Agriculture Lending In Bosnia And Herzegovina - From the Expirience of Ifad Projects

Type Conference Paper - Economic Development and Entrepreneurship in Transition Economies: A Review of Current Policy Approaches
Title Agriculture Lending In Bosnia And Herzegovina - From the Expirience of Ifad Projects
Publication (Day/Month/Year) 2011
City Banja
Country/State Luka
In the transition period agriculture in Bosnia and Herzegovina did not need to pass trough serious privatization, as in other socialist countries, but had a need for other types of reforms. Agricultural production in Bosnia and Herzegovina (BaH) has always been a subject of investment of private capital, but on the other side always faced with constraints in the form of lack of funds to finance development of that type of entrepreneurial activities. An important condition for ensuring the growth and development of agriculture is to provide a stable source of funding necessary for new investments, while credits has a crucial role. In this regard, significant is foreign aid which Bosnia and Herzegovina has received and receives from international donors and creditors, including the International Fund for Agricultural Development (IFAD). During the last fifteen years in Bosnia and Herzegovina IFAD designed, financed and supervised the implementation of five projects, the first starting from emergency and continuing with development projects. All these projects were related to establishing and expanding the modalities of financing and diversification of agricultural and other entrepreneurial activities in rural areas. Lending began with the distribution of credits in kind, continued with the awarding of cash credits through banks and MCOs and continued with the establishment of the first saving and credit associations in BaH. The first lending target group were only farmers and later it spread to SMEs, the first only livestock production and then also to all other entrepreneurial activity in rural areas. In the implementation of all IFAD credit lines in Bosnia and Herzegovina participated 25 financial institutions so far (15 banks, 7 MCOs and 3 SCOs) that extended about 16.000 credits to farmers and SMEs from the target group in the total amount of 67 million BAM. Based on case studies and lessons learned from implementation of these projects the paper describes modalities of lending activities and give some conclusions and recommendations that may be useful in planning and management of further agriculture development funding in Bosnia and Herzegovina, and in similar, less developed, countries.

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