In-depth | BiH

Doing business in impossible conditions

By - 06.04.2018

Does BiH give opportunities to young people to start a business?

Axel Alić and his wife Nikolina should be highly desirable to employers across Bosnia and Herzegovina (BiH). However, the graduated lawyer and soon-to-be master of law, and professor of psychology and pedagogy have been registered as looking for work at the Bureau of Employment for years.

To make things more complicated, the pair now have a family of two children to provide for, leaving them with a dilemma: Do they bide their time at the Bureau and wait for potential employers to offer them a job, or seek happiness outside of BiH?

Even after acquiring the necessary emigration documents for Australia, the couple managed to find a third option. Their newly opened food outlet, Yumm, where food products are sold cheaper with a shorter expiration date, is their last attempt to secure a dignified life before leaving to find a new opportunity elsewhere.

“We wanted to launch something that didn’t exist in BiH so far,” Axel Alić explains. “Food outlets are something that have existed in the world for some time now, and supermarkets in Great Britain and Sweden lower the prices of products when their expiration date is approaching.”

He adds that trying to prevent waste was another major factor behind his decision to open the shop. “Large amounts of food from the supermarkets are thrown away and destroyed even though it didn’t expire, because this is what the law dictates,” Alić says. “It is a shame that food is thrown away, from an ecological aspect. At the same time, [the shop] offers citizens the cheapest supermarket in the state with branded and quality goods.”

Axel Alić is pinning his last hopes of a dignified life in Bosnia and Herzegovina on opening a small business. Photo by Denis Hadžić / BHRT.

But besides whether the Bosnian market is ready for new types of small businesses and what they offer, there is another question to be asked here: Has the state itself, in terms of legislature and other means, enabled young entrepreneurs and made it simpler for them to start a business and maintain it?

Judging by K2.0’s meetings with young entrepreneurs in BiH, it seems that everything comes down to individual willpower, as the existing system seemingly only serves to hinder the development of those willing to work on their own businesses.

Success abroad, ignored at home

Samir Mujović is the vice-president of the IT company Zemana from Sarajevo, which produces safety solutions for computers and mobile devices. Mujović says that “he is happy he is not dependant on the local market.”

Zemana’s software, which includes anti-virus programs for mobile phones and anti-malware programs for desktop computers is at the very top of the range and used by millions of users in 121 countries across the world. Their anti-malware is labeled as one of the three most unbreachable programs by the U.S. National Security Agency and is used on all desktop computers in the U.S. Embassy in Russia.

In BiH however, people are rarely informed about Zemana, and their number of users is minimal. Mujović sees various manipulations during procurement as part of the reason for this, especially in the public sector.

“Only a few people make the decisions here,” he explains. “In Republika Srpska, [Russian cybersecurity firm] Kaspersky is present in all public institutions at the entity level. In Herzegovina and partly at the state level, there is [American cybersecurity company] Fortinet. In Sarajevo, Central Bosnia, Tuzla, there is [American software company] Symantec. It’s all based on the principle ‘I give you something, and you give me something.’ When tender specifications are read through, you can see that only Kaspersky is able to fulfil the terms. It goes so far that Kaspersky licences are requested publicly.”

The law specifically forbids any state-own or run subject from requesting a specific product, or catering to a specific supplier. Mujović says that he has filed complaints regarding these tenders which did lead to their annulment, but that new tenders were still written in line with technical specifications for specific software products.

Software used by Samir Mujović’s Zemana company is used across the world but he claims it was rejected by Bosnian institutions even though it was offered free of charge. Photo by Aleksandar Brezar / BHRT.

The Zemana vice-president also claims that, thanks to revenue from foreign clients, the company was able to offer its software free of charge domestically. However, at least in the public sector, there was no willingness for this kind of cooperation.

Besides the seeming vested interest in his competitors, Mujović says that the lack of desire to change the supplier is also a factor because this would mean that those employed in IT branches of institutions would need to get to know a new software.

But, there is also a paradox here: Zemana’s software runs in Bosnian, Croatian and Serbian (BCS), all necessary instructions to use it are also provided in BCS, and Mujović offers training for the program. “However, they don’t want it, but instead choose Russian or Romanian products,” Mujović says.

Small markets and inhospitable conditions

Harun Omić works as a marketing manager at The Brew Co., a Sarajevo based company that produces craft beer. He says that he liked the idea to start working on a product made in BiH.

However, the BiH market has many specific issues, and Omić says that every small business owner has particular problems they face everyday, and the same goes for The Brew Co. “If we were to sit down with a 100 small business owners, you would hear a 100 reasons why it is difficult to start a business and to maintain one and to fight for it not to be ruined,” he states.

Omić’s conclusion is that, when everything is taken into account, small companies do not have sufficient systemic support at the very start. “A big problem is the state of mind,” he states. “In my subjective opinion, very little attention is paid to small companies in BiH existing in the capitalist system, the open market, or whatever you want to call it.”

As he talks about his company and its activities, as well as about the future in BiH, Omić expresses an honest and undivided optimism. Asked to reveal how he remains enthusiastic about his work regardless of the obstacles, Omić explains it like this:

“Is the situation challenging? Yes. But from day to day we try to justify the trust and give more to the market so that people can see that we are worth their attention. We don’t want people to follow our brand just because we are a domestic brand, or are young or entrepreneurial, but because we try to do things that are liked by the people.”

But Omić believes that you cannot prosper without help from established and larger enterprises and cooperation between small business owners. “I believe that the key to success is active collaboration, active participation of small businesses and engagement of large enterprises which we hear about during conferences, but they are often empty promises.”

Dina Šiber and Gordana Miladinović returned to Bosnia to start a business in the creative industry but the small market in BiH has proved a challenge. Photo: Personal archive / Vanja Lisac.

Gordana Miladinović studied abroad before returning to BiH and starting a business in the creative industry, the Hive, with her business partner Dina Šiber. The Hive offers services in design, branding, product development, digital communication, and 3D printing. The idea behind the Hive was to offer clients complete support from counseling, to conceptualizing, and final realization.

As for the problems they have been facing from the very beginning, Miladinović said that one of the biggest obstacles is a small market. “Our business was established in 2011, prior to this current trend of startups that came from America, where you can actually launch a bunch of stuff because you have the numbers, sufficient numbers of people, and you can sell to different niches,” she explains. “But, simply, where we are concerned, there is no sufficient market, sufficient numbers.”

In Miladinović’s opinion, there is an issue in the treatment of small entrepreneurships in comparison to large ones, as, besides the lack of support, financial reliefs which could be provided by the state to those who are just starting their business are missing.

“There are large financial restraints which you pay from the beginning, as if you had been doing business for the past 10 years,” she says. “I believe this is a problem. It causes great pressure from the very beginning, which discourages people to even try.”

Hopes for the future

According to data from the Ministry of Foreign Trade and Economic Relations, 80,000 young people have obtained working permits outside of BiH in the last five years, though the number of those who have left just within the calendar year is likely higher.

Asked why they decided to try to start a business in BiH, in an environment where the departure of young and talented workers is such an issue, all of the small business owners K2.0 spoke to had a different response, but they are all optimistic.

Miladinović thinks that reasons for this are individual, but that it is a matter of perception that the situation is better somewhere else, especially in a business sense.

“I don’t want to be too critical, but BiH is certainly not a state that works too much for its people and citizens,” she says. “I believe that pressure and poverty can be experienced, since people don’t have money. But I also think that people live in the illusion that outside everything is better, especially in terms of work — that things are a lot nicer and function better, you have many more opportunities… But really, both here and there you must also roll up your sleeves in order to make anything happen. Even though the reality is tough, we limit ourselves with our environment, and often we don’t even try, or try once and then give up. I think we need a lot more action. If we want changes, we must get involved and fight against everything that is bothering us.”

Harun Omić believes that there is opportunity in BiH but it requires a positive perspective on the country to see it. Photo: Personal archive / Adis Nović.

Omić says that everything depends on the state of mind. “Honestly, and this might be subjective, but I believe that there is opportunity,” he explains. “The thing is that you have to try to see something positive in a place where no one sees it. But one should also have an understanding towards people who don’t see it. We all know that effort, work, and discipline is what it takes to succeed. Everyone who left knows this. Those who are leaving, do so because they are willing to work and are disciplined, whereas here, due to a lack of luck and opportunities, they don’t see how they can succeed. But I guarantee you, if we know that the situation in this country is tough, and that there is no way we could do worse than this, then we can only move forward.”

Omić will soon be applying this philosophy to his next project, the restoration and adaptation of Imperijal, a historically important locale in Sarajevo. It is an ambitious project that includes complete renovation of the space but also transforming its purpose, with the aim of providing the city with a new cultural center hosting exhibitions as well as concerts, dance shows, etc.

Mujović is also optimistic. He believes that, despite the large scale departures of people, “we have the most important resource: an innate intelligence.” He also feels that the IT sector in BiH is one of the rare areas with a strong perspective in the future, especially when we bear in mind BiH’s context as a small country.

“What many people, especially those who remember the old system, hang on to is that the factories don’t operate,” Mujović states. “But we are a country of 3.5 million citizens. Do we need a strong auto industry? Or an arms industry? If we won’t export it to foreign markets, what will we do with them?”

The software expert adds that there is no export industry, meaning the domestic market has been reduced to a very modest level of demand, which is then reflected on the supply side as well. “This is why I see the only way for BiH to develop is to push people towards the IT sector, since this is an attractive, developing sector that doesn’t require great investment. And there’s space for young people ready to learn and think of and implement their ideas.”K

Feature image: Aleksandar Brezar / BHRT.

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