IFC Supports Small Businesses in Bosnia with Euros 3 Million Credit Line to Local Bank
Afshin Molavi
Phone: (202) 458-5674
Fax: (202) 974-4384
E-mail: amolavi@ifc.org
Sarajevo, September 13, 2002—The International
Finance Corporation, the private sector development arm of the World Bank,
will provide a Euros 3 million credit line to a Bosnian bank to increase
the bank’s capacity to support micro and small businesses. The seven
year credit line will help Sarajevo-based Micro Enterprise Bank (MEB) grow
its operation and loan portfolio while extending credit to underserved
small businesses.
Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia, said:
“MEB has proven to be an efficient, well-managed provider of capital to
small businesses in Bosnia-Herzegovina. This credit line will help
create new opportunities for Bosnian small businesses. With its enhanced
capacity from this credit line, I expect the bank continue to meet the
critical need for small business credit.”
Micro Enterprise Bank was established with the help of IFC in 1997. The
original sponsors of the project were BH Banka, Internationale Projekt
Consult (IPC), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden
nv (FMO), IFC and the European Bank for Reconstruction and Development.
In July 1999, Kreditanstalt für Wiederaufbau (KfW) acquired BH Banka’s
shares in MEB, further strengthening the Bank’s equity position.
As of December 31, 2001, approximately 94 percent of MEB’s disbursed loans
were between US $1,500 and $15,000. MEB’s average loan size stands
at $3,800 (approximately 4,300 Euros).
“As Bosnia-Herzegovina transitions to a market economy, small business
growth will play a key role in their economic development,” Zamani noted.
“Bosnia-Herzegovina needs strong, reliable banking institutions
like Micro Enterprise Bank to meet the needs of small businesses.”
Significant support for the creation of MEB was provided by the government
of Japan which provided $890,000 in financing for technical assistance
to help found the innovative and self-sustainable microlending institution.
The Japan Trust fund support proved particularly critical during
the very early months of the Bank's operational phase, contributing substantially
to the Bank's eventual growth.
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, and provides technical assistance
and advice to governments and businesses. Since its founding in 1956 through
FY02, IFC has committed more than $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its
own account and $6.5 billion held for participants in loan syndications.
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