FACT SHEET: Development Credit Authority Loan Guaranteea in Bosnia and Herzegovina

DCA credit guarantees improve access to finance for small and medium-sized companies in the productive sectors of the BiH economy, including agriculture and food processing.
DCA credit guarantees improve access to finance for small and medium-sized companies in the productive sectors of the BiH economy, including agriculture and food processing.
USAID FARMA Project

The Challenge

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. Banks in BiH often have doubts about the fundamental com-petitiveness 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.

 

Our Program

This Development Credit Authority (DCA) Loan Guarantee facility 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.

 

Implementation and Results

The DCA program provides the bank with a 50 percent guarantee on the loan principal. This enables ProCredit to make longer-term loans without substantially increasing its risk exposure and to extend loans to borrowers who otherwise may not qualify for loans under the bank’s regular lending parameters. 

 

DCA #1: 

Partner Banks: ProCredit Bank and Sparkasse Bank

Portfolio Guarantee: $20 million  

Financed jointly by USAID and the Swedish International Development Cooperation Agency (Sida)  (September 2015-2025)

Results: As of May 2017, the participating banks had disbursed 37 loans worth 18.8 million convertible marks (KM), ranging from 60,000 KM to 2.7 million KM, with maturity ranging from three to 10 years. These loans have sustained 1,408 jobs and created 23.

 

DCA #2:  

Partner Bank: ProCredit Bank

Portfolio Guarantee: $3.5 million

Financed by USAID

(September 2016-2026)

Results: As of May 2017, ProCredit had disbursed 12 loans worth 5.6 million KM, ranging from 165,000 KM to 2.2 million KM, with maturity ranging from three to 10 years. These loans have sustained 395 jobs and created 81.

 

Last updated: July 17, 2017

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