Press Releases

IFC supports increased lending to small business owners in Bosnia through loan to micro-credit organization

In Washington, D.C.:
Thoko Moyo
Phone: +1 (202) 458-8517

Sarajevo, Bosnia and Herzegovina, July 28, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, signed an agreement to provide a 3 million euro loan to Ekonomic Kredit Institution, a non-bank microcredit organization based in Tuzla, Bosnia and Herzegovina, with branch offices located throughout the country.

The proposed project will expand a financially successful microlending program, targeting micro and small enterprises that have little or no access to the formal financial system. EKI specializes in lending to low-income entrepreneurs, but has particular expertise in lending to agribusinesses and for housing refurbishment.  The loan includes €2.4 million to support EKI’s micro and small business lending operations and €600,000 to support its Housing Refurbishment Loan Program, which focuses on energy efficiency in housing.  Many of EKI’s clients live in houses that remain badly damaged by the war of the early 1990s.

Shahbaz Mavaddat, IFC’s Director for Southern Europe and Central Asia, said, “We expect the project to have a significant developmental impact by providing credit to an estimated 20,000 microentrepreneurs over the next three years.”   He added, “The loan will allow EKI to diversify its client base to include many micro and small businesses outside of its traditional client base.”

Housing loans will mainly finance installation of energy saving equipment, such as thermal insulation and improved boilers.  IFC’s Environmental Opportunities Facility will draw on a €60,000 grant from Austria’s Ministry of Foreign Affairs to train EKI’s loan officers in processing energy efficiency housing loans.

EKI’s loans range from $180 to $18,200, with an average tenor of 17 months and a maximum term of 36 months. The organization's strong performance, as demonstrated by its portfolio growth, profitability, and control mechanisms, will serve as a best practice example for other financial institutions throughout Southern and Eastern Europe.

Mavaddat added, “We hope that this is the start of a long-term strategic relationship with EKI. In addition to the investment, IFC will be providing governance advice through its technical assistance facility, the Private Enterprise Partnership Southeast Europe.”

Sadina Bina, EKI’s Director, stressed the importance of microloans for human development: “Microcredit, microfinance, provides opportunity for low-income people to start up or continue running microenterprises – and to generate more income to improve their standard of living. Many people were affected by the war, and formal sector employment levels remain low.  As a result, each family may have only one income generator in the family.”  She added, “EKI’s overall strategy is to maintain its leadership position among microfinance institutions by transforming itself into a new legal structure following passage of a new microfinance law.  This should make it better positioned to provide a wide range of services and resources to meet the needs of its microentrepreneur clients.”

About EKI

EKI  was founded by World Vision International in1996, when it opened its first office in Zenica.  EKI operates 34 offices throughout Bosnia and Herzegovina, mostly in rural areas where agriculture is an important business sector.   EKI is one of the most successful microfinance institutions in the country.  At December 31, 2005, its total assets stood at €29.0 million at, of which its loan portfolio represented 92.7%.  Loan portfolio quality was high, with loans in arrears over 30 days representing0.3% of the gross loan portfolio at the end of 2005. In terms of profitability, EKI achieved a net income (excluding grants) of €1.4 million, an increase of 9.1% over the net income figure of €1.2 million in 2004.

About IFC

The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition 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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit