Financial Counseling Helps Bosnian Residents Resolve Debt

Suada Hecimovic and Jasmina Mujcinovic in a park in Gradacac © Samir Zahirovic

Jasmina Mujcinovic, deep in debt, didn’t know where to turn. Her husband co-signed on a loan for a friend—and a series of problems that followed drew the family into a costly and confusing battle with a bank.

Before long, loan payments stretched the family finances into the danger zone. Food from the family orchard kept meals on the table; her husband’s disability payments were their only source of income.

Lacking basic financial literacy, and threatened with more debt, Mujcinovic sought help from an agency that referred her to the recently opened Department for Free Debt Counseling in Gradacac, a municipality in Bosnia and Herzegovina. This is one of 29 municipalities in the country that offer financial literacy services through a program created by IFC to strengthen the delivery of sustainable microfinance services.

The Microfinance in Bosnia and Herzegovina Project, in addition to offering debt counselling for citizens, helps improve governance of microfinance institutions—through advice on regulations, voluntary incentives, and public awareness. The project, which is overseen by World Bank Group’s Finance and Markets Global Practice, is supported by the Swiss government, the European Fund for Southeast Europe (EFSE) and local organization U plusu.

Mujcinovic was one of hundreds of residents to line up for financial advice since the Department opened its doors in the country in 2010. Although the conflict in Bosnia and Herzegovina ended more than 20 years ago, many are still struggling economically. National growth is sluggish, and unemployment exceeds 27 percent. The global financial crisis of 2008-2009 made problems worse: financial institutions began suing their borrowers more often, making people wary of banks.

In such a scenario, IFC’s initiative has brought relief to hundreds of people in the country.



In addition to providing debt counseling, the program creates opportunities for municipal employees in Bosnia and Herzegovina to advance their careers.

Suada Hecimovic, a legal advisor with the Gradacac municipality, nursed ambitions of expanding her career horizons. She passed the training course offered under the initiative and became an official counselor. “The training I received has introduced me to new ideas in the field,” she says.

Hecimovic now provides free financial counseling twice a week—while applying the lessons she learned to her regular job as a legal advisor. The impact of the training is evident: Mujcinovic praises Hecimovic’s role in resolving her debt situation. She said the “warm welcome and assurance of discretion” she and her husband received from Hecimovic was just as important as the invaluable financial advice.

“We discussed our problem and how we could resolve it. Since I knew very little about my rights and the methods banks use to collect their debt claims, the assistance I received was a huge relief,” Mujcinovic says.

After the municipality verified that the family didn’t have the means to pay the installments, the charges have been suspended, and the bank is now looking into alternative ways to settle the debt.

The advice will also affect future decisions: “If we ever take out a loan again, we’ll go to the counselors first so we avoid finding ourselves in a similar situation.”



Besides explaining people’s rights as consumers, the IFC-led program advises on how to engage productively with financial institutions; for instance how to renegotiate debts or seek grace periods for loan payments.

The program, the first of its kind for IFC, has surpassed initial expectations. By June 2016, it had resolved nearly 950 debt restructuring cases, exceeding the original target of 190 cases for the period. To continue to reach citizens and additional municipalities, the program works within Bosnia and Herzegovina’s Debt Advisory Center, an independent association recently recognized for its financial education and counseling work.

The project’s pioneer methodology for measuring over-indebtedness is now being used in similar projects around the world—including the Azerbaijan and Central Asia Micro and Responsible Finance Project, financed by Switzerland’s State Secretariat for Economic Affairs (SECO).

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Published in August 2016


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