2008 Bosnia and Herzegovina Microfinance Analysis and Benchmarking Report

Since 1996, a significant number of microcredit organizations have emerged and developed in Bosnia and Herzegovina (BiH)1. The 12 organizations which are members of the Association of Microfinance Institutions in Bosnia and Herzegovina (AMFI) comprise 98 percent of the microfinance portfolio in the country. In the last few years, all of them have recorded strong growth in outreach, were highly profitable and attracted the greatest amount of local and foreign funding to date. Moreover, AMFI members continually win recognition and awards due to their high level of transparency and financial reporting. Out of 20 institutions awarded the CGAP Financial Transparency Awards in 2006 worldwide, five microcredit organizations come from BiH.

To keep up with the quickly growing microfinance sector, the authorities of BiH have introduced changes in the legislation several times since 2002. The two separate entities — the Bosnian Federation and Republic of Srpska in fact have different legislations guiding the microfinance sector, hence microfinance institutions are affected differently depending on where they are registered.

In 2007, the gross portfolio of the 12 AMFI members was 856 million KM (644 million USD and 428 million EUR), an 85 percent increase since 2006 levels, while the number of active clients, 297 thousand as of the end of 2007, has increased by 54 percent since 2006. Microcredit organizations operated in both entities through 477 offices.

This report, a joint production of MIX and AMFI, presents analysis of the 2007 legislative changes in BiH, the financial performance and the funding structure of Bosnian microfinance institutions within the context of the macroeconomic environment as of 2007. Thanks to the detailed reporting of all AMFI members to MIX over the course of several years, this report also discusses trend data in performance and funding for Bosnian MFIs for the last four years (2004-2007).