What is the business in Sofia, the heart of the Bulgarian economy and one of the most vibrant digital and innovation hubs on the Balkans, going through? What’s the role of the municipality in supporting the business? Is it finally time to speed up some digital transformation and eGov processes that have been lagging?
To answer these questions, we’ve invited Vladimir Danailov, the deputy mayor of Sofia for Innovation, Digital Transformation and Economic Development. Appointed last year, Danailov is the first person taking such a position in Bulgaria. He holds an MBA from the American University in Bulgaria, a Master’s Degree in HR Management from the Technical University in Sofia, Bulgaria, and a Bachelor’s Degree in Industrial Management from the same university. Danailov has professional experience in the Real Estate, Manufacturing and Trading sectors, where he held positions like Head of Sales and Country Manager in several companies with an international presence. According to his Crunchbase profile (yes, interestingly enough we found one), Danailov has a strong background in entrepreneurship and business development and a deep interest in startups.
Up until the end of last year, Danailov was CEO of the municipal agency Sofia Invest, which is responsible for promoting the city as an investment destination. In 2019, Sofia Invest released a new strategy for the digital transformation of the capital city, which has a strong focus on strengthening the relationship between the public administration and the startup and innovation ecosystem. So, we decided to have a conversation with Vladimir Danailov about the strategy, the planned implementation steps, and the overall plan for the digital development of the city.
Trending Topics: Sofia City recently published a report about the current state of the business. What are the key takeaways from this report?
Vladimir Danailov: We published this report although we know it’s hard to make a comprehensive report right now, but we see the leading role of the city is at least to inform the business about the current situation and the expected impact. We are all aware that the world will change. I’m happy that in the past three weeks we managed to talk with most of the industry associations in Sofia and source suggestions for measures.
We are looking at three scenarios and the report aims to start a dialogue. All industries are going to be affected, but not all are going to suffer evenly. Culture industries like leisure, tourism are the most affected. The impact on manufacturing will be less significant. Tech sector and professional services will take the least hit, at least won’t lose income very fast.
What is the role of the municipality in supporting the business and are there some particular measures already in place?
There are already proposed measures and the mayor of Sofia is also working on them. Three weeks ago, an economy expert council was initiated, and their job is to prepare a measure package for business aid – from SMEs, to large companies, to startups. Part of these measures will be voted on April 16th.
1M BGN guarantee fund for SMEs is one of the measures. For all local companies that are tenants of municipal premisses and land the rents will be waived during the emergency state. The 5% discount for taxes is extended until June 30. There are other measures that will soon be communicated.
You mention that tech and startups will be least affected, but you mentioned that some measures to support them were also in discussion. Can you share some more details?
Right now one of the most important things is not to allow the current crisis to destroy everything we’ve achieved in the last 6-8 years. In these past several years we managed to develop a fully functional ecosystem with incubators, accelerators, VC funds, we started repositioning Sofia from a pure outsourcing destination to a hub where products and solutions with global applications are developed. We started to be a destination that attracts R&D. We shouldn’t allow this to be destroyed. As a city, we’ll be very active in supporting the innovation ecosystem. For instance, by being an active market creator and to work with local companies whenever they offer relevant solutions. As a city, we also manage some of the most vital infrastructures of the city like transport, heating supply, etc. And I believe that innovative companies in Sofia are developing solutions in these domains and we want to help them test their solutions in a real environment. Once we can prove the solutions are working, the city could be the first client of such companies.
That’s a great vision. Yet, recently the city of Sofia started a platform for citizen information related to COVID-19, done by SAP, which is not exactly a local tech innovator. How does this align with what you just shared?
You are right. Indeed, in the last couple of weeks our main priority was communication and information. Actually SAP Bulgaria reached out to us, and we haven’t spent anything on this project. Luckily, lots of local companies are also reaching out to us. The Bulgarian Outsourcing Association, for instance, offered the government 15K working hours to support digital projects. So now, we are really going to utilize the crisis to implement more and more solutions into the city infrastructure and this is a great opportunity for us to test and adopt. Here I want to extend the invitation to the ecosystem to reach out to us with solutions.
Are there any particular challenges you want to prioritize and work on together with the local ecosystem?
A couple of companies that have solutions in healthcare have reached out. We, as a city, need electronic identification solutions as we are working towards improving our electronic services. Communication and e-democracy are keywords right now. Mobility & Transport, and Ecology are also topics right now.
Last time we mentioned that there were 50 e-services. Has that changed since the emergency state was inforced?
We have around 55 right now. Only in the last week our division and our chief architect supported three new digital services. We also launched an e-service for taxi companies that saves time for getting permission to add a new vehicle. There’s also a website on sofia.bg with all electronic resources and we’ll be working on extending the offering.
What about eGovernment? Our audience asked about it. What are the low hanging fruits, what could be done together with the local ecosystem right now?
We are now in a mode of utilizing the crisis. E-Government is also changing the habits of people, now as we are all staying home, even the generation of our parents that’s more conservative towards digital services, is adopting them. So we are going to be very active. Better communication, services, whaterver we can optimize – processes and procedures, are our priorities – require less paperwork, ask fewer questions, etc. We are trying to be fast, however, everything needs to comply with the legislation. And once the situation is over, these eGovernment advancements will turn into competitive advantages of Sofia as a city that attracts investments and R&D operations, skilled, talented and experienced Bulgarians and foreigners.
If you have to mention one priority of the eGov efforts, what will it be?
Digitalization of municipal services. 55 out of 300 are digital, our goal is to make most of them digitally accessible. At some point, we want to be able to communicate with citizens mostly through smartphones. We don’t want to communicate with people over counters.
Another question from the audience: where do you see the role of blockchain in all these processes?
In my opinion, everything could potentially run over blockchain – services, communication, smart contracts are important. We are following good examples form countries like Estonia, or England, or Austria. In Vienna for instance, the local heating company has a project with blockchain. Of course, on the minus side, the governments are not recognizing the technology. Yet we think that with the local ecosystem, we should start pilot and test projects with blockchain and communicate them, and use this result for legislative changes someday. For now, all solutions need to be in compliance with the legislation that doesn’t recognize blockchain.
What will help you achieve what has not been achieved so far?
It may sound cynic but the current situation is definitely one of the factors. But apart from this, now the mayor has assigned a whole team to work in digital transformation and innovation, sends the message that these activities are becoming the core business of the city. Not least, not every large city in Europe has such a vibrant tech ecosystem, the talent and knowledge, as Sofia, and we can benefit greatly from it.