Assessing Bosnia and Herzegovina's Reform Agenda for Private Sector Development

Reader’s guide

This section presents the contextual background that informed the development of this report. It further outlines the report’s structure, its key thematic focus areas and the process guiding its preparation.

1. What is the context?

As Bosnia and Herzegovina advances on its path toward EU accession, its level and pace of progress remains constrained by persistent structural challenges. Overcoming them is crucial—not only to meet accession criteria, but also to foster sustainable, inclusive growth and accelerate socio-economic convergence toward the EU. As the main driver of job creation, investment and innovation, a dynamic and competitive business environment is fundamental to unlocking broader reform efforts.

To support Bosnia and Herzegovina with this endeavour, the “EU for Private Sector Development” (EU4PSD) project commenced in December 2024 and was officially launched in April 2025. Co-financed by the European Union and the Federal Ministry for Economic Cooperation and Development (BMZ), implemented by the OECD in partnership with GIZ, this three-year project aims to accelerate economic reforms, strengthen resilience and advance Bosnia and Herzegovina’s progress toward EU integration. Its overarching goal is to foster a more dynamic and competitive private sector that can serve as a catalyst for broader structural reforms and inclusive economic growth.

The OECD-led “policy” component under the EU4PSD initiative seeks to support the implementation and monitoring of Bosnia and Herzegovina’s economic reforms, with a focus on improving the business environment and enhancing businesses’ competitiveness. The three main actions are: (i) delivering tailored policy analysis and advice through analytical work; (ii) providing technical support to policy-makers in priority areas of Bosnia and Herzegovina’s economic reform agenda; and (iii) strengthening the country’s capacity to monitor the scope and pace of reform implementation.

2. What is the report about?

This report represents the first deliverable of the EU4PSD initiative and provides insights into the current state of implementation of the economic reforms, drawing on Bosnia and Herzegovina’s strategic frameworks in the context of its EU accession process. Notably, as part of the new Growth Plan for the Western Balkans, adopted by the Commission in November 2023, all the Western Balkan economies are expected to prepare and implement a Reform Agenda in order to accelerate fundamental reforms, supporting the region’s path towards EU membership and improving sustainable economic growth.

Specifically, the report aims to:

1. Provide an initial assessment of the implementation of reform measures proposed under the draft Reform Agenda related to private sector development, laying the groundwork for future monitoring;

2. Offer a clear rationale for why the selected reform measures are critical to enhancing private sector competitiveness, thereby fostering consensus and co-operation across all levels of administration in Bosnia and Herzegovina;

3. Highlight and propose reform areas that warrant greater policy attention in the final version of the Reform Agenda and in future strategic economic policy frameworks;

4. Present concrete and practical recommendations, drawing on OECD good practices and standards, to accelerate reform implementation;

5. Serve as a basis for identifying key bottlenecks and guiding the tailoring of OECD support throughout the EU4PSD initiative.

3. What is the scope of the report?

Drawing on a review of Bosnia and Herzegovina’s draft Reform Agenda, as well as other relevant strategic economic plans and frameworks and the OECD’s own assessment, five priority areas were identified and form the analytical backbone of this report:

1. Strengthening the governance, efficiency and transparency of state-owned enterprises (SOE): Enhancing SOE governance and performance is crucial to ensure fair competition and improve overall market efficiency.

2. Simplifying and harmonising requirements for business operations: Clear and transparent requirements for business registration, licensing and permitting processes reduce administrative burdens, enhance legal certainty and thus can help foster a more enabling environment for businesses.

3. Fostering transparency and accountability in business practices: Robust legal and regulatory frameworks that uphold business integrity, prevent corruption and promote dispute resolution mechanisms are essential to build investor trust.

4. Providing financial support for businesses and innovative start-ups: Accessible and adequate financing tools enable businesses to start and grow, while a well-developed innovation ecosystem helps ensure that these investments translate into competitive advantages for the wider economy.

5. Improving the connection between vocational education and training (VET) and the private sector: A responsive and innovative VET system ensures businesses have access to a skilled workforce, while also preparing individuals to meet the evolving demands of the labour market.

Each chapter begins with an overview of the current state of play across the different levels of government in Bosnia and Herzegovina, establishing a baseline for the relevant reform measures. It also identifies potential reform areas for consideration in the final version of the Reform Agenda and in future strategic planning. This is followed by a detailed situational analysis of key developments, planned reform efforts and the remaining challenges facing businesses. Each section concludes with targeted policy recommendations, complemented by good practices from EU and OECD member states, to inform reform implementation in support of private sector development.

It is important to note that this report does not aim to cover all aspects of the private sector or business environment in Bosnia and Herzegovina. Instead, it focuses on areas identified as priorities in the Reform Agenda, while also including analyses of related issues within the broader scope of these policy areas.

4. How was the report prepared?

This report builds upon OECD flagship work and incorporates updated analysis and stakeholder input to provide a comprehensive assessment. The report was prepared by leveraging inputs and analyses produced under the OECD South East Europe Regional Programme’s flagship reports, namely the Western Balkans Competitiveness Outlook and SME Policy Index for Western Balkans and Türkiye. It has been further enriched with inputs collected from Brčko District, stakeholder consultations with the private sector and local experts and deeper analyses from OECD experts.

The draft chapters were circulated for review and feedback through an inclusive, participatory process to ensure their accuracy prior to final publication. Specifically, they were shared with project partners from the Project Advisory Group, including BiH stakeholders at the state level, Republika Srpska, the Federation of Bosnia and Herzegovina, and Brčko District, as well as with the European Commission, the Delegation of the European Union to Bosnia and Herzegovina and GIZ. In some cases, following the initial review, the OECD team submitted targeted follow-up questions or requests for additional data to obtain specific updates or information. Moreover, to capture private-sector views, particularly on challenges identified by businesses, the draft was shared with the Foreign Trade Chamber, which provided written feedback and participated in organised consultative dialogues to provide oral input. All comments and updated data received were carefully reviewed and incorporated where relevant. The review process followed a clear cut-off date for data and developments, which has implications for the analyses presented. Final comments were required by the start of August, establishing 31 July 2025 as the reference point for included data and developments. Nonetheless, some data constraints meant that certain information may be outdated or unavailable for recent years, affecting the robustness of the analyses.

Finally, at the time of this report’s publication, the reform measures in Bosnia and Herzegovina’s draft Reform Agenda remain tentative and are therefore subject to change. Nevertheless, the topics addressed in this report reflect structural priorities that are broadly relevant for the country, drawing on longstanding reform objectives outlined in various strategic documents and OECD assessments as well as challenges expressed by businesses in the country. Consequently, regardless of the final content of the Reform Agenda, the key areas identified in this report are expected to continue to inform the country’s policy priorities and economic policy frameworks.