2005 Bosnia and Herzegovina Microfinance Case Study - English

This case study highlights developments in the dynamic Bosnian sector since the MicroBanking Bulletin first documented the sector’s emergence in 2000. It focuses on data from six institutions: EKIWorld Vision, Mi-Bospo, Mikrofin, Partner, Prizma and Sunrise; all of which are participating in this edition of the Bulletin. Hereafter, the term “Bosnian MFIs” refers to these six MFIs unless otherwise noted. The case4 will provide a brief background of the sector, describe issues facing Bosnian MFIs, illustrate the MFIs’ responses to the operating environment of Bosnia and Herzegovina (BiH), and highlight the growth and financial performance of the respective institutions.

All MFIs in Bosnia confronted significant challenges when they began providing their first loans. Even before the war broke out in 1992, Bosnia’s economy was struggling in its transformation away from a socialist system. Large industry dominated the economic environment in most towns. Although massive factories provided employment and a stable salary, they were poorly run and never market driven. By the time the war ended with the Dayton Peace Agreement in 1995, unemployment had skyrocketed to 85 percent, as most factories had been destroyed during three years of war. In such an atmosphere, many people became self-employed entrepreneurs for survival.