Small and medium-sized enterprises (SMEs) are drivers of economic development. In Bosnia and Herzegovina (BiH), more than 98% of all private companies are small and medium-sized enterprises and they generate more than 60% of the country’s GDP and contribute to employment with a share of 70%.

However, the pandemic COVID-19 has shown that small and medium-sized enterprises are more vulnerable during a crisis. During the pandemic, small and medium-sized companies struggled to maintain their business operations and faced a sharp decline in turnover and income.

The European Union (EU) has been continuously strengthening the business infrastructure in the Western Balkans as part of comprehensive efforts invested in increasing the prosperity and stability in the region. The EU is improving the access to financing for small and medium-sized enterprises through an EU investment platform for the region and innovative approaches and a high growth potential.

Strengthening competitiveness of small and medium-sized enterprises in Bosnia and Herzegovina and the Western Balkans

”The EU membership perspective brings numerous possibilities for Bosnia and Herzegovina and the Western Balkans, and especially for small and medium-sized enterprises. The EU and the European Bank for Reconstruction and Development (EBRD) are jointly implementing the ”SME Competitiveness Support Programme” that aims to assist privately owned SMEs in meeting EU standards in the field of environmental protection, occupational safety and health and product quality and safety. Over the past three years, more than 178 small and medium-sized enterprises in Bosnia and Herzegovina have benefitted from the programme. The enterprises are improving their energy efficiency and decreasing their production costs in the framework of the programme, which increases their competitiveness in the domestic and international market. The EBRD ensures loans amounting to 46 million EUR in cooperation with local partner banks in Bosnia and Herzegovina within this programme, whereas the EU ensures grants amounting to 6.9 million EUR and free technical assistance for small and medium-sized enterprises, says Stefano Ellero, Head of Cooperation of the EU Delegation in Bosnia and Herzegovina.

The programme assists companies from the agricultural, transport, retail sales and services, medicine, production and food and drinks sectors in Bosnia and Herzegovina to become more competitive in the trade with partners from the EU, increase their trade with partners from the EU and their profitability in the domestic market. ”I am happy to see that the enterprises used the programme to expand their production lines and increase competitiveness by offering high-quality products and services. Thanks to our assistance, some companies are fully export-oriented and can be globally competitive. For example, a company from Bosnia and Herzegovina that produces furniture is exporting 96% of its production today. Its products can be found at around 250 top-notch stores worldwide, but also at the most luxurious Michelin star hotels and restaurants throughout the world”, adds Ellero.

Promotion of development of small and medium-sized enterprises in Bosnia and Herzegovina using EU grants  

In addition to the ”SME Competitiveness Support Programme”, the EU supported 82 companies from Bosnia and Herzegovina through grants in the framework of the project EU4Business. The goal was to preserve jobs and business operations of export-oriented companies in agriculture and tourism over the past two years in order for companies, farmers and local partners to improve their competitiveness using new and state-of-art technologies and skills. Most companies’ income from sale increased by 15%.

”The beneficiaries of our EU4Business project successfully maintained the productivity and created new jobs in spite of the pandemic, which is a great success. We allocated grants amounting to 15 million EUR in the framework of the EU4Business project and additional 13 million EUR in the framework of the EU4BusinessRecovery project for the purpose of reducing the impact of the pandemic COVID-19 on the economy of Bosnia and Herzegovina. In the framework of the project EU4BusinessRecovery, calls for project proposals for the provision of support to companies were published over the past year. The results of the calls will be published on the project website this year”, says Ellero.

Another project financed by the EU in order to support small and medium-sized enterprises in Bosnia and Herzegovina in relation to modernisation and adaptation to variable business conditions is EU4DigitalSME.

”We provide grants amounting to 14 million EUR for the digital transformation of small and medium-sized enterprises in Bosnia and Herzegovina in the framework of the project EU4DigitalSME. This project will assist in the establishment of digital innovation centres in order to enable small and medium-sized enterprises to access the latest know-how, expertise and technology. We will support the technological transformation and digital innovation at small and medium-sized enterprises to mitigate the impact of the pandemic COVID-19 on the economy of Bosnia and Herzegovina”, says Ellero.

In the framework of IPA III (2021-2027) and the Economic and Investment Plan for the Western Balkanswith a value of up to 30 billion EUR, the European Union is planning to increase the grants for the support of the innovation and green growth-oriented private sector. It is also foreseen to increase the grant capacities for investments, in particular for the strengthening of small and medium-sized enterprises and stimulating the creation of new jobs, especially in order to meet the needs of youth. One of the priorities of the EU will also be investments in a sustainable transformation of agricultural and food systems and rural development in the region.