Challenge
The country of Bosnia and Herzegovina (BiH) faces multiple economic challenges, driven largely by its history of conflict and political instability. A lack of economic opportunity has led to significant migration and brain drain, with about 350,000 people, or almost 10 percent of BiH's population, leaving the country in 2022 alone. Migration is particularly prevalent among the country’s young professionals, who face a youth unemployment rate of over 32 percent.
More than two million Bosnian nationals now reside outside of the country. This diaspora has both the potential and willingness to contribute to the development of BiH, as evidenced by substantial diaspora remittances, estimated at 14 percent of BiH’s total GDP. Businesses funded or owned by diaspora members, however, face significant challenges accessing formal financial services due to a lack of credit history, locally available collateral, and business track record in BiH.
Solution and Impact
A $5.18 million DFC loan portfolio guaranty is helping ProCredit Bank expand lending to diaspora-linked start-ups and small and medium enterprises in Bosnia and Herzegovina.
The guaranty has allowed ProCredit to offer loans with longer tenors that enable smaller diaspora businesses to access finance at better terms, despite their limited collateral. With DFC’s support, ProCredit has provided financing for over 80 diaspora-linked businesses in sectors including tourism, manufacturing, and agriculture.
This project was profiled in 2023.