IFC Supports Inclusive, Green Growth in Bosnia with €20M Loan to Mikrofin

In a significant move to bridge the financial divide for women entrepreneurs and bolster climate-oriented initiatives in Bosnia and Herzegovina, the International Finance Corporation (IFC), a member of the World Bank Group, has announced a €20 million loan to Mikrofin d.o.o. Banja Luka (Mikrofin). As the country’s foremost microfinance institution, Mikrofin is well-positioned to amplify access to capital for micro and small enterprises (MSEs), particularly those led by women and those embracing environmentally sustainable practices.

Tackling Financing Gaps in a Stagnant Credit Market

Bosnia and Herzegovina has long grappled with limited credit availability for its private sector. In 2023, domestic credit stood at a mere 43.5 percent of GDP—significantly lower than the EU average of 77.6 percent. This shortfall disproportionately affects MSEs, which form the backbone of the country’s economy. Representing 99 percent of all registered businesses, these enterprises contribute nearly half of total employment and value added. Yet, their ability to expand, innovate, and generate employment remains constrained by financial exclusion.

The IFC’s financial infusion is strategically designed to disrupt this stagnation. Half of the funds—€10 million—are earmarked for women-owned businesses. This allocation aims to counter persistent structural and social barriers, including limited asset ownership, gender-based discrimination, and lack of formal networking opportunities. Many women-run ventures operate informally, placing them outside the radar of traditional banking institutions. By supporting such businesses, the IFC-Mikrofin initiative aims to generate long-term economic empowerment, income growth, and job creation.

Catalyzing the Green Finance Sector

Alongside promoting inclusivity, 25 percent of the loan—€5 million—is devoted to green investments. Bosnia and Herzegovina faces pronounced environmental challenges, being the second-largest emitter of greenhouse gases in the Western Balkans. Despite growing awareness, the country’s green finance sector is underdeveloped due to fragmented governance, weak regulatory incentives, and a shortage of specialized financial expertise.

The IFC-Mikrofin partnership seeks to address these deficits by promoting accessible financing for climate-resilient technologies. Target areas include energy-efficient home upgrades, rooftop solar panels, clean heating systems, and similar sustainable solutions. These initiatives are expected to lower household energy bills, reduce carbon emissions, and spur local job creation in emerging green sectors.

Strategic Support for Institutional Development

Beyond financing, IFC will provide Mikrofin with technical and strategic advisory services. These will focus on fortifying the institution’s environmental and social risk management frameworks, ensuring that its growth trajectory remains inclusive and responsible. This capacity-building component is crucial in helping Mikrofin align with international standards and expand its reach to underserved segments of the population.

Milena Haneš, Director at Mikrofin, emphasized the importance of this milestone: “Establishing a credit-based partnership with IFC is an important step in our evolution. Not only does it fuel our expansion, but it also enriches our institutional knowledge through collaboration with global experts.”

Driving Long-Term Impact Through Non-Bank Financial Institutions

The initiative underscores IFC’s commitment to strengthening non-bank financial institutions, which are critical for reaching marginalized demographics. “This investment addresses IFC’s two key priorities for Bosnia and Herzegovina—inclusive growth and environmental sustainability,” said Etleva Koka, IFC’s Manager for Financial Institutions in Europe. “It reflects our strategy to support micro and small businesses, enhance financial inclusion, and catalyze climate-related investments.”

With over three decades of presence in the country, IFC has played a transformative role in reforming the local business climate, advancing governance frameworks, and promoting sustainable development. This latest collaboration with Mikrofin builds upon that legacy, aiming to create an inclusive and resilient economy that benefits all citizens—especially women and those investing in a greener future.