Total Portfolio Guarantee: $40 million
Start Date: March 2010
End Date: March 2020
DCA Partner Banks: Raiffeisen Bank BiH and Volksbank BH
* Jointly financed with the Swedish International Development Cooperation Agency (Sida)
Local small and medium-sized enterprises (SMEs) in Bosnia and Herzegovina (BiH) are often unable to obtain suitable financing because of high collateral demands, high interest rates, and a lack of loan products for SMEs. They cite access to finance as a major obstacle to making new investments and financing working capital. BiH banks often have doubts about the fundamental competitiveness of local SMEs, and they are reluctant to lend to SMEs that do not have substantial collateral. Strengthening local banks’ ability to finance medium- and long-term loans to SMEs in productive sectors of the economy will foster economic growth in BiH.
The Development Credit Authority (DCA) Loan Portfolio Guarantee facility is jointly financed by USAID and the Swedish International Development Cooperation Agency (Sida). The project mobilizes private capital to finance development initiatives in BiH and demonstrates the economic viability of such investments to the local banking sector. The program's credit guarantees improve access to finance for SMEs and capitalize on technical assistance through other programs. As a complement to two other projects jointly funded by USAID and Sida, FARMA and FIRMA, the DCA program will support SMEs in the agriculture, wood and metal processing, and tourism sectors of BiH.
Implementation and Results
The USAID-Sida DCA program, signed in September 2010 with Raiffeisen Bank BiH and Volksbank BH, provides banks with a 50% guarantee on the loan principal. This enables them to make longer-term loans without substantially increasing their risk exposure and to extend loans to borrowers who otherwise may not qualify for loans under the banks’ regular lending parameters. In 2011, participating banks disbursed seven loans worth 6.3 million convertible marks (KM), ranging from 150,000 to 2 million KM, with maturity ranging from 5 to 12 years. These loans have sustained some 240 jobs and are expected to create more than 50 jobs.
For more information:
Drazena Peranic, USAID/BiH Development Outreach and Communications Specialist
Last updated: November 27, 2013