock Exchange's (BELEX) market capitalisation has substantially declined, reaching only 5% of GDP in 2024, which is half it was in 2018 (CEIC, 2025[64]) and far below the EU average of 61.3% (Figure 2.4). While the absence of SMEs from the BELEX may be due to regulatory requirements that increase listing costs,12 a key constraint is that capital markets, particularly the corporate bond segment, remain largely non-functional, with limited issuance even by larger corporates. This lack of deal flow prevents investors from gradually building a pricing curve, thereby limiting demand for SME instruments. Although the regulatory framework permits the registration of a multilateral trading facility as an SME growth market, the first SME bond issuance did not occur until June 2025, and no SME has been listed as of February 2026. These constraints are compounded by the absence of a corporate credit-scoring/ratings provider, which makes credit risk harder to assess and further reduces the attractiveness of SME issuances, given their shorter track records.
Note: The WBT average does not include Albania and Kosovo, as no stock market operates in these economies.
Source: CEIC (2025[64]).
To further develop its capital markets and make them a more viable source of external finance for SMEs, Serbia started cooperating with the World Bank on the project "Catalysing Long-Term Finance through Capital Markets, in line with its Capital Market Development Strategy 2021-2026. Launched in 2023, the programme supports the implementation of the Capital Market Law through a set of complementary actions, including strengthening the administrative capacity of the Serbian Securities Commission and the Ministry of Finance and preparing the market for a corporate bond issuance in 2025. These efforts culminated in a tangible milestone in April 2025, when Elixir Group completed an RSD 4.1 billion (~EUR 35 million) green corporate bond primary sale on 8 April 2025, marking the first primary trading of a financial instrument on the Belgrade Stock Exchange in 13 years.
Early-stage businesses also face very limited alternatives to bank finance for funding their investments. Private equity and its riskiest form, venture capital, are slow to take off in Serbia, constraining start-ups' ability to scale up due to insufficient investment capital. Expressed in purchasing power parity in 2021 prices,13 available data for venture capital indicate that total invested volumes reached EUR 24.0 million in 2023, which remains far below the 2016 peak at EUR 134.2 million, and is also lower than neighbouring economies such as Bulgaria (EUR 143.1 million) or Slovenia (EUR 57.9 million) (Dealroom, 2025[65]). One barrier to this development could be that the legal framework governing private equity and venture capital, established in 2020 with the Law on Alternative Investment Funds, may have been too restrictive, limiting individual investments to up to 30% of the alternative investment fund’s value, thereby reducing the number of potential investors in Serbia.
The adoption of the draft Law on Amendments and Supplements to the Law on Alternative Investment Funds in 2024 is a step in the right direction, as it aims to increase the number of potential private equity investors by raising the individual investor investment ceiling to 49%.14 It is also worth mentioning that dedicated programmes support the establishment of venture capital funds: funded by the Innovation Fund, the Serbia Ventures Program, the Serbia Ventures Biotech Program, and the Serbia Ventures AI Program, have supported the establishment of three venture capital funds-two of which were operational as of February 2026, while one was still in the process of being established (Innovation Fund of the Republic of Serbia, 2025[66]).15 For each venture capital fund created, the Innovation Fund has invested EUR 5 million, provided that the fund has already raised or received investor guarantees for the collection of at least the same amount (see Table 2.2).
Notes: The data for the private capital raised and the number of private investors refer to the end of 2024.
Kolo Ventures is still in the process of being established.
Source: Innovation Fund of the Republic of Serbia (2025[66]).
Another avenue for accessing finance is crowdfunding, which can be particularly useful for early-stage businesses, but remains underutilised in Serbia. Crowdfunding constitutes a way to make the most of diaspora’s financial transfers, which are significant in the case of Serbia, as remittance inflows accounted for 6.4% of GDP in 2024 (World Bank, 2024[67]). Serbian SMEs cannot fully realise the potential of diaspora financial transfers to fund their investments, as a more systematic, government-backed approach is lacking, including a dedicated legal framework governing crowdfunding activities.16 To develop this activity, the National Bank of Serbia has been developing a draft Law on Crowdfunding since 2024, with the objective of aligning the future regime with the EU acquis. The drafting process has continued into 2025, but no clearly defined timeline for completion, adoption or implementation has been communicated.
Factoring and leasing are the most widely used non-bank financing options by Serbian SMEs. Factoring volumes have recently increased, making it a more viable financial option to alleviate SMEs' liquidity constraints. In 2023, factoring volumes accounted for 2.8% of GDP, more than double the level in 2019 (1.35%), but still far from the EU average of 11.9% (FCI, 2024[68]). Factoring in Serbia has become particularly popular among exporting businesses, enabling them to obtain funds to finance new orders quickly and reducing the risks associated with international transactions. However, challenges hinder further development. These include unclear rules on electronic signatures and enforcement due to misalignment between the Factoring Act and the Law on Electronic Documents, which causes uncertainty and delays in court proceedings; limited awareness among businesses of the benefits and opportunities of factoring; and the absence of safeguards against double financing of invoices or reliable mechanisms to assess debtor creditworthiness, an issue especially relevant for SMEs with limited financial records (Foreign Investors Council, 2024[44]).
The legal framework for leasing has experienced little change in recent years, except for the NBS’s October 2022 decision, which eased conditions for leasing farm equipment. In the meantime, leasing volumes reached 2.1% of GDP in 2024 (National Bank of Serbia, 2025[69]), a level comparable to the EU average of 2.05% in 2023 (Leaseurope, 2024[70]). The development of leasing in Serbia has primarily enabled businesses to reduce investment in vehicle acquisition. In 2023, the financing of passenger vehicles and freight vehicles, minibuses, and buses accounted for 78.0% of financial leasing and 99.0% of operational leasing (National Bank of Serbia, 2023[71]), enabling businesses to invest their capital in acquiring other assets.
2.3.3. Providing direct financial support to SMEs’ operations and growth
When SMEs face difficulties accessing external finance, public support can step in by providing targeted funding to sustain their establishment and operations, foster growth, and enable long-term investments. In the context of growth, such support is particularly important for facilitating internationalisation (expanding into foreign markets and integrating into global value chains), driving innovation and productivity improvements, and enabling SMEs to leverage green and digital transitions. By addressing these strategic areas, targeted financial support not only strengthens firms’ competitiveness domestically but also enhances their resilience and long-term growth potential.
In Serbia, direct funding programmes primarily focus on supporting the establishment of SMEs, though their size remains modest as eligibility is mainly restricted to underserved groups, such as women, the youth or long-term unemployed individuals (see Cluster 4). In line with its Strategy for the Development of the Startup Ecosystem 2021-2025, Serbia also provides targeted support for start-up creation (Table 2.3).
For the growth phase, Serbia implements several schemes providing targeted financial support for SME internationalisation, covering both export promotion and integration into global value chains (Table 2.3). Substantial incentives for innovation complement this support (Table 2.3), together strengthening the foundations for SME growth.
Notes: Other initiatives include the Small Business Support Programme for Equipment Procurement, the EBRD’s Western Balkans Women in Business and Youth in Business programmes, the Italian Deposits and Loans Fund’s Sustainable Access to Finance for Entrepreneurship program, the EIF’s and the German development bank KfW’s European Fund for Southeast Europe S.A. SICAV-SIF fund, KfW’s EU Market Creation Facility, the EBRD’s Green Economy Financing Facility, the EBRD’s Risk sharing for ESG projects, the EBRD’s Credit Enhancement of Green Bonds, the EBRD’s Global Green Bond Initiative, the KfW’s MSME Guarantee Platform, the EBRD’s Enterprise Expansion Fund, the EBRD’s Single Market Ready program, the EBRD’s Growth for All program, the EBRD’s Direct Financial Framework, the EBRD HI-BAR program, the EIF and KfW Green for Growth Fund, the International Finance Corporation (IFC) Western Balkans Climate Programme, the EBRD’s Digital Transformation and the Council of Europe Development Bank’s Green Finance for Inclusion program. More details are available on Western Balkans Investment Framework (2026[59]).
While not mentioned in the table above, the Development Fund of the Republic of Serbia also runs the following grant programmes: “Financial support program for the placement of honey and other bee products” and the “Economic Development Program for Municipalities with extremely negative demographic trends in 2025”.
Sources: 1: Information provided by the Innovation Fund of the Republic of Serbia to the OECD for this assessment; 2: Government of Serbia (2024[72]); 3: Government of Serbia (2025[73]) and information provided by the Government of Serbia to the OECD for this assessment; 4: Information provided by the Government of Serbia to the OECD for this assessment; 5: Development Fund of the Republic of Serbia (2025[74]) and information provided by the Government of Serbia to the OECD for this assessment; 6: Serbian Entrepreneurship Foundation (2025[75]); 7: Development Fund of the Republic of Serbia (2025[74]) and information provided by the Government of Serbia to the OECD for this assessment; 8: Innovation Fund of the Republic of Serbia (2025[76]); 9: Western Balkans Investment Framework (2026[59]); 10: Development Agency of the Republic of Serbia (2025[77]); 11: AOFI (2025[78]); 12: EBRD (2025[79]); 13: (Government of Serbia, 2025[80]); 14: EBRD (2025[79]); 15: Western Balkans Investment Framework (2025[81]); 16: EBRD (2025[79]); 17: European Commission (2024[82]); 18: Tasic and Partners (2025[83]); 19: EBRD (2025[84]); 20: EIB (2025[85]).
The Innovation Fund of Serbia is the leading public actor supporting SMEs’ expenditure on research and development (R&D, providing assistance at various stages of development and constituting Serbia’s flagship policy tool for SME innovation.17 Its portfolio is comprehensive, covering both the early and later stages of the innovation process, and it also fosters collaboration between businesses and research institutions.
However, SME innovation efforts have been declining in recent years. SMEs’ business expenditure on R&D (BERD) amounted to EUR 141.4 million in 2023, broadly unchanged in nominal terms from 2019 (EUR 138.7 million), but representing a real-term drop of more than 30% over the period. The SME contribution to Serbia’s BERD has also substantially weakened, from 86.0% in 2019 to 49.3% in 2023 (Eurostat, 2025[86]) (Figure 2.5).
Source: Eurostat (2025[86]).
In terms of overall impact, the Innovation Fund’s support has primarily supported commercialisation-oriented, incremental innovation (Particip GmbH, 2024[87]), suggesting a limited impact on SME BERD. Moreover, implementation frictions reported by Innovation Fund beneficiaries, particularly administrative bottlenecks in approval procedures and resulting delays in grant disbursement (Particip GmbH, 2024[87]) , may have dampened take-up and reduced the Fund’s ability to stimulate additional SME BERD, particularly start-ups and early-stage SMEs with limited financial resources. Finally, the decline of SME BERD could also be attributed to the general worsening of their financial capacities: as of 2023, Serbian SMEs only funded 2.5% of their BERD (Eurostat, 2025[88]), compared with 27.1% in 2019.
The Innovation Fund is one of Serbia’s key public instruments supporting SMEs’ digital transformation. Aligned with the Industrial Policy Strategy 2021–2030, its mandate contributes to the strategy’s first specific objective of improving the digitalisation of industrial business models by expanding access to finance for the digital transformation and innovation, including through support for the development of venture capital funds. (Innovation Fund of the Republic of Serbia, 2025[76]). Already extensive, these efforts are further supported by a growing range of grants, credit lines and services offered by the Development Fund, and the CCIS (see Cluster 3 for more details).
Whereas SMEs’ digital transformation efforts benefit from extensive direct financial support, comparable government instruments for greening remain limited, with SMEs relying mostly on donor-driven financing. At present, no SME-specific financial incentives are dedicated exclusively to greening,18 although two grant programmes implemented by the Ministry of Economy, the Small Business Support Programme for the Purchase of Equipment and the Development Chance Programme, include components relevant to green investments (see Cluster 2 for more details).
The way forward
Create a scalable national credit guarantee scheme to reverse the recent decline in SMEs’ access to finance. Such a policy tool would primarily address the barrier posed by insufficient collateral, while also reducing commercial banks’ risk exposure and thereby providing strong incentives for SME lending. It could be oriented towards investment priorities, such as SMEs’ green transition (see Box 2.3). A centralised scheme could furthermore prove more efficient than the current multitude of small programmes supporting SME access to finance, many of which may benefit from limited awareness among SMEs.
Strengthen early-stage finance for innovative SMEs by combining a clear legal framework with proactive market-building tools. Serbia should continue to expand existing public initiatives, particularly those led by the Innovation Fund, that mobilise private capital through venture capital and co-investment mechanisms, while closing remaining seed-stage gaps by adopting dedicated rules for business angel networks and crowdfunding platforms. Public actors such as the Development Fund could complement these efforts by co-investing alongside angel syndicates and other early-stage investors to broaden outreach and crowd in additional private capital.
Develop an SME-friendly route to capital markets by introducing a proportional listing and disclosure regime, and hands-on compliance support, in line with the Capital Market Development Strategy 2021–2026. Beyond having a dedicated legal framework in place, Serbia could create an SME market segment with lighter, standardised reporting requirements and private regulators (“Nomads”) to guide SMEs through admission and then support ongoing compliance. Complementary measures could include time-bound fiscal incentives for SME listings and issuances, as well as SME-focused rating coverage, to strengthen investor confidence.
To simultaneously support SMEs in accessing bank finance and investing in the green transition, Finland has developed the Finnvera SME Credit Guarantee scheme (Finnvera, 2025[89]).
The facility supports Finnish companies advancing renewable energy sources, improving energy efficiency, promoting sustainable material usage, and facilitating the transition to a circular or low-emission economy. Finnvera’s SME guarantee covers up to 80% of the loan value contracted with partner commercial banks, with a minimum guarantee of EUR 10 000 and a maximum of EUR 200 000 per enterprise. At the end of 2024, the scheme had reached 4.6% of Finnish SMEs (European Association of Guarantee Institutions, 2025[90]).
In terms of economic impact, the guarantees substantially increase SMEs’ turnover and employment within one to two years (European Association of Guarantee Institutions, 2025[90]). A cost-effectiveness analysis further estimates that each job created corresponds to roughly EUR 174 000 in guaranteed financing, while the scheme remains fiscally positive for the public sector due to low credit loss rates and higher tax revenues from business growth.
Serbia could draw on this experience by establishing a centralised credit guarantee scheme tailored to SME needs and explicitly linked to green transition investments. Drawing on Finland’s model, such an instrument would address SMEs’ persistent financing constraints, channel private bank lending into sustainable projects, and be cost-effective given the expected fiscal returns from SMEs’ additional growth.
Sources: European Association of Guarantee Institutions (2025[90]); Finnvera Group (2025[91]).
Support services for SMEs “are a common policy tool for supporting business productivity, growth and survival”, typically including “business advice, consultancy, coaching, mentoring and management training to start-up entrepreneurs and SME managers” and, in many OECD Member countries, are combined with financial measures “in the expectation of positive synergies”. Evidence shows that such services, when systematically designed and targeted, help SMEs overcome information gaps and capability constraints that limit innovation, competitiveness and internationalisation (OECD, 2021[92]).
In Serbia, SME support has been placed firmly on the policy agenda, with resources increasing and the institutional framework expanding to encompass a broader mix of financial and advisory instruments (European Commission, 2024[11]). The overall direction reflects a shift from fragmented interventions toward a more structured, lifecycle-oriented approach that seeks to address both operational needs and longer-term growth ambitions. This includes laying the foundations for scaling, internationalisation and adaptation to the digital and green transitions, which are central to the economy’s evolving SME support framework (Government of Serbia, 2023[93]).
This section therefore assesses the overall quality, efficiency and effectiveness of the provided business support services (BSSs), distinguishing between foundational BSSs and more advanced instruments aimed at SME expansion, internationalisation and upgrading.
2.4.1. Foundational SME business support services
BSSs are guided by the recognition that institutional bottlenecks constrain SMEs from realising their full economic and social potential and are therefore designed to unlock productivity, growth, and competitiveness across the sector.
In Serbia, this recognition has been translated into a progressively more articulated policy framework for SME development and BSSs. The SME Development Strategy 2023-2027, along with its Action Plan 2023-2024, demonstrates a clearer understanding of SME needs and provides the overarching framework for BSS reform, structured around four pillars: entrepreneurial ecosystem, innovative/green/digital development, competitiveness, and inclusiveness. The updated framework signals a strengthened commitment to support SMEs across their entire lifecycle, with a marked rise in funding: total SME support increased from RSD 826 million (~EUR 7 million) in 2022 to RSD 4 billion (~EUR 34 million) in 202419 (Government of Serbia, 2023[93]), largely directed towards business infrastructure. However, implementation data indicate that this target was not fully met. In 2024, actual spending for BSS infrastructure development amounted to RSD 2.12 billion (~EUR 18 million), of which only part was directed to SMEs20 (Government of Serbia, 2024[94]; 2025[95]). In parallel, dedicated budget lines of around RSD 44 million (~EUR 376 000) annually, together with the EU Instrument for Pre-accession Assistance (IPA), GIZ and other donor co-financing, are directed primarily towards strengthening the institutional framework for SME policy implementation rather than providing direct support to enterprises. Funding has been used for activities such as staff training in public administration and accredited regional development agencies (ARRAs), the preparation of guidelines and reports, portal maintenance, and structured dialogue with SMEs (Government of Serbia, 2023[93]). However, implementation has been uneven, with some planned activities delayed or not implemented, limiting the tangible impact of these investments on SMEs. While this marks a notable expansion, the 2025 EU Progress Report stresses that the overall budget for SME and entrepreneurship support remains modest, suggesting that Serbia’s growing ambitions are not yet fully matched by financial capacity (European Commission, 2025[96]).
In line with this, monitoring results show that much of the increased funding has reinforced existing programmes from the previous strategy cycle, particularly the Standardised Set of Services (SSU), while the rollout of new or advanced services has progressed slowly, limited by administrative and capacity constraints (Government of Serbia, 2023[93]). Although the strategy offers a clearer division of roles and responsibilities among key actors, fragmented institutional mandates and limited co-ordination continue to weaken the coherence of support delivery.
These implementation arrangements are reflected in patterns of service uptake. Foundational services continue to dominate uptake within Serbia’s expanded SME support framework, reflecting a system dominated by traditional instruments despite a strengthened strategic framework. Equipment procurement schemes exceeded targets by 283%; dual education placements increased from 700 to 950 businesses; and export promotion measures slightly surpassed initial expectations, by an estimated 15-25% (Government of Serbia, 2024[94]; 2025[95]) (see Cluster 4). By contrast, more advanced services aimed at upgrading and scaling remain underused: ESG training programmes saw only 32% of interested businesses complete the courses, and digitalisation initiatives are still in the early stages of rollout. This pattern of demand is closely linked to the limited and ad hoc engagement of private business support providers, a structural weakness previously highlighted by the OECD (2022[30]). While Serbia benefits from several mechanisms that connect SMEs with external expertise, including donor-supported advisory programmes such as SME Hub and subsidised advisory services implemented by international partners, these remain largely project-based and are not systematically embedded within the public BSS framework. Formal channels, such as voucher schemes, accreditation procedures, or performance-based contracts, remain limited. As a result, specialised private advisory capacity is not systematically connected to the broader SME population, particularly firms that may not be able to access such services independently. This reliance limits diversity within the support system and hampers its ability to respond dynamically to evolving SME needs.
These structural constraints in service composition and delivery capacity are further reflected in the geographical reach of support, which, while broad on paper, remains uneven in practice. ARRAs and RAS formally provide nationwide coverage, and their capacities have been strengthened through initiatives such as training for over 50 ARRA staff and the certification of 14 mentors in 2023 (Government of Serbia, 2025[95]). Complementing this, digital tools, the SME Hub, the revamped Entrepreneurship Portal, and the Responsible Business Hub launched in 2023, were intended to level the playing field by offering information, training, and compliance resources online. Yet engagement with these portals remains limited, particularly among SMEs in underserved areas, where awareness and digital readiness are weaker. Outreach campaigns have been delayed in several regions due to staffing and funding gaps, and there is no consistent monitoring in place to ensure that businesses in less-developed areas receive timely and comparable support.
Underlying these challenges in service mix and territorial delivery is a persistent weakness in Serbia’s BSS ecosystem: the absence of a systematic, economy-wide training-needs assessment (see Cluster 4). While the SSU programme collects annual feedback that provides partial insight, there is still no comprehensive diagnostic tool to capture sector-specific or stage-specific needs. This gap has direct consequences: the absence of detailed, sector-specific diagnostic tools and the postponement of the planned national employer survey to the second half of the strategy (Government of Serbia, 2024[94]; 2025[95]) has delayed progress toward evidence-based service design, constraining the system’s ability to match SMEs with the types of advanced services most relevant to their growth trajectory or innovation readiness, and pointing to broader systemic weaknesses in analytical and evaluation capacity across institutions responsible for SME policy.
These diagnostic gaps are mirrored in Serbia’s monitoring and evaluation frameworks, which further illustrate the system’s current limits. While reporting mechanisms comprehensively track outputs, such as the number of businesses reached or training sessions delivered, they provide little insight into whether these interventions improve competitiveness, resilience or long-term survival. For example, reports on the RAS export promotion programmes are not published, limiting further monitoring and evaluation (OECD, 2024[16]). The 2023-2024 Action Plan set a target to support 2 980 women- and youth-led businesses, yet the monitoring reports provide no disaggregated data to verify the outcomes of that support (Government of Serbia, 2023[93]). The absence of structured mechanisms for gathering business feedback or commissioning independent evaluations undermines opportunities to refine and adjust services in line with SME needs.
2.4.2. Support services for SMEs’ expansion and growth
The business infrastructure for SME expansion in Serbia is receiving greater strategic attention, underpinned by the SME Development Strategy 2023-2027, which recognises the importance of helping businesses grow, scale operations, innovate, leverage green and digital transitions, and compete in both domestic and international markets. However, the development and implementation of advanced support services is slowed down by administrative and institutional bottlenecks. While more assistance is available, much of it has a strong focus on continuing existing programmes, and efforts to introduce new, growth-oriented services have faced delays.
Within this landscape, innovation-oriented BSSs represent a key entry point for more advanced SME growth trajectories, particularly for firms seeking to upgrade capabilities, adopt new technologies, or move into higher value-added activities. Serbia has developed a solid foundation of BSSs to foster SME innovation, anchored in a network of 19 business incubators and 10 accelerators, primarily located in Belgrade and major university centres such as Novi Sad, Niš, and Kragujevac, in line with the Strategy for the Development of the Startup Ecosystem 2021-2025. However, two caveats remain. First, Serbia has not yet developed comprehensive technology-extension services, as the only existing infrastructure in this area, the Center for Digital Transformation, focusses solely on digital innovation, leaving a gap in broader innovation support services for established SMEs. Second, regular monitoring and impact assessments of the effectiveness of existing BSSs in fostering innovation are not yet systematic, indicating scope to strengthen understanding of the broader ecosystem’s impact on business innovation.
Building on innovation and upgrading support, internationalisation has emerged as a central pillar of Serbia’s SME competitiveness agenda. The updated strategic framework explicitly identifies internationalisation as a cross-cutting policy priority, embedding measures on export promotion, standards alignment and business networking. Within this context, RAS dedicates the majority of its operational focus to export promotion, allocating 57% of its SME budget to export-related programmes, reflecting a deliberate policy shift to position internationalisation as a central lever of SME competitiveness (Development Agency of Serbia (RAS), 2024[97]). However, the effectiveness of this approach is constrained by the limited integration of support for green and digital transitions into growth- and export-oriented schemes. Although programmes addressing digitalisation and sustainability exist (see Clusters 2 and 3), they are not yet systematically integrated into growth support schemes, and firms often face barriers in accessing these services due to limited guidance, low awareness or insufficient follow-up. As a result, outreach remains uneven. Export support continues to primarily benefit established exporters, while first-time and smaller firms continue to face barriers to entry. Only 20% of Serbian businesses report being very likely or rather likely to extend activity into new foreign markets, underscoring persistent hesitancy and barriers to internationalisation (RCC, 2024[3]). Donor-backed initiatives, such as the Responsible Business Hub (see Cluster 2), have begun addressing sustainability compliance and EU market requirements, yet progress in digitalisation remains slow. Support for green exports, sustainability certification, and digital trade tools remains limited, leaving many firms underprepared for emerging global market standards despite alignment with the Smart Specialisation Strategy (see Clusters 2 and 3). Without stronger co-ordination, more targeted outreach, and clearer alignment with firms’ growth trajectories, Serbia risks underutilising its expanding internationalisation support infrastructure.
Against this backdrop, early outcome indicators nonetheless point to growing momentum. Serbia’s export support portfolio has broadened, participation in international fairs has consistently exceeded planned uptake, and total SME export value has risen steadily in recent years, from EUR 6.5 billion in 2019 to EUR 10.2 billion in 2023 (Government of Serbia, 2024[94]; 2025[95]). This growth has enabled SMEs to sustain their share of around 37% of total exports, in contrast to the downward trend observed across the WBT region, although this remains below the regional average of 47.6% in 2022 (Figure 2.6). (Government of Serbia, 2024[94]; 2025[95]). In parallel, sectoral export data indicate a sizeable volume of SME activity linked to indirect exports. In 2024, SMEs in wholesale and retail trade, transport and business-related services accounted for around 36% of total SME export value, reflecting their role as intermediaries, logistics providers, and service suppliers within export-oriented value chains (SORS, 2026[98]).
Notes: The WBT average does not include Kosovo as no data are available for 2022. The WBT average does not include Montenegro as no data for this indicator are available.
Sources: Eurostat (2025[99]), OECD (2022[30]; 2019[100]). Additional data for Albania from INSTAT (2024[101]) and information provided by the government for this assessment. Additional data for Bosnia and Herzegovina from Agency for Statistics of Bosnia and Herzegovina (2020[102]; 2023[103]; 2024[104]) and European Commission (2025[13]). Additional data for North Macedonia from MAKSTAT (2024[105]; 2024[106]). Additional data for Serbia from SORS (2025[1]).
The positive export dynamics have translated only gradually into deeper SME integration into global value chains. Serbia’s ability to attract foreign direct investment (FDI) has strengthened considerably: net FDI inflows reached a record EUR 4.6 billion in 2024 (Government of Serbia, 2023[93]), representing a marked increase compared with the mid-2010s, when Serbia attracted around EUR 1.7-2.0 billion annually in net FDI between 2014 and 2016 (World Bank, 2026[107]). This increase is also reflected in Serbia’s FDI index score, rising to 430.4 in 2020–2023 placing it well above the EU average (OECD, 2025[24]). Yet these inflows have produced only limited spillovers into SME supplier networks. Relatively few firms have secured multinational contracts, and while the Supplier Development Programme (SDP) has been renewed to support projects and facilitate new linkages, uptake remains narrow (OECD, 2024[16]). Planned digital matchmaking tools and a supplier database have yet to be fully operationalised, constraining efforts to systematise SME-multinational enterprise (MNE) linkages. Similarly, although cluster development is recognised as a means of enhancing SME competitiveness, most initiatives remain donor-driven and lack long-term funding and performance-tracking mechanisms, limiting both scalability and the ability to assess longer-term impact (Cluster 2).
The way forward
Accelerate comprehensive training-needs assessment and evidence-based service design. Serbia’s BSS system still relies on fragmented feedback (e.g. SSU surveys) rather than systematic diagnostics, while the national employer needs survey has been postponed to 2025. Accelerating this effort in the second half of the SME Development Strategy 2023-2027 rollout will be critical to ensure that advanced services (digitalisation, ESG, export readiness) are aligned with SMEs’ actual needs. International experience from Thailand shows that embedding diagnostics and co-ordinated referrals into service delivery can significantly improve service relevance, uptake and evidence-based adjustment over time (Box 2.4). Embedding these services within a structured monitoring and evaluation system that tracks gains in competitiveness, survival rates, and scaling outcomes will enable policymakers to adjust or phase out underperforming programmes.
Strengthen integration and regional equity across business support service delivery. Although funding for non-financial measures has grown significantly, fragmented institutional mandates and uneven regional access limit impact. Formalising co-ordination mechanisms between RAS, ARRAs, the Chamber of Commerce and line ministries would reduce duplication and improve service coherence. Addressing staffing and outreach gaps across Serbia is essential to ensure that SMEs in less-developed areas have access to the same quality of advisory, mentoring and training.
Strengthen the role of private business support providers through formal integration and quality standards. Serbia’s BSS ecosystem remains dominated by public delivery channels, with private providers engaged only intermittently as subcontractors within state or donor-funded programmes such as the SSU. There is no national accreditation or quality assurance system for private consultants, and mechanisms like voucher schemes or competitive contracting are absent, leaving SMEs without clear, reliable pathways to specialised expertise in areas such as export certification, IP, ESG compliance, or advanced digitalisation, where international impact evaluations show that outcomes are highly sensitive to provider quality (OECD, 2023[108]). Formalising standards and accreditation, alongside piloting demand-side tools that enable SMEs to select from qualified private providers, would diversify expertise, improve service quality, and ease the pressure on public agencies to deliver all non-financial support. Experience from Poland shows that accreditation combined with a transparent provider database can create a competitive, quality-assured advisory market, giving SMEs more choice while ensuring accountability for public funds (Box 2.5).
Intensify efforts to include dedicated first-time exporting SME programmes. While RAS is currently developing a dedicated programme for first-time exports, it will be important to scale support packages covering fair participation, certification costs, and basic market-entry training and other support measures. Success should be measured by the number of first-time exporters supported and the share of exports from SMEs that have newly begun exporting.
Strengthen sector-focussed supplier upgrading within the Supplier Development Programme. While the SDP has supported diagnostics and a limited number of contracts, uptake is concentrated in automotive, machinery, and plastics, leaving other priority sectors (electronics, furniture, agro-processing) underrepresented. Serbia should launch sector-specific SDP calls co-designed with multinational investors, explicitly tying eligibility to investment projects that receive state support. Each call could earmark a set number of SMEs per sector (e.g. 20 for automotive and 15 for electronics) to undergo targeted standards upgrades, including International Organization for Standardization (ISO), International Automotive Task Force (IATF), and International Railway Industry Standard (IRIS) certifications. Progress should be tracked by the number of SMEs certified per sector and by the number of new supply contracts signed with FDI firms in targeted industries.
To address weak uptake and low effectiveness of business development services (BDS), Thailand implemented the Regional Integrated SME Promotion (RISMEP) project between 2009 and 2018, funded by the Japan International Cooperation Agency and carried out in collaboration with the Ministry of Industry. The initiative aimed to improve the relevance and quality of service by embedding structured diagnostics and co-ordinated referrals into SME support delivery.
RISMEP established provincial networks of accredited BDS providers, including public agencies, private consultants, universities and financial institutions. SMEs accessed services through one-stop consultation counters, where standardised diagnostics (Shindan tool) were used to assess needs and refer firms to appropriate providers. Entry into the network required competency testing and providers were subject to follow-up quality assessments.
By 2018, RISMEP had been implemented in 21 provinces. Impact evaluations show that RISMEP reduced search costs for SMEs and increased demand for BDS. Compared with control provinces, participating regions recorded higher numbers of SMEs served, greater use of training and advisory services, and significantly more referrals between providers. SMEs in RISMEP provinces also reported more frequent interactions with BDS providers and were more likely to secure production contracts and product certifications, indicating improved matching between needs and services.
By linking diagnostics, quality assurance and monitoring, RISMEP shifted BDS provision from supply-driven to needs-based support. For Serbia, adopting standardised diagnostics and systematic follow-up, without replicating the full network model, would strengthen training-needs assessment and align advanced BSSs with SME demand.
Sources: Japan International Cooperation Agency Research Institute (2017[109]); Japan International Cooperation Agency and UNICO International Cooperation (2011[110]).
To improve transparency, quality and uptake of business support, Poland has developed a national accreditation system for BDS providers, combined with a central online database. The system, managed by the Polish Agency for Enterprise Development (PARP), was launched in 2016 to reduce fragmentation and improve SME access to advisory and training services.
Accredited consultants and training organisations must meet eligibility criteria, undergo external certification every three years, and are subject to monitoring visits and user feedback reviews. Only accredited providers can be listed in the national database, which allows SMEs to search for services by expertise, location, or type. This mechanism enables firms to compare options and lowers information barriers that often discourage SMEs from seeking external advice.
The system has achieved substantial uptake. Within its first year, the database recorded more than 4 million page views and 120 000 registered SME users. It listed over 1 400 providers (including around 550 accredited by PARP), offering more than 13 000 active services. Development costs were approximately EUR 15 million, but the platform has since become a core tool for SME advisory policy
By combining accreditation with a public database, Poland has created a transparent and competitive advisory market where SMEs can choose from a broad pool of qualified providers. This strengthens quality assurance, gives businesses confidence in external advice, and ensures that public subsidies flow only to services meeting defined standards. For Serbia, adopting a similar system would help diversify its support ecosystem.
Sources: OECD (2021[92]); Polish Agency for Enterprise Development (2025[111]).
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← 1. As defined in the strategy: 1) a start-up is a newly founded business entity (less than ten years since establishment) that engages in innovation with potential for rapid and large growth, while also bearing the risk of technological or market failure; 2) a unicorn is a start-up with an estimated value exceeding EUR 1 billion; 3) a business angel is an individual investor who provides early-stage funding (above EUR 5 000), along with knowledge, experience and networks, to support a startup’s development without being employed by it.
← 2. In Serbia’s e-government architecture, the Government Service Bus (GSB) serves as the secure interoperability layer enabling automated data exchange between public institutions, while Pisarnica is the electronic registry and case-management system used to receive, register and process administrative requests. Used together, Pisarnica manages the workflow of a procedure and the GSB allows authorities to retrieve required data directly from other registers, supporting the once-only principle and reducing administrative burden for citizens and businesses.
← 3. Information provided by the Serbian government during the assessment period. Additional figures on the grey economy in Serbia can be found in Bolji Način (2024[112]).
← 4. Information provided by the Serbian government during the assessment period.
← 5. Mediation is an informal method of resolving disputes outside traditional court systems. It involves a neutral third party called a mediator facilitating communication between the conflicting parties to help them reach a mutually acceptable, non-binding agreement (American Arbitration Association, 2025[118]).
← 6. Arbitration is a formal method of resolving disputes outside traditional court systems. It involves the conflicting parties agreeing to submit their dispute to one or more third parties called arbitrators, who then take a legally binding decision following a hearing and evidence review (American Arbitration Association, 2025[119]).
← 7. Out of all the IPR-related cases solved in 2024, 48% of first-instance civil court cases were resolved within one year, 25% within one to two years, and 27% exceeded two years. For second-instance proceedings closed in 2024, 57.6% of cases were concluded within six months, 15% within six to twelve months, 22.4% within one to two years, and 5% took longer than two years (Supreme Court of Cassation of the Republic of Serbia, 2025[124]).
← 8. This refers to the Common Equity Tier 1 (CET1) ratio, the most loss-absorbing type of capital. A strong CET1 ratio indicates that the bank can withstand shocks by utilising its most reliable capital. Regulators focus heavily on CET1 because it is the most credible safeguard against insolvency.
← 9. At the same time, a large share of loans and deposits is still denominated predominantly in EUR, which can increase currency risk for SMEs with dinar revenues and limits the depth of longer-term local-currency finance. While the NBS and the government have pursued a Dinarisation Strategy, the share of dinar-denominated receivables in total corporate and household receivables remaining broadly unchanged, at 37.2% in the second quarter of 2022 (National Bank of Serbia, 2022[116]), compared to 37.4% in the fourth quarter of 2024 (National Bank of Serbia, 2025[115]).
← 10. The NBS applies a prudential incentive to encourage dinar lending to SMEs (including entrepreneurs and farmers) by allowing banks to reduce risk-weighted exposures for credit risk on eligible dinar SME exposures using a deduction factor of 0.7619. This lowers banks’ capital requirements for such lending, subject to conditions on exposure classification and the exclusion of defaulted exposures and aligns with the EU acquis to support SME financing. For more details, see (National Bank of Serbia, 2020[123]).
← 11. Serbia’s GDP was estimated at USD 90.1 billion in 2024 (World Bank, 2025[113]).
← 12. For the issuance of shares or depository receipts, non-listed companies must possess a minimum capital of EUR 300 000 or maintain a 15% free float of shares. In the case of debt securities, the sole requirement is a minimum emission value of EUR 200 000.
← 13. OECD calculations. In market prices, venture capital volumes reached USD 12.7 million in 2023 (Dealroom, 2025[65]), with a peak of USD 54.9 million in 2018.
← 14. The legal framework for alternative investment funds was further strengthened by the 2025 amendments to the Law on Alternative Investment Funds. The amendments further updated the regulatory framework and advanced alignment with the acquis. For more details, see Parliament of the Republic of Serbia (2025[114]).
← 15. In addition to the funds listed, the VC fund TS Ventures Fund is also registered in Serbia; however, it was not established with support from the Innovation Fund.
← 16. It should be noted that Serbia’s Law on Digital Assets (Official Gazette of the Republic of Serbia, No. 153/2020; in application since June 2021) provides a legal basis for certain crowdfunding-like fundraising through the issuance of investment (digital) tokens. Such offerings allow legal entities to raise funds for projects based on a white paper approved by the Securities Commission (with virtual currencies supervised by the NBS), using a procedure generally lighter than a capital-market prospectus, and have already been used in practice by some issuers. It should be noted that Serbia’s Law on Digital Assets (Official Gazette of the Republic of Serbia, No. 153/2020; in application since June 2021) provides a legal basis for certain crowdfunding-like fundraising through the issuance of investment (digital) tokens. Such offerings allow legal entities to raise funds for projects based on a white paper approved by the Securities Commission (with virtual currencies supervised by the NBS), using a procedure generally lighter than a capital-market prospectus, and have already been used in practice by some issuers. For more details, see (Ministry of Finance, 2020[117]).
← 17. At the innovation’s early stage, the Mini Grant programme is designed for start-ups in the early stages of innovation to enable the survival of businesses during the critical phase of R&D. The funds awarded can cover a maximum of 70% of the total approved project budget, with funding available up to EUR 120 000. At a more advanced stage, the Matching Grants programme is designed to encourage SMEs to invest in the development and commercialisation of innovations. The funds awarded can cover a maximum of 70% of the total approved project budget for SMEs, with funding available up to EUR 120 000. Since 2022, funding has been approved for a total of 93 projects, with a combined value of EUR 9.2 million. The collaboration between research institutes and SMEs is also an important axis of Serbia’s SME innovation policy, with the Collaborative Grant Schemes aiming to translate research outputs into market-driven innovations. Applicants for this programme are consortia consisting of at least one company and one public sector scientific research organisation. The Fund approves a maximum of EUR 500 000, up to a maximum of 70% of the total approved project budget. Since 2022, 14 applications have been approved for funding, totalling EUR 6.5 million.
← 18. It should be mentioned that, as of February 2026, the Innovation Fund is preparing an EU-funded IPA III (IPA 2025) initiative to establish a dedicated green grant programme for the private sector, supporting green and digital innovations, with implementation expected to start in late 2026 or early 2027.
← 19. Total support was RSD 1.28 billion (~EUR 11 million) in 2022, and RSD 1.23 billion (~EUR 10.5 million) in 2023.
← 20. The Action Plan set a target allocation of RSD 4 billion (~EUR 34 million) for SME support in 2024. According to the Action Plan implementation report, the Ministry of Economy spent RSD 2.12 billion (~EUR 18 million) under Project 4004 – Support to Business Infrastructure Development. Of this amount, RSD 771 million (~EUR 6.6 million) was earmarked for the Business Infrastructure Support Programme, while the remainder was distributed to one investment project.