Supporting Economic Reforms to Strengthen Private Sector Development in Bosnia and Herzegovina

This series of events served as a platform to support policy dialogue on private sector development and competitiveness in Bosnia and Herzegovina, in the context of the country’s economic reform agenda and EU integration process. Bringing together key stakeholders, the meetings combined analytical insights with capacity-building discussions to help identify priority reforms and areas for strengthened policy action.

As part of the programme, the OECD presented the key findings and recommendations of its report, Assessing Bosnia and Herzegovina’s Reform Agenda for Private Sector Development. Subsequent discussions focused on recent reform developments across priority areas, highlighting progress achieved at different levels of government since the report’s finalisation.

The OECD also organised a dedicated technical “zoom-in” session on strengthening private capital markets in Bosnia and Herzegovina. The session highlighted the role of capital markets as a complementary source of financing for businesses at different stages of growth, while also addressing the challenges associated with their limited development and lack of harmonisation. Drawing on international experience, the session showcased practical measures to deepen market liquidity, expand alternative financing instruments and strengthen regulatory and governance frameworks. Contributions from representatives of securities commissions, stock exchanges and chambers of commerce further provided insights into the key barriers preventing firms from using capital markets and the regulatory adjustments needed to unlock their development.

Reform efforts are underway in Bosnia and Herzegovina to support private sector development. Key strategic documents, including the Economic Reform Programme and the Reform Agenda, place strong emphasis on strengthening the resilience and competitiveness of the private sector.

Across the country, progress has been observed in several key areas, albeit unevenly. At the same time, significant challenges persist, including the continued dominance of large and inefficient state-owned enterprises; vocational education systems that remain insufficiently aligned with labour market needs; the underutilisation of alternative dispute resolution mechanisms; and lengthy and costly licensing and permitting processes.

Access to finance remains another main obstacle to private sector development in the economy. Although the banking sector is generally stable and well capitalised, firms perceived as higher risk, particularly start-ups and innovative ventures, continue to face difficulties in securing funding due to stringent collateral requirements. At the same time, alternative financing options remain limited: leasing and factoring are underutilised, while capital markets play only a marginal role, with market capitalisation at 20.2% of GDP—well below the EU average of 56.6%. Early-stage financing, including business angels and venture capital, is particularly scarce, reflecting regulatory gaps, limited investor activity and broader institutional weaknesses.

These constraints also limit firms’ ability to effectively leverage the green and digital transitions. While SME support has primarily focused on digitalisation, assistance for greening remains limited and insufficient, particularly for export-oriented firms preparing to meet EU requirements such as the Carbon Border Adjustment Mechanism (CBAM) (Assessing Bosnia and Herzegovina’s Reform Agenda for Private Sector Development).

In this regard, the event provided an opportunity to:

• Examine recent and planned reform efforts by the Bosnia and Herzegovina administration;
• Foster public-private dialogue on the primary barriers that continue to constrain private sector development;
• Share international good practices and policy approaches, with a view to identifying practical measures for advancing key reforms; and
• Review the current state of capital market development in Bosnia and Herzegovina, including the potential role of the OECD in supporting further progress.

Together, the three events brought together more than 130 representatives from all levels of administration in Bosnia and Herzegovina (state, Republika Srpska, the Federation of Bosnia and Herzegovina and Brčko District), alongside participants from the EU Delegation in Bosnia and Herzegovina, the private sector, civil society, as well as several embassies and international organisations.

• Meeting agenda (Banja Luka, 10 March)
• Meeting agenda (Mostar, 11 March)
• Meeting agenda (Sarajevo, 12 March)
• Presentation from OECD South East Europe Division
• Presentation from OECD Capital Markets and Financial Institutions Division
• Meeting photos
• Briefing note (EN)
• Briefing note (BS)

Umur Gökçe, Economic Advisor

Stephanie Lizzo, Junior Policy Analyst

The events were organised in partnership with the Ministry of European Integration and International Co-operation of Republika Srpska (Banja Luka), the Federal Ministry of Development, Entrepreneurship and Crafts (Mostar), the Ministry of Foreign Trade and Economic Relations (Sarajevo) and the EU Delegation to Bosnia and Herzegovina.