The 2026 edition of the SME Policy Index comes at a critical juncture for the Western Balkans and Türkiye. Over the past decade, governments in the region have made sustained efforts to strengthen SME policy frameworks and align them with European standards. Yet, the context in which these policies operate has fundamentally changed, shaped by successive global shocks, accelerating green and digital transitions and rising geopolitical uncertainty.
Beyond these immediate pressures, a deeper shift is underway. Uncertainty has become structural, while the systems traditionally used to manage it are under strain. In this context, the challenge is no longer primarily to design better SME policies, but to ensure that the existing frameworks deliver.
SMEs remain central to economic growth in North Macedonia, accounting for approximately 73% of employment and 67.5% of value added. Against this backdrop, the economy has made progress across several areas key to SME development since the previous assessment cycle:
Progress in entrepreneurial learning is strengthening the skills foundation for SME development. North Macedonia is among the few economies in the Western Balkans and Türkiye region where key strategic documents explicitly address entrepreneurial learning across all levels of education. Supporting this, a new Co-ordinating Body for Entrepreneurial Education has been established to ensure consistent design and delivery across the system. Practical learning opportunities have expanded, albeit unevenly, with recent curriculum reforms increasing the share of practical training undertaken by students. Notably, over 50% of students report intending to start a business within five years of graduation, a share that surpasses the global average.
Meaningful gains across both bank lending and public financing instruments have broadened businesses’ access to finance. Banks in North Macedonia operate within a robust credit environment, underpinned by a comprehensive and fully digitalised asset registration system with cadastral data covering the entire territory. Public financing instruments have also played an important role: the Development Bank of North Macedonia managed credit lines totalling EUR 62 million in 2024, financing 278 projects—including four lines with an explicit SME focus. The Bank's Credit Guarantee Fund has seen particularly strong momentum, with approved guarantees growing by 166% and approved loans by 313% between 2022 and 2024.
The operational environment for SMEs has strengthened, driven by sustained progress in administrative digitalisation. North Macedonia has continued advancing its e-government infrastructure, with its national e-services portal now offering over 200 online services to citizens and businesses. Completion times for business registration fell from 15 to 12 days between 2023 and 2024, underpinned by a fully digitalised one-stop-shop system that ranks among the region's longest-standing. The same portal is now being extended to licensing, with a one-stop-shop approach currently under development. Looking ahead, SMEs stand to benefit from the Public Revenue Office's Strategic Plan 2025-2027, which prioritises simpler administrative procedures, greater digitalisation of tax services and improved support for small taxpayers.
However, despite these achievements, several challenges remain that hamper the ability of North Macedonia’s SMEs to drive EU convergence:
Access to support for SME greening remains limited, constraining businesses' ability to transition to more sustainable operations. Only around 25% of SMEs in North Macedonia currently offer green products or services, with high perceived costs identified as a primary barrier. The range of available financing instruments is narrow: green grants remain planned but not yet operationalised, and green credit guarantee schemes are absent entirely, representing one of the least developed support offerings in the Western Balkans and Türkiye region. Compounding this, no measures have been introduced to strengthen SMEs' financial literacy around sustainable finance. Where support does exist, limited promotion undermines its effectiveness: only 18% of SMEs aware of available government programmes for greening.
Digitalisation of SMEs lags behind policy ambitions, with cost and skills barriers keeping technology adoption shallow. While most SMEs surveyed by the OECD use at least one basic digital tool, integration of technology into core business processes is limited: only around 12% have adopted more transformative solutions such as cloud computing or e-commerce. This falls well short of the Smart/MK 2030 strategy's target of 75% enterprise uptake of cloud, AI or big data solutions by 2030. Cost is the most commonly cited constraint, with 65% of SMEs flagging the expense of acquiring and maintaining tools as a significant obstacle. Digital skills shortages compound the challenge: 24% of SMEs identify this as a concern, the second highest rate in the region, reflecting a broader gap in adult digital literacy where only 35% of the population holds at least basic digital skills.
The innovation ecosystem faces structural gaps that limits its effectiveness in driving SME innovation at scale. While the establishment of the Agency for Innovation Activity, Scientific and Technological Development and Entrepreneurship (INOVA) has simplified the institutional landscape by consolidating key innovation functions, co-ordination remains in a transition phase, hampering implementation. Evaluation is a persistent weakness: outcomes and impact data are limited across the framework, while the effectiveness of financial support instruments has not been assessed since 2021. Innovation voucher schemes have similarly failed to gain traction, with four years elapsed between pilots—one in 2020 and another in 2024—and the instrument yet to progress beyond the pilot stage. Underlying these challenges is chronically low investment in research and development, at just 0.4% of GDP (or roughly 18% of the EU average).
Going forward, the extent to which North Macedonia’s SMEs can drive economic growth and convergence will depend, in large part, on how effectively these gaps are addressed.
