As part of the POLICY ANSWERS capacity building programme, the project partner RIINVEST produced several policy briefs and reports.

This POLICY ANSWERS Brief was prepared in 2025/26 by Bujar Pira with support from Liridon Kryeziu, Muhamet Mustafa and Alban Hashani.

Executive Summary

Circular Economy (CE) is an important source for economic development, as it helps economies to create more green jobs. However, according to the Circularity Gap Report (2023), the global CE constitutes approximately 7.2 % of the world’s economy, a decline from 9.1 % in 2018. This decline is driven not only by limited recycling but also by increased material extraction and resource accumulation in infrastructure. Therefore, the current momentum on the megatrend is an opportunity for the economy in Kosovo*.

The study at hand situates Kosovo within the broader Western Balkans and European Union (EU) context, comparing national trends with regional peers to identify gaps, progress and policy needs. It examines key dimensions of circular transition, including current and planned resource-efficiency actions, investment intensity, access to external support, encountered barriers and the extent of green market participation.

This study employed a mixed-methods approach, combining quantitative and qualitative data to explore the development of CE practices in Kosovo. The quantitative component was based on a survey of 96 businesses, conducted using the Flash Eurobarometer 498, enabling comparisons between Kosovo, EU Member States (EU MS) and Western Balkans peers. The qualitative component involved multiple case studies of three CE business models (CEBMs) operating in Kosovo, providing in-depth insights into firm-level practices, drivers, and barriers. In addition, a desk review of Kosovo’s legal and policy framework relevant to the circular economy was conducted.

Kosovo’s transition to a CE is at a formative stage. While important building blocks are in place, the enabling environment remains underdeveloped. The analysis reveals that while awareness of CE principles is growing, most companies remain focused on basic, cost-saving measures rather than systemic innovation. The analyses further show that compared with other Western Balkans economies, Kosovo performs similarly to Albania and North Macedonia but lags behind Serbia and Montenegro, where companies benefit from stronger policy frameworks and broader access to private finance. In relation to the EU, Kosovo’s private sector remains significantly behind in the adoption of high-value CE activities, reflecting structural constraints such as limited technical expertise, administrative complexity, and insufficient access to finance.

Taking into account the findings of the study, the following recommendations are made:

• promote innovation grants for firms adopting advanced resource-saving or recycling technologies;
• encourage commercial banks to develop green credit lines, through the Kosovo Credit Guarantee Fund;
• create fiscal incentives, such as tax credits and allowances, for investment in circular technologies, recycling infrastructure and renewable energy;
• reduce administrative complexity by harmonising permits, licensing, and environmental compliance procedures under a “green business one-stop shop”;
• introduce clear guidelines on circular product standards and classification (align with EU taxonomy), waste classification and green procurement to reduce uncertainty and promote compliance;
• support market development for green products through green public procurement (GPP), eco-labelling schemes and public awareness campaigns;
• help small and medium-sized enterprises (SMEs) identify export opportunities in the EU and regional CE value chains through trade facilitation, CE product certification and matchmaking platforms;
• establish a national licensing and regulatory framework for waste collection businesses to formalise operations, reduce informality and ensure environmental compliance;
• intensify the process of accession to the Basel Convention[4] to enable direct export of recyclable materials to the EU and global markets;
• streamline export licensing procedures for certified recyclers, including digitalising permit applications;
• establish a dedicated inter-ministerial coordination body to lead and manage the CE’s transition across all sectors;
• define clear institutional roles, responsibilities, and accountability mechanisms within the strategic framework. Municipalities should be integrated into this framework as operational implementers and coordination intermediaries, bridging local businesses, industry and national institutions;
• consolidate all CE-related objectives from other sectoral strategic documents into one unified circular economy strategy;
• speed up the process of establishing the national CE monitoring framework, aligned with the EU Circular Economy Monitoring Framework.

For sources, list of references and further information, please refer to the full report available below.