Driving Change in Kosovo: How businesses are tackling city congestion and industrial waste

What if the greatest challenges to Kosovo’s future weren’t a shortage of ideas, but the struggle to turn them into reality? Across the country, a new wave of companies is turning real-world problems into scalable products – from easing urban congestion to cutting industrial waste. Among the initiatives supporting this surge of impact-driven innovation is the LuxAid Demonstration Fund (LDF), a programme financed by the Government of Luxembourg and implemented by LuxDev, the Luxembourg Development Cooperation Agency.

Launched in late 2024 as part of Luxembourg–Kosovo development cooperation, the LDF backs companies delivering measurable, positive outcomes in circular economy principles while also backing IT innovative solutions. By co-financing up to 50% of project costs – to a maximum of EUR 350,000 – the Fund helps businesses scale solutions that create value for both people and the planet. The interest has been remarkable: over 100 enterprises applied in the first call, requesting co-financing of EUR 100,000–350,000 per project to invest in equipment, talent, and product innovation, with a strong focus on local benefit and long-term sustainability.

From this first call, two stand-out stories show how local innovation can spark global change: Cacttus SH.A., pioneering smart city solutions, and Dijamanti Sh.P.K., leading sustainable wood processing.

From wood dust to sustainability: How Dijamanti Sh.P.K. is breathing new life into wood waste

In some parts of Drenas Business Park, the scent of sawdust lingers in the air, accompanied by the steady hum of machinery. For years, this by-product of wood was dismissed as waste – dumped, burned, or left to pile up, polluting the air.

For Dijamanti Sh.P.K., the only producer of laminated panels of Kosovo, it marked the beginning of a new story. With outdated machinery and inconsistent waste collection, the challenge seemed insurmountable. Yet in 2017, Dijamanti decided to turn this burden into opportunity. Their idea was simple but transformative: convert wood waste into high-efficiency heating pellets and high-quality wooden panels for local manufacturers, creating a closed-loop model that keeps resources in use, saves energy and emissions down, while at the same time strengthens Kosovo’s economy.

“We saw piles of wood being burned or discarded,” recalls founder Arton Kastrati “We thought – what if we could give it a second life?”

Thanks to the LDF, Dijamanti will, over the next two years, invest in new machinery, upgrade its dust-filtration system, and expand its waste-supplier network across the country. The projected impact is substantial:

• 650 tonnes of wood waste will be prevented from being burned – up from 300 tonnes per year during the last few years);
• 330 tonnes of additional pellets will be produced annually, doubling total output to 660 tonnes;
• Panel production will increase by 75%, from 160 to 280 m³;
• 10 new jobs will be created;
• Heating costs will be cut by up to 30% for customers switching to Dijamanti’s cleaner, more efficient wood pellets.

But the innovation goes beyond hardware. The Cacttus’s platform aggregates and analyses urban data, enabling public institutions to optimise parking, manage traffic flows, and monitor air quality in real time. In the long run, the company aims to act not just as a service provider but to become a data partner for municipalities and innovators across the ecosystem.

One fund, a shared goal: scale what works

On the surface, a wood manufacturer and a tech company might have little in common. Yet Dijamanti and Cacttus share a vision: sustainability is not only about reducing emissions or recycling waste – it is about creating solutions that work for people, businesses, and the planet.

Backed by the LDF, companies like Dijamanti and Cacttus are scaling faster, creating jobs, and proving that transformative change can be home-grown. With the right support, Kosovo’s entrepreneurs are showing that local knowledge and ambition can reshape entire systems – one smart pole, one panel, one innovation at a time.