The amount of BAM 4.481.000.000 or 75% of the total micro credits amount was disbursed for business activities. Micro credits are promoting self-employment and employment.
According to the data of the Agency for Statistics there are 530 000 unemployed persons in Bosnia and Herzegovina, and they are not in a position to obtain a loan from a commercial bank, therefore, micro-credits are the only option available to unemployed persons to bridge the financial gaps or to start their own business and generate adequate resources to cover the expenses for their basic needs.
There are 25 Microcredit Organizations (MCOs) operating on the BiH market, and the advantage of the micro-lending is that the MCOs are providing access to suitable loans to all legal entities in the domain of micro and small business that do not posses any fixed assets as well as to all companies even when they do not have adequate security instruments for a loan.
During the period from 1997 through the end of 2011 the Microcredit Organizations, members of the Association of Microfinance Organizations in Bosnia and Herzegovina, have disbursed the total amount of BAM 5.64 billion to approximately 1.924.000 clients. The average loan amount is BAM 3.000. The total amount of BAM 4.481.000.000 or around 75% of the overall amount of micro credits was disbursed for business activities.
The revenues of the administration units based on the disbursements of microcredits amounted to 20% of public revenues and are stemming from different taxes and fees: tax for goods and services, real estate tax, taxes for salaries and contributions, administrative and other fees, etc.
The Association of Microfinance Organizations in Bosnia and Herzegovina (AMFI) reports that the total amount of BAM 121 million was paid by MCOs to different institutions for the taxes, contributions and fees for the employees of the Microcredit Organizations as well as for other taxes, i.e. the average annual amount of BAM 16.5 million.
It is important to underline that microcredits stimulate self-employment and employment of new staff in all types of entrepreneurship activities, hence they are improving economic and social situation in the country. According to the information from the Study on the Social Impact of Microlending in BiH conducted by the World Bank clients of the MCOs are deciding to register their business activities in 10-14% more cases than the persons who are not using microcredits.
It is evident that the main mission of the Microcredit Organizations on our market is the employment increase and poverty reduction in BiH, but also improvement of life standard and quality of living primarily for the persons who do not have access to financial services of the traditional financial institutions.
In line with AMFI’s information, the Microcredit Organizations have been continuously operating in BiH since 1996, and are subject to all financial and institutional standards regulated by the law for these financial organizations, as well as by-laws adopted by the Banking Agencies from both Entities.
Therefore, apart form the social mission of microlending, the MCOs have to be both sustainable and secure in order to be able to get financing sources from different international and national creditors, and to use those sources for portfolio financing, but also to attract potential international and national investors to invest into profit MCOs and to ensure the expansion of the main activity and to make their financial services more attractive to potential clients.