Serbia Accelerating Innovation and Growth Entrepreneurship Additional Financing

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The original SAIGE Project (the Project) was approved by the Board on December 13, 2019, and became effective on May 18, 2020. The EU made a favorable decision in mid-December to support Serbia through the IPA 19 Program with an additional EUR 41.5 million, to bemanaged by the World Bank to complement the Project loan, just after the Project loan was submitted to the Board for approval. The Additional Financing (AF) will allow the client to scale-up activities and enhance development impact. The AF solely consists in the amounts to be disbursed and the respective results targets, and would not change the Project Development Objective, components or activities. Further, the AF would be disbursed through the same programs described in Components 1 and 2 under the Project. Thus, with the AF, the programs described would be financed by a combination of IBRD loan proceeds and EU IPA 19 proceeds, through the Project. All implementation arrangements would remain the same.The Project will support reforms of the research sector, through establishment and operation of the Serbia Science Fund, reform of selected group of individual RDIs, and specific interventions promoting researchers' skills. The Project will also allow for the large Serbian diaspora to be engaged through a Diaspora Facility, aimed at strengthening the Serbian innovation and entrepreneurship ecosystem by providing scientific excellence, financial networks, knowledge, and new market opportunities. Finally, the Project will also provide needed support to innovative Small and Medium Enterprises (SMEs) through an enterprise acceleration program that will extend co-investment grants and technical assistance to enterprises. The Project consists of 3 components. Component 1 will support Research Sector Reforms. Sub-component 1.1 will finance the operationalization of the Serbia Science Fund (SF), established in 2018, reporting formally to the Ministry of Science,Technological Development and Innovation (NITRA) that succeded previous Ministry of Education, Science and Technological Development (MoESTD) in its role of the ministry for SAIGE Project implementation and management of the SAIGE PIU. Project support includes TA for strengthening the fund’s organizational architecture (i.e., governance, operational structure, M&E, etc.); and financing for grants - both basic science grants and applied research grants aimed at improved academia-private sector linkages, collaboration with diaspora researchers, EU researchers, and others. A Serbian diaspora program (see Sub-component 1.3) will be closely connected to the Science Fund. The TA will also support the NITRA and the SF in the prioritization and development of SF’s programs. This component will be an addition to Government budget resources allocated for this purpose. Sub-component 1.2 will support institutional reform of select Research and Development Institutions (RDIs), through improvements in governance systems, strategic planning, HR development, accounting, monitoring, marketing, upgrading laboratory infrastructure and facilities, and more. Project activities targeted at RDIs will take place in cities where such institutions are concentrated. This sub-component will support reforms of the public R&D Institutes (RDIs) system by providing appropriate incentives for undertaking institutional reforms by RDIs on a voluntary (opt-in) basis. Sub-component 1.3 will support a Serbian Diaspora Facility (SDF) within Science Fund to leverage the strengths and desire of Serbian diaspora community and benefit from this immense potential in the development of research, innovation and entrepreneurship ecosystem in Serbia. Component 2 will support development of Enterprise Acceleration program, building on existing programs of the Innovation Fund (IF). The component will involve a co-financing investment grant program and training and mentorship program for innovative early- and growth-stage firms aimed at facilitating their growth. The training and mentorship program will cover project and people management practices, strategy development and execution, market research, marketing and sales, product development, partnership development, fundraising, and so on. The majority of participating firms are expected to be businesses based on digital technologies, in specialized sectors, such as food and agriculture, health, biotech, education and gaming, etc. Firm grants will be managed through a co-financing facility within the Innovation Fund (IF) and companies will receive investments in the range of $150,000 to $500,000 per firm. Component 3 will finance activities related to project implementation and monitoring including operations of a Project Implementation Unit (PIU). This will include operational and fiduciary (procurement, environmental and social safeguards), M&E, project audits, studies,policy/program design and capacity building support to the MESTDI and related agencies. The Project is fully congruent with the Word Bank Group’s Country Partnership Frameworks (CPF) for FY22-26 (Report No. 166496-YF, approved by the Board April 28, 2022), Focus Area 1, Economic Governance and the Role of the State' and Focus Area 2, Private Sector Growth and Economic Inclusion. Both focus areas are aligned with 'Research for Innovation -- Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2016 – 2020.' An important intervention under this objective is continued support to build Serbia’s innovation and technology transfer system based on promising results yielded from earlier efforts in these two areas and a need to scale them up to create a broader impact on employment generation. All three components of the Project directly and jointly contribute to the Research for Innovation Strategy, with activities of the Science Fund supporting primarily public research and development, activities of the Innovation Fund supporting primarily innovation in enterprises, and the diaspora-related activities supporting innovation generated by both public and private entities.