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Facilitating Digital Transformation in Developing Countries: A Holistic Approach in Shaping North Macedonia’s Digital Landscape

In the dynamic business landscape of North Macedonia, information and communication technology stands out as the single fastest-growing sector, reaching around 5% of the Macedonian GDP. Despite witnessing the intensive growth of this sector, the absorption of digitalization by the companies is still low. Even though about 90% of Macedonian companies have computer and Internet access, the percentage of companies with digital internal work processes is small. For example, only 14% of the companies received orders for products or services via computer networks or website, including services like online reservation and booking.  The number of companies is even smaller (around 8%) of those that are tracking the orders or are offering visitors to customize or design online goods or services. The digitalization indicators of North Macedonia have a growth trend but are still below the EU average. One of the main challenges of Macedonian companies in the implementation of digitalization is the access of financial resources and technological expertise, necessary for the smooth implementation of this process, as well as the weak institutional infrastructure and lack of digital literacy.

With a mission to cultivate an enabling environment, the Swiss Increasing Market Employability Program – IME strategically focuses on cross-cutting digitalisation initiatives as a supporting development of two other high-growth sectors in the country – Sustainable Agribusiness and Sustainable Tourism, within the local and regional economy. The program is based on the market systems development approach, accentuating interventions that modify behaviours for lasting and large-scale change. This article delves into the development’s program multifaceted approach, harmonizing public and private sectors.

By working with private sector companies, business service organisations, and public sector representatives, the program takes a facilitative role in building capacities within the actors in the above illustrated market system. Thus, a credit line for digitization and digital transformation was championed by the Development Bank of North Macedonia, reflecting the Swiss experience, with an emphasis on the active participation of the private sector in shaping policies affecting them. In this way, access to finance and financial support was provided to facilitate the adoption of digital technologies. The Bank was founded in 1998 with the primary goal of supporting domestic micro, small, medium, and export-oriented trading companies and strengthening the competitiveness of the Macedonian economy. Through this credit line, the companies were provided loans from 5,000 euros to 100,000/300,000 euros depending on the type of investment. Consequently, during 2023, the banks granted digitization loans in the total amount of around 1.3 million euros with half of them intended for small companies.

As digital transformation accelerates, it is becoming crucial for businesses in non-ICT sectors like tourism and agribusiness to join the digital revolution or risk being left behind. Regular surveys and interviews with companies show that they are interested in digital tools that will improve their performance. Such tools are systems for formalizing work with suppliers, process control software, business software, tools for increasing the visibility of products and services, e-commerce, digital office and other productivity and development tools.

The surveyed agricultural companies are more and more interested in digital agriculture, such as using drones for spraying the crops, machines for harvesting finished products or other smart agriculture tools. Most of the companies are ready to invest in the initial stage of their digital process, and later, in introduction of advance technology.

It is crucial to point out the broader push for digitalization across the tourism and agricultural-food sectors through the cooperation with the Fund for Innovations and Technological Development, a leading government institution supporting startups and innovative companies in the country. Placing a focus on the supporting functions like infrastructure, coordination, product development, and access to market, the selected thirteen small and medium-sized enterprises (SMEs) under the public challenge ‘With Digital Transformation to Innovation’ are currently in the process of increasing their levels of innovation and digital transformation, competitiveness, and overall productivity. At the same time, the capacities for digital additional innovation are also being strengthened, as part of the ecosystem necessary for further digital transformation.

In that sense, digital transformation specialists play a pivotal role in navigating the ever-evolving landscape of emerging technologies and trends. By aligning technological solutions with business objectives, these experts contribute to the competitiveness of organizations. One such instance is the Center for Digital Transformation, designed to boost the digital transformation of Macedonian economy and businesses, focusing on micro, small, and medium-sized enterprises (MSMEs). The Centre’s multi-faceted approach covers support, analysis, strategy development, implementation, verification, and structure. The foundation actively supports the international certification of management consultants for digital transformation, provides expert analysis, develops strategies, supports implementation with vouchers, and establishes a repository of digitalization service providers.

These endeavours represent a holistic approach to digital transformation, seamlessly integrating public and private sector efforts. They are all in strategic alignment with the Smart Specialization Strategy of North Macedonia (2024-2027), as a document of high importance for the future growth of the Macedonian economy, enabling further development by strengthening the research. The program’s role in digitalizing Macedonian business landscape is underscored by a commitment to strategic interventions and private sector engagement. By strategically integrating digital initiatives into key sectors and collaborating with various partners, it paves the way for increased competitiveness, innovation, and long-term economic growth. Through alignment with the market system development approach, the program assumes a significant role in shaping a future where businesses thrive through innovation, sustainability, and digital transformation.