“The existence of competition in business is one of the most significant achievements of capitalism and lies at its core. However, in different times and in different geographical spaces, the concept of competition has displayed its various faces.”
In Serbia, we are all witnesses to various forms of oligopolistic structures across many segments of our economy and society, from the banking sector, retail chains, investment and pension funds, sports, pharmacy services, oil companies (continue the list), and in such circumstances, it is extremely difficult for new or small players to impose themselves on consumers or the public, even if they have a better product or service.
For instance, it’s unclear to me what serious economic argument is consistently highlighted in the media that there are still too many banks in Serbia? In 2001, there were 74 banks operating in Serbia, and now there are twenty. Who could be pleased by this? The five largest banks hold 65% of the total assets of the Serbian banking sector, and this level has been constant for years. It’s evident that in such a financial system, citizens and businesses have limited choices and must accept the offered costs and services. Bank-centrism is synonymous with Serbian finances, while microfinancing, microcredit, and other fintech services have been waiting on the bench as reserve players for years.
There are nine retail chains in Serbia with turnovers exceeding 100 million euros and holding about 50% market share. The National Bank of Serbia has sharply accused these major retailers as one of the culprits for the high inflation rate. However, it’s logical that when you put certain companies in a position of oligopoly, they will do everything to maximize their advantage. Yet, there are media reports obediently stating that there is room in Serbia for the entry of new major foreign retail chains because there are still small shops that need to be closed.
In Serbia, there are only nine companies managing investment funds (four of which are owned by banks) and just four managing voluntary pension funds. These figures are embarrassingly low; even a major German city has more funds than the entire Serbia. So, what’s the point of having laws on capital markets and funds aligned with European regulations when they evidently discourage new players instead of bringing them into the market?
Regarding state aid to sports clubs like Crvena Zvezda and Partizan, hardly anyone reacts anymore. In 2022, thirteen sports associations received 54% of the total funds from the Ministry of Sports and Youth, excluding the Olympic and Paralympic Committees of Serbia and the Sports Association of Serbia. The remaining 51 sports associations received 46% of the approved budget funds. How can those pejoratively labeled “minor sports” become major when the major ones consistently receive a higher percentage of funds year after year? Is winning an Olympic medal that crucial to Serbia?
When will a new financial institution emerge in Serbia? A new bank, new pension fund, or open investment fund? In the summer of 2000, when I founded my brokerage firm Senzal, the monetary threshold was 5,000.00 DM (2,500.00 EUR), and that’s exactly how much I had. Today, that threshold is 125,000.00 EUR. If the threshold had been that high back then, someone else would be writing this text, not me.
How many young people want to start a brokerage firm right now but don’t have 125,000.00 EUR? How many kids would enjoy baseball, climbing on an artificial rock wall, flag football, but there are no clubs in their area? How many brilliant small entrepreneurs and producers can’t place their products in major markets because they can’t afford to be listed in large retail chains? Why can only insurance companies and banks establish voluntary pension funds?
Why does the state borrow from international banks at an annual interest rate of 6.5%, when a vast number of citizens would buy such bonds, as in Croatia and Belgium? Why wouldn’t the state encourage the establishment of domestic e-commerce platforms through tax incentives or similar means, enabling small producers to transparently offer their products instead of relying solely on Facebook groups? Why not reduce the thresholds and ease the conditions for establishing brokerage firms, investment funds, pension funds, having dozens of them – this is the path Serbia must take. Why not have incentivized conditions for establishing and operating banks that would serve specific clients or sectors, such as the IT sector, entrepreneurs, farmers, and firms adhering to ESG standards? We all know about Islamic banking and finance; can’t we create something that we truly need in our current time and space, rather than what others dictate to us?
To be clear, I don’t support any restrictive measures against those currently holding a dominant market position if they operate within the bounds of the law. They’re merely utilizing what’s permitted. It’s evident that various forms of oligopoly function globally; major countries and multinational companies seek to protect their dominant position and prevent smaller entities from growing and taking a piece of the pie. For thirty-five years, the Washington Consensus has promoted liberal capitalism, safeguarding the interests of the big and powerful. Offshoring has existed for a long time, and now nearshoring is trending. What we need is deregulation, ease of doing business, and a focus on homeshoring – on the self-sustainability of Serbian companies and the Serbian economy in all areas where we can make that happen. Serbia won’t be truly free until it achieves financial and economic freedom.
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