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Challenges of financing green business models in Bosnia and Herzegovina

Challenges of financing green business models in Bosnia and Herzegovina

Up until now, interest in supporting the development of green and circular business models has mostly been present among international financial institutions and donors, and has recently been growing among domestic institutions that are increasingly becoming more active in this sector.

The financing of green business models in Bosnia and Herzegovina was one of the topics at the meeting that was discussed today by the representatives of competent institutions, financial organizations, companies and chambers of commerce at the meeting, which is financed by the Ministry of Economic Development and Cooperation of FR Germany (BMZ), and implemented by GIZ, within the framework of the COVID-19 Investment Response project. 

Small and medium-sized enterprises are the basis of economic development in BiH, and in order to accelerate development and transition to green and circular business models, they need financial assistance. 

The grant components are intended for technical assistance to companies in fulfilling the technical conditions by which companies are obliged to improve their green business practices. An example of this is the Green Recovery component within the framework of the COVID-19 Investment Response project, which supports small and medium-sized enterprises in BiH by co-financing the purchase of equipment and other activities with the aim of improving green business practices and models in these companies.

As stated at the meeting, entrepreneurs are interested in applying, but they need to be introduced to the concept of green transition and explained that it is possible through technological improvements and grants.

“Today's event enabled the exchange of information and raising awareness of the green economic transition, which is inevitable and in line with global trends on decarbonization and the European Green Plan. Our companies are faced with the demands on output markets and the need to adapt their production to environmentally friendly processes", said Adrijana Marić, manager of the Green Recovery component.

Given that they communicate with entrepreneurs, the Chambers of Commerce proposed at the GIZ event that all information on available funds should be presented in a simplified way through the means of information and communication available to the Chambers, so that as many entrepreneurs as possible can find out that funds are available, how to apply and what benefits they get from it. 

Regardless of the fact that many of the regulations related to green transition are non-binding, they are significant when companies have international customers and when they are integrated into international value chains.

One such company is Ramex doo from Kladanj. 

“Being competitive on the European and world market is a big challenge. Through this project, we are trying to identify our path to green transition through the program implemented by GIZ. I have to point out that we have very positive experiences because we have received technical assistance that has helped us to understand the challenges that lie ahead of us but also how to use our potentials “, said Jasminka Hadžiabdić, executive director of the company Ramex doo from Kladanj.

Green business models are also supported by key domestic institutions, two entity ministries, entity funds and the Development Bank of the Federation of BiH with dedicated credit lines. They have in their programs support components related to green and circular business models to a certain extent. 

The meeting also resulted in a series of recommendations for the successful resolution of recognized challenges and open issues, which should be worked on in order to improve programs and support effects.

“Funds to support the green transition exist, but they are rather fragmented and distributed in different institutions. This is partly the reason why they cannot meet the needs of small and medium-sized enterprises in the field of digital and technological development and innovations in complex technical systems. However, the participants of the meeting proposed a redesign of the program. The funds are there, the institutions work very well. They have developed policies, they have a vision for a green transition and they have instruments, and now the entire portfolio of these mechanisms needs to be improved", concluded Prof. Dr. Sanda Midžić Kurtagić, professor at the Faculty of Mechanical Engineering of the University of Sarajevo.

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