EBRD to help investment climate in Bosnia and Herzegovina

By Anthony Williams
@ebrdtony

On Monday 1 July, the citizens of Croatia were celebrating their country's accession to the European Union.

On the very same day, thousands of the citizens of Bosnia and Herzegovina were blocking off streets in front of the parliament building in Sarajevo. They were demonstrating against just the latest example of political inertia and stalemate that is preventing their country from following its neighbour into the now 28-strong bloc.

Authorities have suspended the issue of identification numbers for new-born children, preventing them from receiving passports or access to medical treatment. The suspension follows a row over whether the 13 digit ID number should include a reference to the ethnic divisions in the country.

The peaceful but increasingly vocal protests have halted parliamentary proceedings since 6 June, when lawmakers were barricaded in the parliament building for 14 hours. They have not reassembled since.

The demonstrations have taken on an added poignancy following the death of a three-month old baby, whose lack of an ID number complicated her transfer across the border to Belgrade and led to a row over who would pay for her treatment once she arrived.

For many in Sarajevo the latest stalemate reflects the institutional paralysis that is standing in the way of reforms needed to prepare the route towards EU integration.

The 1995 Dayton accords successfully ended three years of conflict in Bosnia that had left 100,000 people dead.

But its legacy was a complex constitutional arrangement comprising a weak central authority and two entities that rarely agree. It gave birth to a bloated tripartite bureaucracy from which vested interests profit and which drains funds that could be used to greater effect to promote economic modernisation.

It was against this backdrop that the EBRD’s president, Sir Suma Chakrabarti, arrived in Bosnia and Herzegovina this week from Montenegro. In his discussions with senior officials from all three authorities he said he expected the next strategy for the country that is currently being drafted to shift the focus of finance away from post-conflict infrastructure reconstruction and towards the private sector.

The Bank has invested €1.5 billion in the country so far, €125 million last year and probably more than €150 million in 2013. But the nature of the economy means that funding has been skewed in favour of the public sector. That was now likely to change.

The EBRD would also emphasise projects that supported regional integration, by supporting cross-border commercial flows.

Sir Suma stressed that efforts had to continue to improve the investment climate. After a successful investment conference for Bosnia and Herzegovina held in London earlier this year, the President received positive feedback in countries he visited this week for a proposal to hold a similar conference for the whole region early in 2014.

The aim to emphasise the private sector in this country was underscored by Sir Suma as he signed two projects to support energy efficiency and to give private companies greater access to funds to finance leasing activities.

He also visited Jami, a successful young company in the pastry and frozen foods sector that was actively expanding its sales abroad, and a woman entrepreneur whose agricultural small holding had benefited from a micro loan from another EBRD partner.