The EBRD in Bosnia and Herzegovina: Investing in the future

By Ian Brown


The Bank’s projects reflect the range and depth of our commitment

The EBRD is getting ready for its 2019 Annual Meeting in Sarajevo in May. The conference is expected to bring together around 2,000 delegates from government, business and civil society and will provide Bosnia and Herzegovina with a platform to present itself and the Western Balkans region as an attractive investment destination that is open for business.

As a long-standing partner of Bosnia and Herzegovina, the EBRD has been supporting the country’s sound and sustainable growth through a combination of investment and assistance for policy reforms. Since the country became a shareholder of the Bank in June 1996 and operations began, we have invested €2.3 billion in around 160 projects. Last year alone we invested some €200 million and we are planning to expand our activities further this year.

Donors play a particularly important role in Bosnia and Herzegovina as the international community remains committed to the reconstruction and development of the country and the region. For example, Bosnia and Herzegovina is benefitting from the European Western Balkans Joint Fund, a multi-donor fund managed by the EBRD and the EIB under the Western Balkans Investment Framework. The country also enjoys the support of the EU and many bilateral donor countries such as Austria and Sweden.

Our goal is to contribute to the creation of an economy that allows its people – especially the young – to deploy their talents and reap the benefits of their efforts in their own country. Below we are illustrating in 10 examples the range and depth of the EBRD’s engagement in the country:

Financial Stability

Deposit Insurance Agency of Bosnia and Herzegovina

When the global financial crisis of 2007/08 also threatened to affect Bosnia and Herzegovina, the EBRD provided much-needed stability with a €50 million standby credit line to the Deposit Insurance Agency that enable the institution to more than double its coverage. This was a key measure to reassure both private depositors and the banking sector.

New Horizons

Corridor Vc

Connectivity is the big challenge for the Western Balkans and Bosnia and Herzegovina. It includes “soft connectivity” such as creating the legal and institutional framework for regional and trans-European integration as well as building the physical infrastructure to make this happen. The transport Corridor Vc will cross Bosnia and Herzegovina from the port of Ploce in the south to the border with Croatia in the north, following earlier investments in Republika Srpska. To date, the EBRD has already committed €550 million to the project which is jointly financed with the EIB and has also received an €11.8 million investment grant from the EU and the Western Balkans Investment Framework (WBIF).

Warm Homes

Banja Luka District Heating

An €8.3 million loan was provided by the EBRD in 2017 to support the construction of a 49 MW district heating boiler plant fired by wood biomass in Banja Luka, in order to reduce the dependence on heavily polluting oil in the capital of Republika Srpska. Banja Luka has joined EBRD Green Cities with support from Austria. The programme promotes green solutions in infrastructure, transport and urban development in cities across the EBRD regions.

Local Champions

Bingo

Promoting a local champion and helping it becoming a regional player, the EBRD has provided the local supermarket chain Bingo with a series of loans since the first financing of €6.5 million in 2010. Established in the central Bosnian city of Tuzla in 1993 as a private company, Bingo has since grown to become the largest retailer in the country. Bingo’s successful expansion offers local producers a unique opportunity to introduce their goods on the local and national market.

New Technology

United Group/Telemach Bosnia

United Group was established in 2000 as a small cable company offering new telecommunications platforms and media. In 2011, the EBRD arranged a €25 million syndicated loan for its subsidiary Telemach Bosnia. The company brought modern, high quality telecoms services to the country and became a leading cable TV and broadband internet provider. Over the years, United Group expanded through organic growth and acquisitions and in September 2018 was valued at €2.6 billion.

Clean Water

Bijeljina Wastewater

Access to clean water – and the safe disposal of wastewater – is a fundamental human need. A €7.0 million credit from the EBRD in 2007 to the city of Bijeljina in the north of the country was the first in a series of loans for the construction of a wastewater treatment plant, a wastewater collection network and an expansion of the network supplying clean water. Each had a direct, positive impact that improved the quality of life for the local population of more than 100,000 inhabitants. The EU and Sweden co-financed the investment with €6.5 and €4 million, respectively.

Industrial Potential

ArcelorMittal Zenica

When the largest steel producer in the world, ArcelorMittal, considered expanding to Bosnia and Herzegovina they turned to the EBRD. In 2005, the EBRD provided a €25 million loan in support of energy efficiency investments at the plant in the Zenica-Doboj canton, with TaiwanICDF providing €5 million in concessional financing. Today ArcelorMittal employs over 2,400 staff at Zenica and indirectly supports around 10,000 jobs throughout the country. Building on the success of the cooperation, in March 2019 the EBRD arranged a €46 million loan package, supported by TaiwanICDF, financing a new combined heat and power plant supplying the plant and the city with cleaner and more efficient energy.

Clean Air

Zenica Hospital

For many years the local hospital in Zenica, built in 1959, had been one of the worst polluters in a city already suffering from severe environmental problems. A €10 million EBRD loan together with €1 million from the EU/WBIF-supported Regional Energy Efficiency Programme was signed in 2018 for investments to reduce CO2 emissions and increase energy efficiency. The refurbishment will provide cleaner energy and lead to significant savings, combining economic and environmental benefits.

Save Pensions

European Pension Fund

The EBRD was a pioneer in the development of private pension management in Bosnia and Herzegovina. Its investment in an equity stake in the European Voluntary Pension Fund Management Company allowed the firm to become the first provider of voluntary pension services in Republika Srpska. The investment offered private customers and investors a wider choice in how to prepare for their financial future and was a milestone in the development of the local capital market.

Pulp Fiction

Natron Hayat

The EBRD has helped rebuild Bosnia’s industrial base with credits in support of a pulp and paper mill in the central Bosnian town of Maglaj owned by the Turkish company Natron Hayat. A first loan in 2006 allowed the plant to restart the production of pulp and financed the renovation on an integrated pulp and paper mill. The plant draws on an ample supply of local natural resources and has set new standards in the forestry sector for the whole country. In 2012, the cooperation continued with a new EBRD loan for the construction of a new biomass-fired power plant that cut carbon emissions and reduced the environmental impact of waste from the installation.

*Ian Brown is EBRD’s Head of Office in Sarajevo