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 DFC loan portfolio guaranty of up to $23.3 million 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.
Tahir and Sabina Bisic left Bosnia as refugees in the mid-1990s and had been living in the United States for almost 20 years when they started Intuitiva, a BiH-based apparel company focused on sustainability and fair trade. A DFC guaranteed loan from ProCredit helped Intuitiva source more raw materials from Bosnian suppliers and double its operations to meet growing demand for its products.
This DFC guaranty is complemented by technical assistance from USAID/BiH’s Diaspora Invest Program, which helps catalyze investment from the Bosnian diaspora into the country.