This cluster investigates the role of digital transformation in enhancing connectivity, fostering innovation, and creating inclusive and sustainable societies in the Western Balkans. Structured around three key sections, it evaluates the breadth and effectiveness of policy frameworks and implementation. First, it focuses on how to strengthen the foundations of the digital ecosystem by exploring existing efforts to enhance digital infrastructure and access, and to establish a trustworthy and secure digital environment. Second, it analyses the uptake of digital technologies in both public and private sectors, and delves into initiatives to foster technological innovations to unleash the region’s digital potential. Finally, it assesses societal and environmental impacts, probing efforts to bridge the digital divide and design inclusive and sustainable digital policies.
Western Balkans Competitiveness Outlook 2024: Regional Profile
5. Digital transformation cluster
Abstract
Key findings
The six Western Balkan (WB6) economies have made some progress in digitalisation in recent years and are slowly converging towards European Union (EU) levels. Some of the region’s key achievements are:
Broadband coverage and quality have improved, with an annual increase of 3.8 percentage points in available fibre connections, rising from 29.2% in 2021 to 33.0% in 2022. Four economies have joined the Balkans Digital Highway initiative to improve high-speed broadband access at local and regional levels. Furthermore, the region is increasingly implementing initiatives to address connectivity disparities between urban and rural areas.
Spurred by concerns over digital threats and data breaches, the WB6 economies are increasingly focusing on improving public perception and capacity regarding privacy and data protection. Notable advancements have been made in updating policy and legal frameworks regarding cybersecurity, and privacy and data protection.
Progress has been made in digitalising government services, including investment in digital infrastructure and user-centric e-service portals. Economies have also made headway in developing key enablers for digital government, such as improving relevant legislation, implementing electronic identification and payment systems, and integrating these systems with national e-service portals. All WB6 economies have joined the Digital Europe Programme, which provides opportunities for businesses and public administration to participate in projects that deploy innovative digital technologies across the EU.
The WB6 economies are increasingly focusing on supporting small and medium-sized enterprises (SMEs) to adopt digital technologies, develop e-commerce and e-business, and engage in digital innovation. Efforts have been intensified to promote information and communication technology (ICT) investment through programmes that offer monetary support for purchasing ICT equipment and services, as well as consulting and mentoring services.
Despite these positive regional trends, a fundamental reimagining of business models and operations, government decision-making processes, and co-ordination mechanisms across the entire economy is still needed. As such, some of the key challenges to the digital transformation facing the region are:
The lack of electronic accessibility of digital government services, public websites and applications in the WB6 exacerbates the marginalisation of people with disability. The non‑binding nature of accessibility rules in some Western Balkan economies, and co-ordination deficiency in enforcing them in others, perpetuates inequality and exclusion, as these individuals face barriers to accessing critical government information, services and benefits.
Insufficient funding limits the number of businesses benefiting from ICT adoption, with only 63.7% of WB6 enterprises having a website, compared with 78.1% in the EU. This creates challenges for the digitalisation efforts of businesses, particularly given the shortage of digitally skilled workers. This gap often creates a heavy reliance on EU and donor support across most regional economies.
Limited cross-border interoperability hampers the WB6 economies’ aspirations to facilitate the free movement of workers and citizens across the region and join the European Digital Single Market.
Lack of important reforms for protecting critical infrastructure and tangible initiatives to enhance cybersecurity capacities in public administration leave the region particularly sensitive to data breaches and misuse. Inadequate resources and capacities of the relevant institutions persist, with understaffing a common issue across most regional economies.
The region has yet to develop policies to ensure the integration of green digital technologies and environmentally sustainable practices into digitalisation processes. The WB6 economies have not formally assessed the environmental footprint of the digital sector in the public and private sphere, and have yet to evaluate the environmental impact of government and business digitalisation. Programmes and initiatives specifically designed to foster a green digital sector are absent.
Introduction
Digital transformation affects all sectors and permeates many facets of society, cutting across traditional boundaries and impacting governance, economy, education and beyond. Embracing digital transformation at a national level requires collaborative efforts across government, industry, academia and civil society to drive innovation, enhance efficiency and ensure inclusive development in an increasingly interconnected world. Fostering digital transformation at the regional level demands the synchronised efforts of all WB6 economies.
Strengthening the foundations of the digital ecosystem
Enhancing infrastructure and access for digital transformation
Most WB6 economies have taken steps to enhance digital infrastructure and access by adopting dedicated national broadband development strategies or integrating broadband infrastructure development targets into their sectoral or horizontal development policies. Four economies (Albania, Kosovo, North Macedonia and Serbia) have recently updated their broadband development policies to encompass Gigabit Society targets to ensure that very high capacity connectivity (above 100 megabits per second [Mbps]) reaches citizens and businesses. Meanwhile, Montenegro has outlined targets for very high-speed Internet access, without specifying gigabit connectivity objectives at this stage.
High-speed network infrastructure and broadband penetration in the Western Balkans are advancing, but still lag behind EU and OECD standards
Broadband infrastructure in the WB6 has seen significant advancements in coverage and service quality since 2021. Although the scale of investments in high-speed network infrastructure varies across regional economies, there has been a consistent annual increase in available fibre connections throughout the region (Figure 5.1).
However, despite increasing network infrastructure, high-speed Internet connectivity is not yet universally available in the WB6, with both mobile and fixed broadband penetration rates lagging behind the EU and OECD averages (Figure 5.2).
In terms of mobile broadband penetration, Montenegro and Serbia1 have nearly reached EU and OECD average levels; however, Kosovo, Albania, North Macedonia, and Bosnia and Herzegovina significantly trail behind (Figure 5.2). The slow uptake of mobile broadband in Bosnia and Herzegovina, which is the lowest in the region, can be attributed to the delayed introduction of 4G technologies, which only occurred in 2019. North Macedonia, Albania and Kosovo face particular challenges due to relatively lower levels of private sector investments.
Granting 5G licences to telecommunications companies incentivises investments in 5G infrastructure, which can improve network capabilities and expand access to high-speed mobile broadband services. Nevertheless, as of early 2024, only Kosovo, Montenegro and North Macedonia have awarded commercial 5G licences. Delaying 5G deployments hinders access to faster data speeds and an increasing range of connected devices and transformative technologies and applications such as the Internet of Things (IoT), autonomous vehicles and augmented reality.
Fixed broadband penetration rates reflect a similar trend, with Montenegro and Serbia taking the lead, closely followed by Bosnia and Herzegovina. However, in Albania, Kosovo and North Macedonia, fixed broadband uptake falls below the regional average due to lower quality infrastructure, unavailability of networks in some regions, affordability and low demand.
Regional economies are developing comprehensive plans to effectively address the rural‑urban broadband divide
The Western Balkan Digital Agenda has underscored the importance of investing in regional broadband connectivity. However, the challenge of increasing broadband penetration rates remains particularly pronounced in the WB6 economies due to their significant rural populations.2 Recognising the disparities between urban and rural broadband connectivity, the majority of WB6 economies have prepared dedicated policy initiatives focused on rural broadband infrastructure development and private sector investment stimulation in underserved areas. Boosted by EU and donor funding that strategically supports digital infrastructure projects under the Western Balkan Investment Framework (WBIF), most economies in the region are either implementing (Kosovo and Serbia) or preparing (Albania is well advanced, and Montenegro and North Macedonia are in the initial stages) high-speed network development projects with a focus on rural areas (WBIF, 2024[5]). However, Bosnia and Herzegovina has yet to launch a similar initiative in underserved areas.
Economy-specific endeavours are augmented by the regional Balkans Digital Highway initiative,3 which pledges to improve access to high-speed broadband services both at economy and regional levels among the four participating economies (Albania, Kosovo, North Macedonia and Montenegro). This donor-funded initiative seeks to establish a regional wholesale broadband network leveraging the optical fibre infrastructure of participating transmission system operators (primarily electricity power utility companies).
Most Western Balkan economies have made strides in developing tools and regulatory measures to facilitate the deployment of broadband networks
Western Balkan economies have made progress since the last Competitiveness Outlook (CO) assessment in 2021 (CO 2021) in developing broadband infrastructure mapping systems similar to those available in EU member states. These systems offer valuable insights into the availability, technology and speed of broadband infrastructure, as well as the quality of broadband Internet services at the local level. They serve as an impartial market and provider overview, mitigating investor uncertainty and helping to identify coverage gaps and more efficient resource allocation in bridging the digital divide.
Albania, Kosovo, Montenegro, North Macedonia and Serbia have already implemented mapping systems. By contrast, although geoportals in the two entities of Bosnia and Herzegovina – Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS) – provide some information on broadband infrastructure, the economy has yet to plan the development of a nationwide broadband mapping system. This delay is primarily attributed to factors such as an underdeveloped digital cadastre and the complexity of permit regimes for construction works at the various administrative levels, which complicates the associated data collection process.
Despite the progress made by most WB6 economies in streamlining network deployment processes to attract investments in high-speed communication infrastructure, several significant issues remain. Most notably, the WB6 economies have yet to fully streamline the criteria for subsidising infrastructure development and demand creation, and are yet to fully address persisting hurdles related to infrastructure sharing, co‑ordinating civil works, and reducing the timeframe and cost of issuing permits for infrastructure development, which are essential for making investments more cost effective.
The region is still facing relatively high costs and administrative burdens for the development of broadband networks. While Albania, Kosovo, Montenegro and North Macedonia have updated relevant legislation in 2022 and 2023, in accordance with EU legislation,4 the alignment process is not yet complete, mostly due to legacy legislation harmonisation issues, particularly at the local administration level where the lack of co-ordination, cost-sharing and time-efficiency for civil works for infrastructure projects among relevant stakeholders remains a significant investment barrier. Serbia has yet to update relevant legislation, while Bosnia and Herzegovina has not yet adopted relevant regulations, which negatively affects network investments.
The modernisation of state aid rules for broadband infrastructure development would streamline the criteria for new investments in very high-speed networks and mobile networks, including 5G, while avoiding market distortion (see Chapter 2 on Infrastructure and Connectivity). Regional economies would benefit from alignment with the revised European Commission state aid guidelines,5 enforced in 2023, which effectively address these issues in line with Gigabit Society targets. Updating relevant legislation in the WB6 economies would streamline processes and stimulate the private sector investments necessary for completing ongoing or planned rural high-speed network development initiatives.
Regulations aimed at simplifying and accelerating the installation of 5G networks, including alignment with the EU 5G Toolbox and Connectivity Toolbox,6 and outlining specifications for small-area wireless access points (small antennas) are still pending in the WB6 economies. These regulations are crucial for fostering the deployment of advanced telecommunications infrastructure and promoting technological innovation in the region.
Creating a trustworthy and safe digital environment
The rise of connectivity and the data-driven economy presents new challenges in digital security and privacy, emphasising the need for updated policies and practices to cultivate and uphold trust in the digital realm.
Policy initiatives on cybersecurity have accelerated, but capacity constraints and limited international co-operation hinders progress
The WB6 economies have experienced a notable increase in cyberattacks in the past three years, which have primarily targeted critical online infrastructure, public services and ICT systems. Insufficient public awareness and cybersecurity capacities, combined with limited regional collaboration, have compounded the challenges faced by the region’s economies in combating cybercrime. Recognising deficiencies in managing cybersecurity risks, all regional economies except Bosnia and Herzegovina have adopted cybersecurity strategies and focused on implementing legal reforms aligned with the EU cybersecurity framework, and in line with the Digital Agenda for the Western Balkans and the Multiannual Action Plan for a Regional Economic Area.
As of early 2024, Albania was the only Western Balkan economy with an established National Cybersecurity Authority7 operating as a national focal point for cybersecurity, similar to network and information system (NIS) authorities in EU member states that are part of the NIS Co-operation Group. Kosovo and Serbia have articulated plans to establish their own national cybersecurity authorities in 2024, and North Macedonia is awaiting the adoption of a new information security law in 2024 that outlines the establishment of its own agency.
Efforts have also been made to strengthen structures for information security risk management, such as computer emergency response teams (CERTs) that aim to safeguard both public and private sector infrastructure, while fostering collaboration and information exchange across teams. However, a significant gap remains between the acknowledged importance of cybersecurity and the resources allocated to address it. While national CERTs are operational in all WB6 economies except Bosnia and Herzegovina, where there is only an entity CERT in the RS, they face substantial challenges, primarily due to limited staffing and funding. This constraint hampers their ability to conduct crucial awareness-raising and capacity-building activities, as well as to invest in international information exchange with counterpart organisations abroad. Additionally, although there is a growing presence of computer security incident response teams (CSIRTs) within both public entities and large private sector firms, progress in this area has been sluggish, lacking a systematic level of collaboration among these teams and the national CERT.
Public and private sectors across the Western Balkans face a shortage of skilled cybersecurity personnel, mainly due to outdated educational systems and teaching methodologies in this field, alongside non‑standardised cybersecurity job descriptions and qualifications (PwC, 2022[6]). A notable brain drain, particularly among young professionals, exacerbates the issue. Even when cybersecurity talent is available, salary disparities between the private and public sectors further hinder the ability of public administration bodies to retain highly skilled professionals.
The region also lacks systematic mechanisms and resources to invest in international co-operation and information exchange with relevant stakeholders abroad to reinforce its response to cybercrime. Initial steps have been made with a regional cyber capacity-building initiative that emerged during the Berlin Process Summit in Tirana, Albania in October 2023. The establishment of the Western Balkans Cyber Capacity Centre (WB3C),8 with support from the governments of France and Slovenia, aims to address the existing gap in capacity building and foster enhanced regional collaboration. However, the centre is in its early stages, and building sufficient regional capacities will take time. Currently, Serbia stands out as the only regional economy that has undertaken significant cybersecurity capacity-building initiatives since 2021. In 2022 alone, 6 638 individuals were trained through educational activities conducted by the National Academy for Public Administration, 340 individuals were trained in ICT systems of special importance and 44 individuals were trained on the operation of CERTs (MIT, 2022[7]).
Western Balkan economies are making progress in establishing higher standards of privacy and personal data protection, but allocated resources remain inadequate
Since the CO assessment in 2021, privacy and data protection issues have attracted increased attention in the Western Balkans, as they have globally, due to heightened awareness of digital threats, data breaches and concerns over personal information misuse. The region’s personal data protection authorities have systematically invested in enhancing public perceptions and capacities in privacy and data protection, despite inadequate resources to conduct effective awareness campaigns and capacity-building training. However, these efforts have not always translated into increased trust in their work.
Since 2021, the respective authorities in North Macedonia and Serbia have adopted individual personal data protection strategies outlining goals and objectives until 2030, in line with EU and OECD standards. However, only Serbia and Kosovo have updated their personal data protection legislation to uphold the higher standards on personal data protection introduced by the EU General Data Protection Regulation (GDPR)9 and the EU Police Directive.10 Despite EU accession commitments, the other WB6 economies are still preparing or planning relevant reforms. Albania is expected to be the next to align with the EU acquis on personal data protection, with new legislation pending adoption in 2024.
Despite being in the early implementation phase of their new legislative frameworks, Kosovo and Serbia have seen evidence of heightened public perception and stakeholder trust in the work performed by relevant authorities. For example, in Serbia, 78.4% of public survey respondents expressed confidence in the level of protection provided by the Personal Data Protection Commissioner’s Office (Kantar, 2023[8]). Increased trust in the work of the Information and Privacy Agency in Kosovo was also reported by international media freedom organisations and journalists (CPJ, 2022[9]).
However, the implementation of relevant frameworks in Western Balkan economies is hampered by the inadequate allocation of human and financial resources. Privacy and data protection authorities in the region are understaffed11 in all regional economies except Albania and Serbia, where authorities have increased their human resources. Moreover, authorities face challenges in conducting effective awareness campaigns and staff capacity-building activities in public bodies and companies to enhance privacy perceptions and highlight the importance of compliance with personal data protection obligations. There are persisting issues with the non-compliance of data handlers in both the private and public sectors, and limited respect for the decisions and opinions of relevant protection authorities.
Serbia stands out as the only economy in the Western Balkans that has put significant effort into providing training for diverse groups from the private and public sectors, supporting data handlers in implementing the law and assisting citizens in exercising their rights. Kosovo, Montenegro and North Macedonia rely on donor-funded support to raise awareness on personal data protection, while such efforts are very limited in Albania and Bosnia and Herzegovina.
Online consumers in the region have limited opportunities to receive support and education on how to exercise their rights in e-commerce
The WB6 economies have faced a rising trend in e-commerce uptake, similar to the global trend and raising environmental concerns, boosted by the COVID-19 pandemic and growing Internet penetration (Figure 5.3). Although some economies have recently modernised consumer protection rules to introduce considerations of trade in the digital realm, inspections and law enforcement in businesses conducting e‑commerce remain weak. Moreover, the WB6 economies are lacking resources for public awareness campaigns on consumer rights in e-commerce, as well as robust mechanisms to support them in exercising these rights effectively.
Recognising the challenges in consumer protection, Montenegro, North Macedonia and Serbia are implementing consumer protection policies that underscore consumer empowerment, effective out-of-court dispute resolution mechanisms and heightened consumer education, particularly in e-commerce transactions. These economies have advanced in modernising their relevant legal frameworks to align with the EU acquis in consumer protection, a process that is still ongoing through the adoption of new rules and the harmonisation of legacy legislation. Notably, Serbia is better positioned than other WB6 economies to provide an effective mechanism for submitting complaints and accessing alternative dispute resolution (ADR) through its National Consumer Protection Portal, which facilitates the submission of complaints and requests for ADR. The alignment of consumer protection rules in e-commerce has yet to be prioritised in Albania, Bosnia and Herzegovina, and Kosovo.
Mechanisms to inspect e-commerce businesses across the region are weak, with Albania and Montenegro standing out as the only WB6 economies to have implemented monitoring initiatives that scan online trader websites on legal compliance (“e-sweeps”), such as those conducted by EU member states.
Most WB6 economies allocate inadequate resources to consumer education, particularly in e-commerce, leaving consumers largely unprotected. Online consumers in some WB6 economies have access to online educational materials on e-commerce, but this has questionable impact on consumers’ understanding of their rights in online transactions and digital contracts. Consumer protection non-governmental organisations have an active role in raising public awareness in Montenegro, North Macedonia and Serbia, although relevant activities rarely target online consumers.
Recommendations for strengthening the foundations of the digital ecosystem
Facilitate investments in high-speed network infrastructure by further streamlining processes and reducing costs for broadband development. WB6 governments must implement policy and regulatory measures aimed at alleviating persisting broadband investment barriers. This includes facilitating cost-sharing arrangements and reducing timelines of broadband infrastructure projects, while enhancing capacities in local authorities to co-ordinate the implementation of construction works planned by multiple service providers for the same locations. Additionally, efforts should focus on streamlining administrative processes for permit issuance and harmonising procedures across sub-national or local jurisdictions to reduce related costs and expedite the implementation of construction projects related to broadband networks. The WB6 economies are encouraged to leverage the regulatory tools provided by the EU Broadband Cost Reduction Directive and the proposed EU Gigabit Infrastructure Act12 to propel the regional broadband development agenda.
Accelerate implementing programmes to bridge the urban-rural broadband access divide. All WB6 economies are urged to enhance collaboration on extending network coverage through initiatives such as the Balkans Digital Highway. Furthermore, leveraging the resources available through the new Reform and Growth Facility for the Western Balkans, including capital investment financing provided by the WBIF, presents a unique opportunity to accelerate the development of very high-speed networks in underserved areas, where market interest is low and private investments are economically unviable. In these efforts it will be essential for the WB6 economies to streamline the criteria for public support (state aid) aimed at subsidising high-speed network connectivity in remote locations. The revised European Commission guidelines on state aid for broadband networks offer a comprehensive framework for public support. These guidelines align with Gigabit Society targets, incorporate considerations for market failures in mobile networks, including 5G, and provide streamlined rules and criteria for balancing the positive impact of state aid against its negative effect on market competition.
Complete the 5G spectrum allocation process, raise awareness of 5G benefits and support market innovation for 5G applications. Albania, Bosnia and Herzegovina, and Serbia should prioritise the swift completion of the spectrum allocation process for 5G networks, ensuring sufficient spectrum availability for operators and establishing transparent and fair auction mechanisms. All governments should launch comprehensive awareness campaigns to promote the benefits of 5G services and applications among businesses, consumers and public institutions, highlighting how 5G technology can revolutionise various sectors such as healthcare, education, transportation and manufacturing by enabling ultra-fast connectivity, low latency and massive device connectivity. Moreover, WB6 governments should create an environment that supports market innovation for 5G applications. This can be achieved through targeted funding schemes, research and development grants, and collaboration with industry stakeholders, academia and research institutions. Encouraging the development of innovative 5G applications tailored to local needs and challenges will not only drive demand for 5G services, but will also spur investment in cost-efficient infrastructure deployment.
Prioritise the establishment of ADR mechanisms, investing in capacity building and awareness raising to enhance confidence in digital commerce (Box 5.1). The WB6 economies should ensure that legal frameworks are in place to foster effective implementation of ADR mechanisms for digital commerce and create dedicated online platforms or portals where consumers and businesses can efficiently resolve disputes. These platforms should be user‑friendly, accessible and equipped with tools to facilitate effective communication and resolution. Additionally, it is essential to invest in capacity-building programmes to train mediators and arbitrators in digital dispute resolution techniques and technologies. Training should cover areas such as online mediation, virtual hearings and the use of technology-enabled dispute resolution tools. In this endeavour, the WB6 economies should foster collaboration with international organisations and jurisdictions that have successfully implemented ADR systems for digital commerce to get valuable insights and technical assistance in aligning with global standards. Furthermore, governments should launch awareness campaigns to promote the benefits of ADR mechanisms for digital commerce and encourage their adoption among businesses and consumers to help build confidence in these mechanisms and drive uptake.
Box 5.1. Increasing confidence in e-commerce through effective ADR tools
ADR offers a quicker, more cost effective and less adversarial means of resolving disputes, and can reassure consumers and businesses that any issues encountered during transactions can be efficiently addressed, ultimately fostering trust and facilitating smoother transactions in the digital marketplace. The following examples of effective implementation of ADR mechanisms can provide valuable insights for Western Balkan economies when designing their own approaches to ADR:
The EU has established the Online Dispute Resolution (ODR) platform, which provides a single point of entry for consumers and traders to resolve disputes related to online purchases across borders. The platform facilitates the resolution of disputes through mediation or arbitration, making it easier for consumers and businesses to resolve conflicts without resorting to traditional legal processes.
Singapore has developed a robust framework for online dispute resolution, including the Singapore Mediation Centre (SMC) and the Singapore International Arbitration Centre (SIAC). These institutions provide specialised mediation and arbitration services for resolving digital commerce disputes, catering to both domestic and international parties.
The International Chamber of Commerce (ICC) offers various dispute resolution services, including the ICC Digital Library and the ICC Online Dispute Resolution platform, which provide resources and tools for resolving digital commerce disputes. The ICC also administers arbitration proceedings for e-commerce disputes through its International Court of Arbitration.
Sources: European Commission (2024[11]); SMC (2024[12]); SIAC (2024[13]); ICC (2024[14]).
Strengthen cyber resilience by enhancing co-operation in combating cybercrime, ensuring adequate resources and investing in a skilled workforce to address cyber threats effectively. The WB6 economies should advance regional co-operation efforts to develop a robust and co-ordinated response to cybercrime. It is essential to increase human cybersecurity resources and reinforce mechanisms for information sharing, joint exercises and collaborative initiatives to address cyber threats collectively. The region should support initiatives such as the Western Balkans Cyber Capacity Centre (WB3C) by allocating sufficient resources and expanding training. Moreover, WB6 economies should accelerate the establishment of national focal points for international cybersecurity collaboration, including participation in networking events organised by the EU Agency for Cybersecurity (ENISA), which provide valuable opportunities for capacity building, knowledge exchange and collaboration with EU counterparts. Furthermore, governments should promote cross-sector collaboration between public authorities, law enforcement agencies, academia and the private sector to tackle cybercrime comprehensively.
Encouraging the uptake of digital technologies
Enhancing the digital transformation of the public sector
Western Balkan economies have recognised the importance of digitalisation policies not only to digitise analogue government processes and services, but also to adopt a digital-by-design approach to transform government. However, despite formal recognition and certain open government initiatives, the region is in the initial phases of integrating digital technologies into all government functions, such as the decision‑making process and the policy, legal and regulatory reform process.
WB6 governments are only just starting to address each of the six dimensions of the OECD Digital Government Policy Framework to transition to fully digital governments. These dimensions are: 1) digital by design; 2) data-driven public sector; 3) government as a platform; 4) open by default; 5) user‑driven; and 6) proactiveness (OECD, 2020[15]). The economies have adopted digital transformation or e-government strategies alongside their public administration reform strategies. These comprehensive strategic frameworks constitute initial efforts towards a paradigm shift from traditional e-government to digital government, gradually integrating emerging technologies, data-driven decision making, citizen engagement and agile governance practices to deliver more efficient, inclusive and responsive public services, in line with the 2014 OECD Recommendation of the Council on Digital Government Strategies (OECD, 2014[16]). However, they are yet to effectively design and implement strategic approaches for the transition towards the digital maturity of the public sector.
Western Balkan economies lag behind EU member states in digital government maturity
Accelerated by the COVID-19 pandemic, most WB6 economies have invested heavily in digitalising public services for citizens and businesses. The region aims to come closer to the EU Digital Single Market by accelerating digital transformation, as affirmed by WB6 leaders at the 6th Digital Summit held in Sarajevo in October 2023.
Serbia and Albania have both accelerated government digitalisation since the CO 2021 assessment, surpassing the other WB6 economies. Serbia has invested in digital government infrastructure development including data centres, cloud infrastructure and digital identity user-friendliness, thus building a strong foundation for its digital transformation and a robust basis for the future integration of technological innovation into government functions. Albania has prioritised the digitalisation of nearly all existing services and the switching of service delivery to online channels only, with at least 95% of all services offered online by May 2022.
Despite progress, the WB6 economies are lagging behind the EU average in digital government maturity. According to the EU eGovernment Benchmark 2023 report, Serbia ranks 30th, followed by Albania (33rd), Montenegro (34th) and North Macedonia (35th), among 35 European economies assessed on the maturity of their digital governments (Capgemini, Sogeti, IDC and Politecnico di Milano, 2023[17]). While Bosnia and Herzegovina and Kosovo are not participating in this study, evidence indicates that their digital government maturity lags behind the other four economies, with Bosnia and Herzegovina coming last in the region having demonstrated limited progress in government digitalisation since the CO 2021 assessment.
The WB6 economies have made progress in developing government e-services, although interactions over the counter are often still required
All WB6 economies except Bosnia and Herzegovina have developed national e-service portals, and are increasingly converging to the one-stop shop model of service delivery for all online public services. In Bosnia and Herzegovina, RS has developed its own e-services portal, while isolated services are provided by individual national institutions, FBiH and the Brčko District. Albania is the region’s frontrunner in the number of available digital services, with 1 237 services offered online for citizens, businesses and public administration, and 68% of e-forms pre-filled. All of these services are at the fourth level of sophistication, meaning that they are fully transactional (e.g. supporting e-signature and e-payments). Montenegro, North Macedonia and Serbia each offer fewer than 400 services online, at various levels of sophistication. Transactional e-services in Serbia amount to 80% of 340 e‑services in total, compared to around 24% of 392 e-services in North Macedonia; in Montenegro, only 19% of 382 e-services are more than simply informative. In Kosovo, only 10% of all public services are offered online, and most are informative.13
The WB6 economies have actively focused on user-centricity by increasing e-service (or information about services) availability, mobile friendliness and availability of user support. This is confirmed by the EU e‑Government Benchmark 2023 report, where Albania, Montenegro, North Macedonia and Serbia have reached the EU average level of maturity in terms of user-centricity (Capgemini, Sogeti, IDC and Politecnico di Milano, 2023[17]). These economies have also transformed their e-services according to the life-event approach, which involves developing services aimed at key life events such as the birth of a child and enrolment in educational institutions. Albania and Serbia have made particular progress in transforming how some of their key e-services are provided to citizens and businesses, and North Macedonia, one of the first economies to adopt the life-event approach, is following at a slower pace. Montenegro has outlined a shift towards the life-event approach in strategic digital transformation documents, but has been sluggish in terms of implementation. Kosovo and Bosnia and Herzegovina are lagging behind in this respect, with only RS having developed a life-event e-service (e-baby).
User engagement with e-government services varies significantly in the Western Balkans. Lower levels of citizen interaction with e-government services are primarily attributed to a lack of awareness about e‑services or an unavailability of high-quality, fully transactional services hindering service completion online. One-third of the region’s population remains unaware of available e‑services (CEP, 2023[18]). Serbia has slightly surpassed the EU average in the percentage of individuals using the Internet to interact with public authorities in 2022 (Figure 5.4), while Albania is approaching this level. The remaining WB6 economies are falling behind, with Kosovo coming last in the region. According to OECD SIGMA (Support for Improvement in Governance and Management) monitoring reports for the WB6 economies in 2021,14 user satisfaction regarding e-services was low or even declining, except in Albania. While some WB economies have since taken steps to address issues limiting user satisfaction and engagement, the adoption of a data-driven approach to effectively address issues is being hindered by the lack of systematic monitoring of user satisfaction.
Most Western Balkan economies have made strides in developing key enablers for digital government, including e-payments and e-identification
The WB6 economies have made progress in developing key enablers for digital government, including the improvement of digitalisation legislation, the implementation of electronic identification and payment systems, and their integration with national e-service portals. However, the implementation of these enablers varies significantly across the region, and their maturity is below the EU average (Capgemini, Sogeti, IDC and Politecnico di Milano, 2023[17]). Most WB6 economies have enhanced their legal frameworks on digital government and are implementing adequate legal reforms to establish comprehensive legal frameworks for digital government that encompass legislation on electronic documents, electronic public registers and e-identification. However, some remaining misalignments with legacy legislation on administrative procedures create challenges, slowing down the digitalisation of public registers or limiting the enforceability of e-document and e-signature legislation, such as in North Macedonia (Metamorphosis, 2022[19]).
The new Growth Plan for the Western Balkans proposed by the European Commission in November 2023 emphasises the importance of the region’s alignment with the EU acquis in electronic identification,15 authentication and trust services to enable its integration into the Digital Single Market (European Commission, 2023[21]). While legal frameworks in Albania, Kosovo, Montenegro, North Macedonia and Serbia have aligned with the EU eIDAS Regulation, practical implementations of electronic identification (eID) solutions and their uptake are still in the early development phases in most WB6 economies. Albania and Serbia have developed the most advanced, user-friendly public eID systems in the region through the integration of mobile phone identification, which has facilitated increased user uptake of e-signatures and e-government services as a whole. Albania and Montenegro have implemented their own eID systems, but uptake is still relatively low. Kosovo and North Macedonia are still preparing their public eID implementation, while Bosnia and Herzegovina has no nationwide eID system in use yet, although eIDAS compliant e-signatures have been issued by the Agency for Identification Documents, Registers and Data Exchange of Bosnia and Herzegovina (IDDEA) since 2023 at the state level, and RS issues e-signatures for its territory.
The implementation of eIDAS compliant public (free) digital identification systems is particularly important not only for the increase of digitalisation and e-government uptake in WB6 economies, but also for enabling the development of cross-border services. WB6 governments recognise the importance of cross-border collaboration in this field, and signed a memorandum of understanding on Regional Interoperability and Trust Services in the Western Balkans in November 2020, and the subsequent Joint Statement on Interoperable Western Balkans in October 2021 to improve regional interoperability, including the recognition of eIDs and trust services. Despite high-level political alignment, limited progress has been made in achieving some level of interoperability and mutual recognition of eID systems in the region. As of early 2024, the WB6 economies significantly lag behind the EU average in terms of cross-border services, meaning that the region’s citizens have limited opportunities to use online government services when travelling in the region or in EU member states.
Interoperability challenges with information systems and the low utilisation of interoperability platforms for data exchange among public bodies hamper the coherent use of data
Sectoral and horizontal strategies recently adopted in WB6 economies emphasise the importance of using and applying new technologies in the work and provision of services. In practice, however, the coherent use of data and digital technologies in all government functions is still constrained by challenges related to the digitisation of public registers and the integration of information systems, the availability of appropriate technical equipment and communication technologies in public administration, the development of pro‑digitalisation mindsets, and the efficiency of in-service training for civil servants on the use and application of new technologies in their everyday work. These challenges are further pronounced at the local administration level. Data and digital technologies are not yet consistently used in the entire range of government functions, such as policy making and monitoring, financial management, and civic engagement.
Despite advancements in developing government interoperability platforms since 2021, data-driven decision making and transparency remain limited. Common challenges include the underutilisation of these platforms for data exchange among public bodies, and a slow pace in connecting public administration information systems and digitalising public registers. Albania and Serbia stand out among WB6 economies in terms of interconnecting public information systems with their government platforms. At the end of 2023, Albania had connected around 60 information systems and 230 public institutions (mainly from the central government) to its government platform, Serbia had connected the majority of its public sector databases, Montenegro had connected 37 out of approximately 300 public registers, while North Macedonia had interconnected only 52 public institutions. This assessment indicates that Kosovo, Montenegro and North Macedonia acknowledge that their government interoperability platforms are currently underutilised. In Bosnia and Herzegovina, technical interoperability infrastructure suffers from a lack of enforceability and support (OECD, 2022[22]).
Western Balkan economies have not yet invested in cross-border interoperability and their future integration into the European Digital Single Market
The WB6 economies have not yet started to prepare for their alignment with the new Interoperable Europe Act,16 which aims to establish a co-operation framework for EU public administrations to ensure the seamless delivery of public services across borders, and to provide support measures that will promote innovation and enhance skills and knowledge exchange. Aligning with this new EU regulation will be critical for Western Balkan economies in joining the European Digital Single Market as it will enable the cross‑border interoperability of network and information systems and thus the cross-border exchange of data. The importance of strengthening cross-border interoperability through national interoperability frameworks is stressed in the new Growth Plan for the Western Balkans (European Commission, 2023[21]).
While all WB6 economies except Bosnia and Herzegovina have adopted national interoperability frameworks, Albania and Serbia are aligned with the revised European Interoperability Framework (EIF) (European Commission, 2023[23]). Alignment is still pending in Montenegro (European Commission, 2023[24]), North Macedonia (European Commission, 2023[25]) and Kosovo (European Commission, 2023[26]). Bosnia and Herzegovina has yet to develop a nationwide interoperability framework and to align with the EIF (European Commission, 2023[27]).
Since 2023, all WB6 economies have joined the Digital Europe Programme, which provides opportunities for businesses and public administrations to take part in projects that deploy innovative digital technologies across the EU. The programme will be the primary funding instrument for implementing the Interoperable Europe Act, stimulating public sector innovation and public-private “GovTech” projects. The Interoperable Europe Community that supports the programme brings together a broad set of interested practitioners and experts from GovTech companies, the open source community, regions and cities across the EU to help implement new solutions. By actively joining this programme, WB6 economies will be making a push towards interoperability, eventually connecting with European digital governments.
Supporting private sector digitalisation
Unleashing the potential of digital transformation for companies, especially SMEs, requires holistic policies that encompass a broad range of aspects to help businesses navigate this transition effectively (OECD, 2020[28]).
Western Balkan economies have acknowledged the importance of helping SMEs embrace digital technologies. This commitment is reflected in strategic documents targeting information society development or digital transformation that have been published since the CO 2021 assessment, for example the promotion of ICT adoption by SMEs through e-commerce and e-business development (in Albania, Montenegro and Serbia), alongside digital innovation and entrepreneurship (in all WB economies to some extent).
Inadequate financial resources are allocated to raise awareness of digitalisation benefits among SMEs and effectively support their digital transformation
Improving productivity and competitiveness through the digitalisation of business models, processes and products depends on the successful dissemination of digital tools, which is significantly influenced by awareness campaigns and business investment in ICT. Since the CO 2021 assessment, most WB6 economies have intensified efforts to promote ICT investment through programmes providing monetary support to buy ICT equipment or services, and through non-financial support such as digital transformation consulting and mentoring services. However, these business digitalisation programmes have yielded limited results in terms of ICT adoption by SMEs. This can be attributed primarily to the insufficient allocation of funds to co-finance digital transformation projects, coupled with the lack of awareness regarding the availability of these programmes or how digital tools can support business growth.
The percentage of businesses with a website serves as an indicator of ICT adoption. In 2023, this indicator remained significantly lower than averages for the EU (78.1%) and OECD (77.5%) in Albania, Bosnia and Herzegovina, Kosovo, and North Macedonia (Figure 5.5). Additionally, while the use of social media for business purposes in the WB6 was roughly on par with the EU average (60.9%) in 2023 (Eurostat, 2023[29]), the adoption of more advanced digital tools such as cloud computing was below the EU average (45.2%) across all WB economies. For instance, in 2023 cloud computing was used by 20.7% of companies in Bosnia and Herzegovina, 31.7% in Montenegro and 37% in Serbia (Eurostat, 2023[30]).
The low percentage of businesses engaging in online sales in Albania, Kosovo and North Macedonia underscores a deficiency in effectively investing in programmes promoting e‑commerce adoption among companies (Figure 5.6). These economies primarily rely on EU and donor-funded programmes to help businesses embrace e-commerce and e-business practices.17 In Montenegro, only one-third of businesses are aware of the dedicated portal for digitalisation support, according to analysis conducted by the Montenegrin Chamber of Commerce in 2023 (KOMORA, 2023[31]). Additionally, even in Serbia, where annual dedicated programmes for SME digital transformation have been implemented since 2021, allocated funds have failed to meet industry demand: in 2022, only 272 companies received support from a total of 447 SMEs that applied for digital transformation consulting services.
The unavailability of digital skills in the workforce and the scarcity of ICT talent hinders the digital transformation of businesses
Digital innovation and entrepreneurship policies aimed at nurturing startups, facilitating access to finance, and fostering collaboration between industry and research institutions can play a crucial role in cultivating a vibrant digital ecosystem. Since the CO 2021 assessment, Western Balkan economies have made strides in enhancing the legal framework for entrepreneurship and startups, while also fostering initiatives to support innovation. The economies have invested in establishing dedicated innovation and startup funds, alongside initiatives to develop digital innovation hubs, technology parks, business accelerators, startup centres and IT clusters. However, the effectiveness of these initiatives is impeded by the scarcity of ICT talent and the digital skills deficit prevalent in the workforce throughout the region.
The digital skills deficit in the workforce (see Chapter 3: Skills) and the shortage of IT professionals, compounded by brain drain, hinder the ability of WB6 economies to harness the innovation potential of SMEs and startups. WB6 governments have yet to prioritise the development of comprehensive initiatives to address these challenges.
Digital upskilling activities have fallen behind in the majority of the WB6 economies, with the notable exception of Serbia, where the Digital Academy of the Centre for Digital Transformation of the Chamber of Commerce and Industry offers free training on the fundamentals of digital transformation. IT (re-)training programmes have already trained 2 200 participants, with plans in place to address the digital skills gap by increasing the capacities of technical faculties in universities and enhancing programming classes in high schools.
Supporting effective and cutting-edge technological innovations
Due to the rapid development of emerging technologies, policy makers around the world, including those in the Western Balkans, are facing challenges in keeping pace and implementing policies that can harness the potential of these technologies, while minimising the associated risks (OECD, 2022[34]). The Western Balkans is still in the early stages of policy and regulation development at the economy level, which implies the need for overarching strategies and regional co-ordination, as this is not solely a national issue.
The region is pooling efforts to design frameworks governing emerging technologies, with each economy at different levels of readiness
The WB6 economies, with the exception of Serbia, have yet to implement comprehensive regulations for emerging digital technologies such as artificial intelligence (AI), blockchain and the IoT. While measures for AI are progressing, with each economy having at least one digital development or reform strategy incorporating measures related to AI technologies, those for blockchain and IoT are lagging behind.
Among the WB6 economies, Serbia and North Macedonia show more advanced AI development. Serbia’s National Strategy for Development of AI aligns with the European AI Initiative and addresses several OECD AI principles (Box 5.2). It has established the Research and Development Institute for Artificial Intelligence to foster collaboration between public and private sector entities and serve as an incubator for AI startups. Serbia was also elected Chair of the OECD's Global Partnership on Artificial Intelligence (GPAI) for 2025. In parallel, North Macedonia is in the process of establishing a Coalition for Responsible Artificial Intelligence, positioning itself to become the second economy in the region (besides Serbia) to propose ethical guidelines regarding AI technology usage.
Box 5.2. OECD Recommendation of the Council on Artificial Intelligence
Adopted in 2019, revised in 2023 and amended in 2024, the OECD Recommendation of the Council on Artificial Intelligence (AI) builds upon existing OECD standards, including those on privacy and data protection, digital security risk management, and responsible business conduct.
The OECD’s AI standards were established with the ethos that the technology’s rapid development, use and implementation at the national level across the world requires a stable policy environment that supports a human-centric approach and fosters research, preserves economic incentives to innovate and applies to all stakeholders. The recommendation is aligned with the United Nations Sustainable Development Goals and the UN Declaration on Human Rights.
The recommendation is separated into two sections that encompass principles to ensure good practice and offer recommendations for OECD member and non-member states:
Section one covers principles for responsible stewardship of trustworthy AI, including inclusive growth, sustainable development and well-being, human-centred values and fairness, transparency and explainability, robustness, security and safety, and accountability.
Section two addresses national policies and international co-operation for trustworthy AI, including recommendations on investing in AI research and development, fostering a digital ecosystem for AI, shaping and enabling the policy environment for AI, building human capacity and preparing for labour market transformation, and international co-operation for trustworthy AI.
Given the evolving landscape of AI adoption, the Western Balkans is in a unique position where aligning AI initiatives and governmental frameworks with the OECD recommendation will foster responsible innovation and significantly contribute to regional economic convergence efforts. By embracing these guidelines, the Western Balkans can build upon an established foundation for AI governance that prioritises ethical considerations, fosters trust and leads with a human-centric approach, thereby facilitating sustainable growth and prosperity in the region.
Source: OECD (2024[35]).
Although it remains to be broadly adopted, governments across the WB6 are initiating the integration of blockchain technology as part of their wider digitalisation strategies, marking progress in their adoption of emerging technologies beyond AI. Albania is implementing blockchain technology into its governmental services through the Digital Agenda Strategy 2022-26, and Serbia is laying the groundwork for national-level blockchain integration with its 2020 Law on Digital Assets, which legally recognises virtual currencies and digital tokens as digital assets. These proactive digital initiatives signify progress towards the broader integration of emerging technologies beyond AI, underscoring the commitment of WB6 economies to aligning with EU and OECD standards.
The prevalence of IoT adoption in enterprises across the region surpasses that of AI, with notable variances in adoption rates compared to EU peers
The prevalence of AI policies exceeds those of IoT and blockchain, although data reveal that enterprises across the Western Balkans rely more on IoT in their daily operations. IoT enabled products and services can automate processes and optimise resource utilisation, leading to increased efficiency and cost savings. Within the region, AI adoption stands at 4%, while 22% of enterprises have embraced IoT. Notably, North Macedonia exceeds the EU average of AI adoption in enterprises by 2 percentage points, and Albania surpasses the EU average of IoT adoption by 6 percentage points (Figure 5.7).
However, a more comprehensive review underscores that despite these outliers, WB6 economies generally lag behind the EU average in enterprise adoption rates of both AI and IoT. Across the EU and Bosnia and Herzegovina, North Macedonia, and Serbia (no data available for Albania, Kosovo and Montenegro), the use of IoT is largely for premises’ security, such as smart-alarm systems, smoke detectors, door locks and security cameras, with an EU enterprise adoption average of 72%. IoT is also employed for energy consumption management (30% adoption rate among enterprises in the EU) and logistics management (24%), showcasing how the Western Balkans can learn from the evolving dynamics of the EU market and consider areas where significant gaps persist.
Recommendations for encouraging the uptake of digital technologies
Improve regional interoperability and advance towards European interoperability to achieve full integration into the European Digital Single Market. Western Balkan economies face challenges in achieving regional interoperability for cross-border services due to the lack of mutual recognition of eID systems and trust services. This hampers the region's aspirations of facilitating the free movement of workers and citizens across the Western Balkans. To overcome this obstacle, the region should prioritise efforts to enhance regional interoperability, aligning with the revised European Interoperability Framework. Such alignment will enable Western Balkan economies to seamlessly connect with European digital governments, fostering the development of effective cross-border digital public services. In pursuit of this goal, Western Balkan governments should actively consider aligning with the European Interoperable Act, which aims to establish a new co-operation framework for EU public administrations to ensure the smooth delivery of public services across borders.
Enhance user-centricity by consolidating digital public services into a single online point of entry, and adopt an omnichannel approach for digital service delivery. Western Balkan economies are gradually consolidating all government websites into a single domain. These efforts should be intensified to further simplify user journeys and foster better understanding of data flows within the public sector. To meet the evolving needs of citizens in an increasingly digital environment, regional governments should provide seamless and cohesive service experiences across multiple channels, including online platforms, mobile applications and physical service centres. Governments should invest in modernising their service delivery infrastructure, ensuring interoperability and integration among various channels, and adopting user-centric design principles to enhance accessibility and usability. By embracing the omnichannel approach, Western Balkan economies can improve citizen engagement, streamline service delivery, and foster greater trust and satisfaction in government services (Box 5.3).
Box 5.3. Designing and delivering public services in the digital age: The omnichannel strategy
The evolution from analogue to digital government has left a large footprint. The processes, data flows and channels for delivering public services follow from strategies developed by different organisations at different times. Moreover, public services can be provided by central, regional or local governments and involve crossing nuanced organisational boundaries that may not be clear to the citizens or businesses trying to access services from “government”. The result of this patchwork are user journeys that might involve switching among phone calls, face-to-face exchanges or online transactions. Although citizens might be able to access public services via this “multi-channel” approach, the websites, call centres, self-service kiosks or physical locations often behave as separate siloes, and interactions begun online often cannot be completed in person and vice versa.
A clear omnichannel strategy is therefore vital for addressing the confusion and competition between multiple entry points into government services. The omnichannel model of public service provision ensures that no matter the channel someone chooses, they will always be able to seamlessly access a consistent, joined-up and high-quality service. The clarity of this strategy and the leadership to support it is vital for ensuring that service teams can concentrate on meeting the needs of their users, not developing new channels of their own.
Several countries have consolidated all government websites into a single domain, which simplifies access for users. Such an approach simplifies access and the entire landscape of service provision, including the consolidation of user journeys and a better understanding of data flows within the public sector. These ambitions rely on government leaders cutting through organisational siloes, fostering horizontal integration and disrupting historic policy domain specific practices. Without these efforts it will prove very hard to ensure a consistent and seamless experience for the public.
Source: Welby and Tan (2022[39]).
Accelerate digital transformation among SMEs by increasing awareness of the benefits of digitalisation and supporting their journey towards digital maturity. Governments should allocate sufficient funds to co-finance digital transformation projects, ensuring that SMEs have access to subsidised digital transformation consulting and mentoring services. They should raise awareness among SMEs about the benefits of digitalisation and the availability of digital tools capable of supporting business growth. Moreover, Western Balkan economies should prioritise the establishment of digital innovation hubs and ensure that SMEs seize the opportunities presented by the Digital Europe Programme, including access to funding support for digital innovation projects, advanced digital infrastructure (such as high-performance computing, AI and cybersecurity capabilities), innovation partnerships and increased market opportunities within the EU. By implementing these measures, the WB6 economies can empower SMEs to embrace digitalisation, enhance competitiveness and unlock new opportunities for sustainable growth in the digital economy.
Embracing digital sustainability
Building an inclusive and sustainable digital future for all
Enhancing Internet accessibility and digital literacy is paramount to ensure digital inclusivity. The strategic frameworks adopted in the WB6 economies incorporate measures on improving the quality of government digital services, enhancing digital literacy among disadvantaged groups, and ensuring Internet access to every household and public institution. They identify various challenges to overcome, such as underdeveloped or low-quality network infrastructure, particularly in rural areas; low levels of digital skills among vulnerable groups; and a considerable urban-rural divide due to significant rural populations.
Policy initiatives to enhance digital literacy among vulnerable groups and efforts to redesign e-services and websites to promote e-accessibility are not sufficiently prioritised
Digital sector policies implemented in the Western Balkans since the CO 2021 assessment have begun to address digital inclusion challenges such as digital literacy and the accessibility of digital technologies for vulnerable groups. However, the region still faces limitations in implementing initiatives to develop digital skills among vulnerable populations, often relying on EU and international donor funding. Moreover, despite commitments to EU accession, progress in addressing e-accessibility issues for people with disability in public sector websites and online applications has been minimal across Western Balkan economies. This is due to the non-binding nature of accessibility rules for public sector websites in some economies, and the low prioritisation of necessary redesign activities to align with EU and international e‑accessibility standards.
While Serbia and Montenegro have adopted relevant legal obligations and rules on e-accessibility, implementation has been sluggish. The central government websites in these two economies and state‑level institution websites in Bosnia and Herzegovina comply with the Web Content Accessibility Guidelines (WCAG 2.0) standard,18 but other public bodies and local governments have yet to redesign their websites accordingly. Albania and North Macedonia plan to align with the EU acquis in 2024. The integration of accessibility requirements for ICT products and services in public procurement processes has also yet to be realised in Western Balkan economies.
While most WB6 economies are advancing digital government services by prioritising digital channels for accessing government services and promoting efficiency, accessibility and convenience, they have yet to adequately provide alternative channels for individuals lacking digital access or skills, or those who prefer non-digital methods. Additionally, although some economies are gradually adopting the one-stop shop approach in digital government, enhancing user-friendliness and engagement, progress in implementing the “once only” principle to reduce the need for in-person transactions remains insufficient.
Regarding Internet access in households, regional economies have made strides since 2021, with Kosovo leading at 98.60% of households having some form of Internet access, surpassing the EU average of 93.08% in 2023 (Figure 5.8). This progress is attributed to achievements in network coverage through initiatives such as the Kosovo Digital Economy (KODE) project.19 Albania is also surpassing the EU average, while the other WB6 economies slightly lag behind, with Montenegro ranking last at 81.28%.
While Internet access is becoming widespread across the region, equitable participation in the digital economy is hindered by skills gaps among certain demographic groups (Figure 5.9). While young individuals (aged 16-24) in Bosnia and Herzegovina, Montenegro, and Serbia exhibit similar digital skills to those in EU member states, young people in Albania and North Macedonia slightly trail behind. As age increases, the skills gap widens, with Montenegro the only WB6 economy maintaining a relatively smaller gap in the 55-64 and 65-74 age groups compared to the EU average, while the rest significantly lag behind. Albania faces the lowest percentage of digitally skilled individuals in the region, with only 4.7% and 1.2% of individuals aged 55-64 and 65-74, respectively, possessing digital skills, indicating significant exclusion from the digital transformation process among these age groups.
Challenges in digital literacy extend to other vulnerable groups, exacerbating marginalisation. However, regional economies inadequately monitor digital inclusion indicators for groups such as people with disability and Roma or Egyptian populations. The implementation of digital literacy activities outlined in digital sector strategies in Albania, Montenegro, North Macedonia and Serbia is slow. In Montenegro, the Digital Academy has yet to offer digital skills training to vulnerable groups, while in Serbia, planned subsidies for these groups to purchase computer equipment and receive training are still pending. In Bosnia and Herzegovina, civil society initiatives play a crucial role in enhancing digital literacy, such as the IT Girls in BiH20 that had trained 2 000 girls and young women by 2022.
Digital literacy is particularly critical in Albania, as the government has adopted a “digital-by-default” model in service delivery, with 95% of all services provided online, and is phasing out traditional service points. However, the government has yet to ensure that this approach does not exclude individuals facing barriers to digital access and that it provides support and alternatives for people to access services through other means.21 Western Balkan economies have yet to prioritise the establishment of local service centres to assist citizens in using e-services. In North Macedonia, for instance, single point of service centres exist only in five cities, while plans for further expansion are pending.
Limiting the environmental impact of digital technologies
Limiting the environmental impact of digital technologies is crucial for ensuring sustainable development and mitigating the ecological footprint of an increasingly digitalised world.
Western Balkan economies have not integrated environmental sustainability considerations into their digital transformation strategies and reform programmes
While heavily focusing on accelerating digitalisation, WB6 economies have largely overlooked its environmental impact. Albania stands out with its National Plan for the Development of Digital Infrastructure, which introduces measures to make high-speed communication networks environmentally friendly by implementing sustainable energy technologies such as solar installations at remote telecommunication stations. Similarly, Kosovo’s Economic Reform Programme 2023-25 outlines activities aimed at harnessing digital technologies to facilitate the green transition, although tangible outcomes have yet to materialise.
Western Balkan initiatives promoting environmental sustainability in digital technology use and awareness campaigns about the environmental footprint of digital technology are still in their infancy. While some EU and donor-funded projects attempt to address this issue, they have yet to take a strategic role for the region. For example, the Computing Power Goes Green project,22 implemented by a partnership that includes the National Agency of Information Society in Albania and the Bureau for Regional Development in North Macedonia, aims to identify obstacles to green digitalisation and raise awareness about creating environmentally sustainable digital infrastructure. Initiatives under this project include tangible outcomes such as reducing the energy consumption of the Albanian government data centre by 20% (NAIS, 2023[41]).
On a positive note, the WB6 economies are gradually integrating measures on waste electric and electronic equipment (e-waste) into their waste management policies. Over the past three years, Montenegro, North Macedonia, Serbia and FBiH have adopted or updated legal frameworks regulating e-waste management, and Albania and Kosovo have plans to establish relevant frameworks soon. These economies have also introduced extended producer responsibility (EPR) principles for e-waste management, although implementation is still in its early stages. EPR ensures that manufacturers consider the full lifecycle of their products, which promotes sustainability and environmental responsibility.
Furthermore, some economies have begun monitoring indicators measuring enterprises and individuals’ environmental practices regarding the energy efficiency and e-waste disposal of ICT equipment. This monitoring will facilitate informed policy and decision-making processes that promote sustainable digitalisation (including potential greenhouse gas emissions and waste reduction). Data reveal that businesses in the Western Balkans are taking measures to reduce the energy consumption of ICT and to consider the environmental footprint of ICT services and equipment before making purchasing decisions (Figure 5.10). Serbia is on par with the EU average on both counts, while Montenegro lags behind the other regional economies in how its businesses consider ICT sustainability. On the contrary, citizens in the region appear to be unaware of the environmental impacts of ICT, as demonstrated by the low rates of recycling old smartphones, tablets and laptops (Figure 5.11). Although ICT recycling practices are more frequent in Montenegro than in Serbia and Albania, they still significantly lag behind the EU average.
Recommendations for embracing digital sustainability
Prioritise digital inclusion by enhancing digital literacy among vulnerable groups. Western Balkan economies must design effective programmes targeting digital skills development for underprivileged groups in the population. Governments should tailor digital skills training to the specific needs and preferred delivery modes of marginalised individuals, including the elderly, people with disability, and Roma and Egyptian populations. To address the growing demand for digital literacy, regional economies should mobilise existing resources or establish new digital academies to provide free access to digital skills training. They should also leverage institutions such as public libraries or local cultural centres to offer relevant training, prioritising ease of access and user-friendly delivery methods to make them appealing to the individuals targeted.
Address persisting e-accessibility issues in public sector websites and integrate accessibility standards and requirements into the public procurement of ICT. Western Balkan economies should accelerate public website redesign initiatives to ensure that they comply with international standards on e-accessibility (WCAG) and relevant EU legislation.23 ICT products and services procured by public sector entities must comply with recognised accessibility standards, ensuring that they are inclusive and accessible to all users, including people with disability. Additionally, regional governments should invest in training programmes and capacity-building initiatives to raise awareness among public procurement officials and ICT vendors about the importance of e-accessibility and the specific requirements to be met.
Develop green digital policies and integrate green digital technology considerations into horizontal and sectoral policies. To foster sustainable development and mitigate environmental impact, Western Balkan economies should prioritise the adoption of energy efficient ICT infrastructure, incentivising the use of renewable energy sources for digital operations and encouraging the development and deployment of green digital technologies such as smart grids, energy efficient data centres and e-mobility solutions. Additionally, it is essential to address the greenhouse gas emissions and packaging waste associated with e-commerce as a part of both digital and sectoral policies. It is also important to invest in monitoring and evaluating the environmental footprint of the use of digital technologies in the public sector and in ICT-intensive firms. To further support these efforts, the WB6 economies should establish certification schemes and standards to help ICT companies measure the environmental impact of their digital technologies. These standards can provide guidance on assessing energy consumption, carbon emissions and other environmental factors associated with digital products and services. By adhering to these standards, ICT companies can make informed decisions to minimise their environmental footprint and contribute to sustainability goals.
References
[17] Capgemini, Sogeti, IDC and Politecnico di Milano (2023), The eGovernment Benchmark 2023, European Commission, Directorate-General for Communications Networks, Content and Technology, https://digital-strategy.ec.europa.eu/en/library/egovernment-benchmark-2023.
[18] CEP (2023), Western Balkan PAR Monitor 2021/2022, European Policy Centre, https://media.institut-alternativa.org/2023/07/Regional-PAR-Monitor.pdf.
[9] CPJ (2022), Political Pressure on Journalists Risks Undermining Media Freedom Progress in Kosovo, Committee to Protect Journalists, The John S. and James L. Knight Foundation Press Freedom Center, https://cpj.org/wp-content/uploads/2022/11/Joint-mission-findings-Kosovo-2022-Google-Docs.pdf.
[1] DBnomics (2024), Broadband Internet Coverage by Technology, https://db.nomics.world/Eurostat/isoc_cbt?tab=list (accessed on 14 May 2024).
[11] European Commission (2024), Online Dispute Resolution, https://ec.europa.eu/consumers/odr/main/?event=main.home2.show (accessed on 13 May 2024).
[27] European Commission (2023), Commission Staff Working Document: Bosnia and Herzegovina 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_691%20Bosnia%20and%20Herzegovina%20report.pdf.
[26] European Commission (2023), Commission Staff Working Document: Kosovo* 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/document/download/760aacca-4e88-4667-8792-3ed08cdd65c3_en?filename=SWD_2023_692%20Kosovo%20report_0.pdf.
[24] European Commission (2023), Commission Staff Working Document: Montenegro 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_694%20Montenegro%20report.pdf.
[25] European Commission (2023), Commission Staff Working Document: North Macedonia 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_693%20North%20Macedonia%20report.pdf.
[23] European Commission (2023), Commission Staff Working Document: Serbia 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_695_Serbia.pdf.
[21] European Commission (2023), New Growth Plan for the Western Balkans, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Commiittee and the Committee of the Regions, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/COM_2023_691_New%20Growth%20Plan%20Western%20Balkans.pdf.
[43] Eurostat (2024), Destination of ICT Devices No Longer in Use, https://ec.europa.eu/eurostat/databrowser/product/page/ISOC_ECO_DD (accessed on 14 May 2024).
[33] Eurostat (2024), E-commerce Sales of Enterprises by Size Class of Enterprise, https://ec.europa.eu/eurostat/databrowser/view/ISOC_EC_ESELS/default/table?lang=en&category=isoc.isoc_e.isoc_ec (accessed on 13 May 2024).
[20] Eurostat (2024), E-Government Activities of Individuals via Websites, https://ec.europa.eu/eurostat/databrowser/view/isoc_ciegi_ac/default/table?lang=en (accessed on 13 May 2024).
[2] Eurostat (2024), Households – Level of Internet Access, https://ec.europa.eu/eurostat/databrowser/view/ISOC_CI_IN_H/default/table?lang=en (accessed on 14 May 2024).
[42] Eurostat (2024), ICT and Environment by Size Class of Enterprise, https://ec.europa.eu/eurostat/databrowser/view/isoc_e_envs/default/table?lang=en&category=isoc.isoc_e (accessed on 14 May 2024).
[40] Eurostat (2024), Individuals’ Level of Digital Skills by Sex and Age, https://data.europa.eu/data/datasets/tian5i34qtgnpsqhfjth9q?locale=en (accessed on 14 May 2024).
[10] Eurostat (2024), Internet Purchases by Individuals (2020 Onwards), https://ec.europa.eu/eurostat/databrowser/view/isoc_ec_ib20/default/table?lang=en (accessed on 14 May 2024).
[32] Eurostat (2024), Websites and Functionalities by Size Class of Enterprise, https://ec.europa.eu/eurostat/databrowser/view/ISOC_CIWEB/default/table?lang=en&category=isoc.isoc_e.isoc_cism (accessed on 13 May 2024).
[30] Eurostat (2023), Cloud Computing Services by Size Cass of Enterprise, https://doi.org/10.2908/ISOC_CICCE_USE (accessed on 5 June 2024).
[29] Eurostat (2023), Social Media Use by Type, Internet Advertising and Size Class of Enterprise, https://doi.org/10.2908/ISOC_CISMT (accessed on 5 June 2024).
[37] Eurostat (2023), Use of Artificial Intelligence in Enterprises, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Use_of_artificial_intelligence_in_enterprises (accessed on 13 May 2024).
[36] Eurostat (2021), Enterprises using IoT, https://ec.europa.eu/eurostat/statistics-explained/images/c/c5/Enterprises_using_IoT%2C_2021.png (accessed on 5 June 2024).
[14] ICC (2024), Dispute Resolution Services – ADR, International Chamber of Commerce, https://iccwbo.org/dispute-resolution/dispute-resolution-services/adr/ (accessed on 13 May 2024).
[4] ITU (2024), DataHub, International Telecommunication Union, https://datahub.itu.int/ (accessed on 5 June 2024).
[8] Kantar (2023), Public Opiniion Research – Citizens’ Perception of Personal Data Protection, Kantar Serbia, TMG Insights, https://www.poverenik.rs/images/stories/dokumentacija-nova/Publikacije/Prezentacija_rezultati_istra%C5%BEivanja_OEBS-Poverenik-Kantar/041223_Report_Citizens_Perception_of_Personal_Data_Protection_050723.pdf.
[31] KOMORA (2023), “Poslovni Ambijent U Crnoj Gori Na Osnovu Anketnog Istraživanja Realizovanog U Periodu Februar-Mart 2023” [Business Environment in Montenegro on the Basis of a Survey Conducted in the Period February-March 2023], Chamber of Commerce of Montenegro, https://komora.me/wp-content/uploads/2023/09/poslovni-ambijent-u-cg-sep-2023-w.pdf.
[19] Metamorphosis (2022), North Macedonia Digital Agenda Observatory – Country Report and Roadmap for Digital Agenda Advancement in North Macedonia, Metamorphosis Internet and Society Foundation, https://metamorphosis.org.mk/en/izdanija_arhiva/digital-agenda-observatory-country-report-and-roadmap-for-digital-agenda-advancement-in-north-macedonia-2022/.
[7] MIT (2022), 2022 Annual Report of the Action Plan for the Implementation of the Strategy for Information Society Development and Information Security for the Period from 2021-2023, Ministry of Information and Telecommunications, https://www.mit.gov.rs/tekst/702/sektor-za-informaciono-drustvo-i-informacionu-bezbednost.php.
[41] NAIS (2023), “Zgjidhjet ’Green’, AKSHI: Planifikojmë 20 % Kursim Të Energjisë Në Datacenter-in Qeveritar Shqiptar” [’Green’ Solutions, AKSHI: We Plan 20% Energy Savings in the Albanian Government Datacenter], National Agency of Information Society, https://akshi.gov.al/zgjidhjet-green-akshi-planifikojme-20-kursim-te-energjise-ne-datacenter-in-qeveritar-shqiptar/.
[3] OECD (2024), OECD Data Explorer, OECD, Paris, https://data-explorer.oecd.org/ (accessed on 6 May 2024).
[35] OECD (2024), Recommendation of the Council on Artificial Intelligence, OECD, Paris, https://legalinstruments.oecd.org/en/instruments/oecd-legal-0449.
[34] OECD (2022), “Harnessing the power of AI and emerging technologies: Background paper for the CDEP ministerial meeting”, OECD Digital Economy Papers, No. 340, OECD Publishing, Paris, https://doi.org/10.1787/f94df8ec-en.
[22] OECD (2022), Monitoring Report Executive Summary: The Principles of Public Administration – Bosnia And Herzegovina, OECD, Paris, https://www.sigmaweb.org/publications/Monitoring-Report-Executive-Summary-May-2022-Bosnia-and-Herzegovina.pdf.
[28] OECD (2020), “Going digital: An integrated approach to policy making in the digital age”, in OECD Digital Economy Outlook 2020, OECD Publishing, Paris, https://doi.org/10.1787/c5b3ea5d-en.
[15] OECD (2020), “The OECD digital government policy framework: Six dimensions of a digital government”, OECD Public Governance Policy Papers, No. 02, OECD Publishing, Paris, https://doi.org/10.1787/f64fed2a-en.
[16] OECD (2014), Recommendation of the Council on Digital Government Strategies, OECD, Paris, https://www.oecd.org/gov/digital-government/recommendation-on-digital-government-strategies.htm.
[6] PwC (2022), Cybersecurity Ecosystem Report, Western Balkans: Emerging Cyber Threats, PricewaterhouseCoopers, https://www.isac-fund.org/wp-content/uploads/2022/04/PwC-Cybersecurity-Ecosystem-Report-WB.pdf.
[38] RCC (2023), Western Balkans Digital Economy Society Index: WB DESI 2022 Report, Regional Cooperation Council, https://www.rcc.int/pubs/159/western-balkans-digital-economy-society-index-wb-desi-2022-report.
[13] SIAC (2024), Singapore International Arbitration Centre (homepage), https://siac.org.sg/ (accessed on 13 May 2024).
[12] SMC (2024), Singapore Mediation Centre (homepage), Singapore Mediation Centre, https://mediation.com.sg/ (accessed on 13 May 2024).
[5] WBIF (2024), Digital Future: Universal Access to Fast and Secure Broadband, a WBIF Digital Future Factsheet, Western Balkan Investment Framework, https://www.wbif.eu/storage/app/media/Factsheets%20April%202024/WBIF%20DIGITAL%20Factsheet%20April%202024.pdf.
[39] Welby, B. and E. Tan (2022), Designing and Delivering Public Services in the Digital Age, Going Digital Toolkit Note, No. 22, OECD, Paris, https://goingdigital.oecd.org/data/notes/No22_ToolkitNote_DigitalGovernment.pdf.
Notes
← 1. The WBIF is currently financing the Rural Broadband Rollout project (phase 2), which aims to enable Serbia to connect the existing fibre backbone to an additional 815 settlements, 305 schools and at least 128 000 households in rural areas without access to a broadband network.
← 2. According to the Word Bank, in 2022 the percentage of rural population was 50% in Bosnia and Herzegovina, 43% in Serbia 43%, 41% in North Macedonia, 36% in Albania, and 31% in Montenegro, significantly higher than the EU average (25%) and the OECD average (19%) https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS?locations=BA-RS-MK-AL-ME-EU-OE.
← 3. The Balkans Digital Highway initiative, under preparation with lead financing by the World Bank, follows a WBIF technical assistance project for the preparation of the Feasibility Study, Cost Benefit Analysis and Preliminary Design of the Balkans Digital Highway network, completed in October 2023. For more information see: https://wbif.eu/project-detail/PRJ-MULTI-DII-006 and https://www.wbif.eu/technicalassistancegrants//WB22-REG-DII-02.
← 4. Directive 2014/61/EU of the European Parliament and of the Council of 15 May 2014 on measures to reduce the cost of deploying high-speed electronic communications networks Text with EEA relevance, see: http://data.europa.eu/eli/dir/2014/61/oj.
← 5. Communication from the Commission Guidelines on State aid for broadband networks 2023/C 36/01, see: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023XC0131%2801%29.
← 6. Commission Recommendation (EU) 2020/1307 of 18 September 2020 on a common Union toolbox for reducing the cost of deploying very high capacity networks and ensuring timely and investment-friendly access to 5G radio spectrum, to foster connectivity in support of economic recovery from the COVID-19 crisis in the Union, see: http://data.europa.eu/eli/reco/2020/1307/oj.
← 7. Previously called National Authority on Electronic Certification and Cyber Security.
← 8. The Western Balkans Cyber Capacity Center (WB3C) is a regional cyber capacity building initiative based in Montenegro supported by the EU, see: https://me.ambafrance.org/Western-Balkans-Cyber-Capacity-Center-WB3C.
← 9. Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), see: http://data.europa.eu/eli/reg/2016/679/oj.
← 10. Directive (EU) 2016/680 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA, see: http://data.europa.eu/eli/dir/2016/680/oj.
← 11. Staff count reported at the end of 2023 for the respective authorities for free access to public information and personal data protection in the Western Balkan economies: BiH (11), Kosovo (4), Montenegro (29) and North Macedonia (20), in contrast to Serbia (115) and Albania (60). This staff count includes personnel for both competences related to free access to information and personal data protection.
← 12. Proposal for a Regulation of the European Parliament and of the Council on measures to reduce the cost of deploying gigabit electronic communications networks and repealing Directive 2014/61/EU (Gigabit Infrastructure Act), see: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52023PC0094.
← 13. Data provided to the OECD by relevant institutions from WB6 economies.
← 14. SIGMA-OECD monitoring reports based on the Methodological Framework for the Principles of Public Administration, see: https://www.sigmaweb.org/publications/monitoring-reports.htm.
← 15. Pillar 1 of the new Growth Plan underlines the importance of the integration of the region into EU trust services once national legislation is compliant with eIDAS. Currently, only Albania, Montenegro and Serbia are aligned.
← 16. Regulation (EU) 2024/903 of the European Parliament and of the Council of 13 March 2024 laying down measures for a high level of public sector interoperability across the Union (Interoperable Europe Act), see: http://data.europa.eu/eli/reg/2024/903/oj.
← 17. In Albania, the donor funded programmes “CoSolve-19” and “ConnectIT 2.0” supported 300 and 75 SMEs, respectively, in their digitalisation endeavours. In Bosnia and Herzegovina, the EU and donor funded “Go Digital in BiH” programme co-financed SME digitalisation. In Kosovo, the donor-funded “Access” programme supported 62 businesses in the period 2019-2022.
← 18. WCAG 2.0 provide recommendations for making web content more accessible to people with disability. Adhering to these guidelines also enhances the usability of web content for all users.
← 19. The development objective of the Kosovo Digital Economy (KODE) project is to improve access to better quality and high‐speed broadband services in project areas and to online knowledge sources, services and labour markets among citizens, and public and academic institutions.
← 20. Four UN agencies (UNDP, UNICEF, UN Women and UNFPA) launched the IT Girls initiative in BiH aimed at bridging the digital gender gap and promoting equal opportunities in the marketplace, workplace and community through high-quality digital skills training.
← 21. Albania is currently establishing the Omni-Channel Contact Centre to provide support through various channels, including the virtual assistant, a reshaped helpdesk support, phone calls and face-to-face interactions as the very last resource. In addition, Youth Innovation Centers should offer face-to-face guidance on using e-Albania, host ICT training courses to boost digital skills and provide basic digital skills training.
← 22. The Computing Power Goes Green project (GO_GREEN) is under the Transnational Cooperation Programme Interreg V-B "Balkan-Mediterranean 2014-2020", co-funded by the European Union, see: http://www.interreg-balkanmed.eu/approved-project/51/.
← 23. Directive (EU) 2016/2102 of the European Parliament and of the Council of 26 October 2016 on the accessibility of the websites and mobile applications of public sector bodies (Text with EEA relevance), see: http://data.europa.eu/eli/dir/2016/2102/oj.