The microcredit sector in Bosnia and Herzegovina (BiH) had a significant role during the post-war period in poverty reduction and support to the small and medium entrepreneurship development among socially endangered population that does not have a possibility to get financial resources from traditional banks. In general, microfinance is a new a field in finance sector in the world and is being considered as one of the greatest innovations that emerged at the end of the last century. Since 1996, our country has been lucky to encounter the development of this type of poverty combat and entrepreneurship development based on market principles through the state Local Initiatives Project (LIP) supported by the World Bank and through the support of the international non-governmental organizations.
The results achieved in the past thirteen years included BiH among the countries with the highest development level in this domain of financial offer, which is often being mixed with traditional banking, but the main difference is that the banks serve the wealthiest clients with credit history and collateral, while the microfinance i.e. microcredit organizations (MCO) serve the clients who do not have collateral and have low income or no income whatsoever.
In the period from 1996 until today, a respectable number of microcredit organizations (12-14) operating in line with the best world experiences in financial institutions management was established. According to financial indicators, twelve organizations, members of the Association, which cover 97% of microfinance market in BiH, have disbursed 641.008.038 convertible marks of credit funds in 2009. More than 2.460 employees in 508 branch offices work to enable access to financial means to the highest possible number of clients that does not have a possibility to get financial means from the bank sources.
Following the adoption of the Law on MCOs, microcredit organizations were enabled to transform into two possible forms, microcredit foundations as non-profit and microcredit companies as profit form, while the Banking Agency is defined as the supervisor for the sector. Therefore, the majority of the Association’s members received work licenses from the relevant agencies.
During the past years, members of the Association of Microfinance Institutions in BiH (AMFI) have received rewards and recognitions from the World Bank and Consultative Group to Assist the Poor (CGAP) for a high level of transparency in doing business and financial reporting. Out of 20 awarded institutions from all over the world in 2007, there are also five microcredit organizations from BiH.
Impressive results that prove the quality of microcredit organizations’ work in BiH are also reflected in the fact that five AMFI members are included on the list of 100 most successful microfinance institutions, published by the prominent US business magazine “FORBES”.
The Association will continue to strengthen and further affirm microfinance sector in BiH, through activities that include, among other things, cooperation with representatives of authorities, at the State and local level, as well as on the level of microfinance organizations and clients. Also, there will be activities on strengthening the cooperation with organizations with same or similar work orientation, in the country and worldwide.