The final list of beneficiaries of EU grants aiming to support investments in the food and agricultural industry within the ‘EU4Business’ project will be published by the end of this month. This is one of a number of projects through which the European Union provides significant support for development of small and medium-sized enterprises (SMEs) and development partnerships in Bosnia and Herzegovina.
Through ‘EU4Business’, the EU allocated around €10 million for SMEs to increase the competitiveness of export-oriented sectors, agriculture, tourism and employment. The programme is jointly implemented by the International Labour Organization (ILO), the United Nations Development Program (UNDP) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
The European Union has also invested an additional EUR 4 million for SMEs’ development through the EBRD project “Competitiveness of the Small and Middle Enterprises”, which provided a €20 million line of credit for eligible companies. EBRD has recently released a new €20 million line of credit, together with 4 partner banks in BiH. The EU funding under this program will provide incentives to businesses up to 15% of the loan’s value and free advisory assistance.
SMEs are the backbone of Europe’s economy. They account for 99% of all companies in the EU, and the situation is similar in Bosnia and Herzegovina. According to BiH Statistics Agency data for 2019, out of 38,500 companies registered in the country, around 75% are micro-enterprises with annual turnover below BAM 4 million, which contribute over 40% to GDP and over 50% to employment.
The EU has to date provided around €70 million under IPA II for development of SMEs, and an additional €14 million from IPA 2020 are being planned to support the digital transformation of small and medium-sized enterprises. The majority of SMEs benefiting from EU support registered an increase of about 15% in sales and income, while they also managed to retain jobs and create new ones.
EU support to small and medium-sized enterprises in BiH has been focused on increasing their competitiveness and modernisation via application of the new standards, technologies and skills. The assistance to be allocated via IPA III will further focus on innovative start-ups, the digital sector and new technologies.
The business sector in BiH is the dominant type of entrepreneurship in BiH whose further development depends on the reforms that need to be immediately implemented, without further delay, in order to create a better business environment for entrepreneurs and investors. The EC Opinion on BiH’s application for membership and accompanying Analytical Report have identified the most urgent needs in this sector.