SMEs depend on a supportive business environment to start, operate and grow, making sound policies, fair competition, access to finance and effective support services essential to their development. This cluster examines whether the policy, regulatory and institutional environment enables SMEs to start, operate, grow and exit the market under clear, predictable and proportionate conditions. It assesses how effectively SME considerations are embedded in policy design, as well as whether SMEs operate on a level playing field, including efforts to reduce informality, protect competition, ensure fair access to public procurement, and provide timely access to justice.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Bosnia and Herzegovina
Abstract
The business landscape in Bosnia and Herzegovina, in line with other regional economies, is dominated by small enterprises, with small and medium-sized enterprises (SMEs) accounting for around 99.7% of all firms and approximately 69% of total value added, considerably above EU levels (Eurostat, 2025[1]). This structural prominence underscores the need for SME-specific considerations to be systematically embedded across all policy domains affecting private-sector development. At the same time, given Bosnia and Herzegovina’s constitutional and governance structure, particular care is required to ensure that policies do not impose additional administrative burdens or increase compliance costs for SMEs operating across jurisdictions.
Creating an enabling environment for SMEs to invest, innovate and expand requires clear and predictable legislation, well-targeted support measures and effective co-ordination across government institutions. In this context, this section assesses government initiatives to promote an enabling environment for SMEs, in line with OECD principles on regulatory quality, better regulation and SME policy (OECD, 2022[2]). It examines measures to facilitate market entry and exit, and to ensure that legislative and policy frameworks are evidence-based, proportionate and responsive to SME needs, minimising administrative and compliance burdens. The section also considers the effectiveness of consultation mechanisms and the extent to which structured stakeholder engagement supports transparent, accountable and predictable policymaking.
2.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support
A sound regulatory and institutional framework is essential to provide effective support to SMEs across all stages of their development, from business creation and growth to, where relevant, market exit. In regional comparison, Bosnia and Herzegovina continues to rank last among the six Western Balkan (WB6) economies both in indicators capturing the quality of regulations for private-sector development, as well as in measures of government effectiveness related to policy formulation, implementation and the credibility of public commitments (World Bank, 2024[3]). Firm-level perceptions are consistent with this picture, with only 28% of companies reporting satisfaction with their operating environment, the lowest share in the region (RCC, 2025[4]). Nonetheless, this assessment points to emerging efforts to address these gaps and narrow the distance with regional peers. In recent years, Bosnia and Herzegovina has taken steps to modernise its framework, including the adoption of core legislation, updates to strategic documents and the expansion of SME support schemes. However, institutional capacities remain uneven across the economy, with weakly harmonised policy and institutional set-ups that continue to increase administrative burdens and operational complexity for businesses. Moreover, persistent shortcomings in transparency and accountability in the use of public funds undermine predictability, limit policy learning and constrain the effectiveness of SME support measures (European Commission, 2025[5]).
As part of the effort to modernise the SME policy framework and harmonise it with EU standards, the definition of SMEs is now fully aligned with the EU acquis across the economy. In the Federation of Bosnia and Herzegovina (FBiH), a new Law on Encouraging the Development of Small Businesses was introduced in 2024, which provided an updated definition fully aligned with EU thresholds, specifying criteria based on employment, annual income and asset value, and formalising the categorisation into micro, small and medium-sized enterprises (MSMEs) (Government of the Federation of Bosnia and Herzegovina, 2024[6]). In the Republika Srpska (RS), the definition had already been harmonised with the acquis in 2019, requiring no further adjustments during the current assessment cycle.
The strategic framework for SME development in Bosnia and Herzegovina has also progressed, with both entities now operating dedicated, partially aligned strategies that guide policy implementation until 2027. In Republika Srpska, the SME Development Strategy 2021-2027 has remained in force since the previous assessment, while in the Federation of Bosnia and Herzegovina, the Small Business Development Strategy, initially drafted for the 2022-2027 period, was adopted by the government only in March 2024 (European Commission, 2025[5]). Both strategies, inserted within the respective broader frameworks for economic development (i.e. Republika Srpska’s Strategy for the Development of the Industry 2021-2027 and the Federation of Bosnia and Herzegovina’s Development Strategy 2021-2027), seek to strengthen the SME ecosystem, combining institutional and regulatory reforms, improved access to finance and business support services, and enhanced competitiveness driven by innovation and the twin transition, generally aligning with the acquis. Progress in implementing the Small Business Act within the strategic frameworks is targeted and assessed against the OECD ratings presented in this publication. Notably, a relatively strong degree of strategic alignment has been achieved across entities, even though the adoption of cross-entity guidelines to support SME policy harmonisation has yet to advance.
In implementing their SME policies, both entities support their strategies with dedicated budgets and annual planning instruments, albeit within substantially different institutional set-ups (see Dimension 3). In the Federation of Bosnia and Herzegovina, the Ministry of Development, Entrepreneurship and Crafts (FMRPO) acts as the lead body, operating as a line ministry with limited operational flexibility and autonomy over its budget and staffing. Over the assessment period, the FMRPO has seen a gradual strengthening of financial and human resources, supported by the introduction of a mandatory minimum allocation for SME incentives in 2024 (Government of the Federation of Bosnia and Herzegovina, 2024[6]). The FMRPO implements the SME Strategy through annual expenditure plans and a limited number of core support programmes, with a strong concentration of resources on competitiveness support for innovative and export-oriented SMEs. Although the Federation of Bosnia and Herzegovina has long envisaged strengthening its implementation and absorption capacity through the establishment of a dedicated SME agency, no concrete progress in this direction has materialised to date (OECD, 2022[7]).
By contrast, in Republika Srpska, responsibility for SME policy is shared between the Ministry of Economy and Entrepreneurship, which defines policy and manages dedicated support measures, and the RS Development Agency (RARS), which serves as the main implementing institution. While this institutional arrangement provides RARS with operational autonomy and delivery functions, the agency has long faced resource constraints, resulting in continued reliance on international donor funding for programme implementation. SME support programmes continue to be delivered largely in line with policy planning and strategic priorities, mainly aimed at expanding entrepreneurial activity, strengthening SME participation in global value chains (GVCs) and fostering innovation- and knowledge-based activities (see Section 2.4). Yet, the scale of the projects remains limited and executed through more targeted interventions, increasing the risk that support remains concentrated among a relatively small group of recurrent beneficiaries. Monitoring of SME policy implementation in both entities is limited to basic execution reporting, as institutional capacity for substantive evaluation is limited and statistical data are insufficient.
Furthermore, as part of ongoing public administration reform, Bosnia and Herzegovina has taken initial steps to advance digital government services, although progress remains uneven across levels of government. At the state level, a new Action Plan under the Strategic Framework for Public Administration Reform 2025-2027, and a recently adopted Open Government Partnership Action Plan, provide renewed momentum for the digitalisation of services and the expansion of open data. An Open Data Portal aligned with EU standards has been established, and amendments to the Law on Administrative Procedure have introduced elements of the once-only principle, and the Law on Free Access to Information has been harmonised with the EU Open Data Directive, further strengthening the legal framework for open data.
At the entity level, Republika Srpska operates a business portal serving as a single point of contact for registration procedures, permits and tax-related services, and has begun connecting key registries to enable data exchange, while the Federation of Bosnia and Herzegovina relies on a limited set of electronic services for company registration, taxation and financial reporting. In 2024, the Federation of Bosnia and Herzegovina also adopted priority measures for e-government development and tasked the Federal Ministry of Justice with preparing an e-Government Development Strategy and Law, though neither has been formally adopted yet.
External support is also contributing to progress. The Instrument for Pre-accession Assistance (IPA)-funded DIGI BiH project is providing technical assistance on e-governance, interoperability and digital identity, while the EU4 Digital Transformation initiative, co-financed by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ) and running until April 2028, aims to strengthen the enabling environment for e-government and e-services for entrepreneurs. In June 2024, Bosnia and Herzegovina also signed an agreement to join the EU Digital Europe Programme, opening access to capacity-building support for SME digitalisation. However, the absence of a fully integrated, state-level e-government platform for businesses, reflecting, in part, the constitutional division of competencies between the state and entity levels, together with uncoordinated governance arrangements and weak monitoring systems, constrains the reach, consistency and user orientation of digital public services for SMEs.
Despite observed progress in the policy and regulatory framework, the business environment in Bosnia and Herzegovina remains characterised by overly high barriers to business entry. While business registration falls within entity-level competencies and a state-level legal framework provides common principles for the registration system, the continued existence of separate business registers constrains firms’ ability to operate seamlessly across the economy (OECD, 2025[8]). Progress towards a fully functional one-stop-shop for business registration remains uneven across Bosnia and Herzegovina. In the Federation of Bosnia and Herzegovina, recent legal and technical steps, most notably the introduction of a single identification number and the launch of an e-registration portal (bizreg.ba) in 2023, have laid the legal groundwork for electronic registration, yet implementation remains partial and geographically limited. Fragmented governance structures at the cantonal level and the absence of a fully operational, entity-wide digital platform continue to require entrepreneurs to interact with multiple institutions and complete in-person procedures, resulting in lengthy, burdensome registration processes that take up to one month to establish a new company and almost three months to make it fully operational. By contrast, in Republika Srpska, while full e-registration is still pending due to the absence of e-signatures, the integrated registration portal launched in 2021 is technically ready, and the one-stop-shop has been operational since 2015, enabling registration in three days through a two-step process with significantly lower costs and a symbolic minimum capital requirement of BAM 1 (Bosnia and Herzegovina convertible mark). In the Brčko District, a physical one-stop shop centralises core registration steps, including company registration and tax identification, but it similarly lacks full functionality due to the absence of e-signature infrastructure.
The licensing and permitting framework in Bosnia and Herzegovina remains highly complex and non-uniform, reflecting substantial divergence in bylaws and administrative practices despite broadly harmonised core legislation at the state and entity levels (OECD, 2025[8]). This complexity represents a significant burden for firms, with over one-third of businesses identifying licences and permits as a major or moderate obstacle to growth (RCC, 2024[9]). Republika Srpska operates a fully functional Single Point of Contact for Businesses, providing clear guidance on required permits, fees and responsible institutions, while in the Federation of Bosnia and Herzegovina, the planned centralised register of administrative procedures remains non-operational, leaving businesses to gather information from individual departments or institutional websites. Procedures vary widely across cantons, and the lack of mutual recognition of licences and certifications forces firms operating across entities or districts to repeat administrative steps, increasing compliance costs and delaying market entry. These structural weaknesses are further compounded by an extensive landscape of para-fiscal charges, with more than 2 000 non-tax obligations identified by the OECD across government levels. Although Republika Srpska has advanced procedural simplification through a structured optimisation initiative,1 resulting in the abolition or simplification of a substantial number of formalities, uneven progress in reform across entities risks deepening regulatory divergence and perpetuating disparities in the business environment. In this context, the Growth Plan also foresees the identification and harmonisation of selected licences and permits across entities through a co-ordinated action plan.
In Bosnia and Herzegovina, SMEs continue to operate within a complex and inconsistently modernised tax administration environment that limits predictability and keeps compliance burdens relatively high, with no co-ordinated, system-wide reform identified to meaningfully streamline procedures across the economy (see Dimension 4). Recent measures have eased compliance obligations for a segment of SMEs, notably with the increase of the value-added tax (VAT) registration threshold to BAM 100 000 in 2023, which reduced VAT registration and filing requirements for low-turnover firms. However, the highly differentiated structure of the tax administration system, in the absence of effective co-ordination mechanisms, continues to generate significant challenges, especially for SMEs operating across jurisdictions. Digitalisation of tax administration remains uneven across entities: the Federation of Bosnia and Herzegovina’s e-filing framework remains only partially functional, while Republika Srpska has advanced further through expanded e-filing systems and the roll-out of electronic fiscal devices (see Section 2.2). In both entities, however, in-person submissions are still required for several tax types, and persistent technical bottlenecks continue to increase compliance time and costs. In terms of tax liabilities, Bosnia and Herzegovina combines low headline rates for several taxes (e.g. personal income tax [PIT] and corporate income tax [CIT]) with a high labour tax wedge driven by social security contributions (SSCs). While the reduction of SSC rates in the Federation of Bosnia and Herzegovina in 2025 may affect employers' labour costs, the concurrent sharp increase in the statutory minimum wage is expected to partially offset this impact.
Market exit frameworks in Bosnia and Herzegovina remain underdeveloped, particularly from an SME perspective (see Dimension 2). In both entities, bankruptcy legislation still lacks simplified, proportionate procedures, leaving small firms to rely on standard, often costly reorganisation processes when pre-insolvency options are unavailable. Legal provisions for out-of-court settlements are also limited, reducing incentives for quicker and less disruptive restructuring solutions tailored to SMEs, although the establishment of a consensual out-of-court financial restructuring mechanism in Republika Srpska in 2023 represents a positive step. Recent reforms have primarily focussed on digitalisation and transparency, notably through improvements to bankruptcy registers. Yet, monitoring and evaluation remain weak, with limited and insufficiently disaggregated data constraining evidence-based policy development and the strategic refinement of market exit procedures.
2.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs
Engaging the private sector in policymaking is essential to ensure that regulations are effective, proportionate and responsive to SME needs. In Bosnia and Herzegovina, however, the policymaking process remains largely non-inclusive, with many laws still adopted without systematic consultation with private-sector stakeholders. Compared with the previous assessment, the quality of the framework for consulting the business community has remained largely unchanged, with more substantive reforms introduced only in Republika Srpska. Overall, the lack of harmonisation across regulatory systems, limited administrative capacity and accountability, weak digitalisation and the near absence of quality-control mechanisms continue to undermine the conduct of public-private consultations (PPCs), leaving SMEs without structured and reliable channels to contribute evidence and perspectives throughout the regulatory cycle.
Although a formal framework for PPCs exists at both state and entity levels in Bosnia and Herzegovina, its uneven design and application across the economy limit its effectiveness as a policy co-ordination and feedback mechanism. The absence of economy-wide standards and the lack of reforms to harmonise consultation practices during the assessment period have resulted in differentiated obligations across jurisdictions, weakening predictability and comparability of regulatory processes. While Republika Srpska adopted new consultation guidelines in 2022 aimed at broadening participation, the continued use of wide-ranging exemptions has diluted their impact at first (Government of Republika Srpska, 2022[10]). More broadly, consultation requirements tend to prioritise procedural compliance over substantive engagement. Reporting obligations are inconsistently enforced, and oversight focuses on the presence of documentation rather than on the quality, inclusiveness or policy influence of consultations. As a result, PPCs function largely as a formal requirement rather than as a mechanism for improving regulatory quality, stakeholder trust or evidence-based policymaking.
Gaps in digital infrastructure and accessibility of draft legislation for consultation further reinforce shortcomings. Across the economy, in 2024, only around half of draft laws were made publicly available for scrutiny, with low disclosure rates in Republika Srpska partly attributable to the more established practice of circulating draft acts through sectoral organisations (OECD, 2025[11]). Since then, however, Republika Srpska has reinforced its framework by launching a central e-consultation portal in 2025, which appears to have considerably improved the publication of draft legislation. By contrast, the Brčko District still lacks an e-consultation portal, while the former FBiH portal is no longer operational, leaving institutions in the Federation of Bosnia and Herzegovina to rely on ministry websites and targeted outreach. A state-level e-consultation portal also exists, but its use remains inconsistent, and participation data are not disaggregated by stakeholder type, making it difficult to assess SME engagement or to use consultations strategically to improve regulatory design. As in other regional economies, the consultation framework across all levels of government has yet to formally incorporate virtual public meetings.
When draft regulations are published for public scrutiny, information on their expected impacts, costs and broader consequences is often insufficient. Although regulations at all levels of government require draft acts to be accompanied by an explanatory memorandum outlining the policy problem, the rationale for intervention and the intended objectives, these requirements are not consistently applied in practice and are frequently addressed in a largely formalistic manner (Council of Ministers of Bosnia and Herzegovina, 2003[12]; Government of the Federation of Bosnia and Herzegovina, 2003[13]; Government of Republika Srpska, 2009[14]). According to the OECD Support for Improvement in Governance and Management (SIGMA)’s monitoring review, samples examined at the state level and in Republika Srpska indicate that such memoranda are systematically attached to draft laws; however, their analytical quality is often weak. A similar pattern applies to fiscal impact assessments: although these are formally required and frequently conducted, they often amount to a cursory statement that no additional financial resources are needed, even for measures with likely fiscal implications (OECD, 2025[11]). As a result, stakeholders are not consistently provided with sufficiently detailed or robust information to assess proposed measures, develop evidence-based feedback or engage meaningfully in the policymaking process, thereby limiting the overall effectiveness of PPCs.
The way forward
Advance the harmonisation of SME regulations across the economy. In line with their constitutional competences, the constituent jurisdictions of Bosnia and Herzegovina should develop economy-wide guidelines to support harmonised SME-related regulations, as envisaged under the Reform and Growth Facility's Reform Agenda for Bosnia and Herzegovina. The guidelines should provide a common reference framework for the entities, cantons and the Brčko District on SME definitions, policy objectives, policy instruments and monitoring arrangements, thereby strengthening policy coherence, facilitating the mutual recognition of licences and certificates, and supporting alignment with the acquis.
Introduce a fully interoperable economy-wide system for electronic signatures. Bosnia and Herzegovina may wish to consider adopting the state-level Law on Electronic Identification and Other Trust Services and establishing a single accreditation authority for trust service providers, in line with EU requirements. This could be accompanied by harmonised amendments to entity legislation to enable the nationwide legal use of electronic signatures by businesses and public authorities. An interoperable and secure infrastructure for issuing and validating e-signatures for firms would enable end-to-end digital public services and reduce administrative burdens.
Complete the transition to end-to-end digital business registration with cross-entity interoperability. Bosnia and Herzegovina is encouraged to complete the operationalisation of digital one-stop-shops by enabling e-signatures, online payments, and secure data exchange among courts, tax, statistical, and customs authorities, thereby allowing companies to be registered end-to-end online. In parallel, the minimum capital requirements for limited liability companies in the Federation of Bosnia and Herzegovina and the Brčko District could be reduced or eliminated, in line with good practice in Republika Srpska. Building on the existing legal framework and respecting constitutional competences, stronger inter-entity co-operation could support interoperability between business registries and the mutual exchange of registration data, reducing administrative duplication, improving business statistics and facilitating the functioning of the internal market.
Advance simplified, digital and integrated business licensing and permitting. Using existing registers of formalities and cantonal e-registries as a baseline, the competent authorities at the entity level should map and rationalise licensing requirements in economically significant and cross-entity sectors such as construction, engineering and regulated services. Moreover, entities are encouraged to work towards greater harmonisation and mutual recognition of secondary legislation and licensing procedures where appropriate, reducing duplication, para-fiscal charges and compliance costs for firms operating across entities. In parallel, the introduction of end-to-end digital workflows could be prioritised, to allow licences and permits to be requested, processed and issued fully online through centralised portals.
Prioritise the reduction of the para-fiscal burden linked to business operations. Authorities are encouraged to conduct regular fiscal burden reviews to identify unjustified, redundant or disproportionate fees. Charges that cannot be justified on a cost-recovery basis could be amended or abolished to improve transparency and reduce the cumulative cost of doing business for SMEs operating across multiple jurisdictions.
Strengthen quality control and digital accessibility of public-private consultations. The oversight bodies at the state and entity levels should be empowered to assess the quality, report on all consultations, and return draft legislation to the initiating institution when requirements are not met. Building on recent progress, including the establishment of an e-consultation portal in Republika Srpska, all levels of government are encouraged to ensure the systematic publication of draft legislation and supporting impact information through accessible digital consultation platforms, enabling SMEs to participate in a structured and transparent manner.
For the business environment to effectively foster SME development, it is essential to maintain a level playing field where the same rules and conditions apply to all market participants. When exceptions and irregular practices take hold and become widespread, competitiveness is eroded, and the business environment becomes averse to SME growth, as SMEs are particularly vulnerable to high compliance costs due to their limited resources.
The European Commission's 2025 Country Report for Bosnia and Herzegovina continued to identify the informal economy as a significant challenge and an inhibitor of economic growth, with informal employment constituting a substantial share of the labour market (European Commission, 2025[5]). Reducing informality requires taxation and labour policies that actively support SME formalisation by keeping compliance costs manageable. In Bosnia and Herzegovina, elevated SSC remain a structural challenge, increasing labour costs for SMEs and weakening incentives to transition into formal employment. Beyond informality, ensuring a level playing field for SMEs also depends on the effective functioning of competition policy, public procurement and state ownership frameworks. In Bosnia and Herzegovina, competition institutions operate within a solid legal framework but face implementation constraints, while public procurement markets continue to exhibit low competitive intensity, limiting SMEs’ ability to access public contracts on equal terms. Lastly, a fair business environment for SMEs requires access to timely and affordable justice, both through courts and alternative dispute resolution (ADR) mechanisms. Bosnia and Herzegovina, however, has faced a high commercial case backlog and low uptake of ADR, constraining SMEs’ ability to efficiently enforce their rights.
The following section will assess Bosnia and Herzegovina's efforts to build a more transparent and efficient business environment for SMEs by examining measures introduced to reduce informality, promote fair competition, improve SME access to public procurement, and facilitate their access to justice.
2.2.1. Tackling informality for a more competitive business environment
High informality can be a severe obstacle for SMEs, which often lack the capital and logistical resources to compete with firms that reduce their costs through non-compliant practices and underreporting. In Bosnia and Herzegovina, the informal economy, meaning the part of the economy not covered by formal arrangements or not fully so, is a major inhibitor of business development. According to data from the Balkan Barometer on business perceptions, 94% of firms surveyed in Bosnia and Herzegovina identified in 2024 the informal economy as an obstacle, one of the highest shares among the WB6 economies, albeit most of those firms qualified it as a minor rather than a major obstacle (RCC, 2024[9]). Recent estimates indicate that Bosnia and Herzegovina’s informal economy accounts for around 30% to 34% of gross domestic product (GDP), representing around BAM 16.4 billion (approximately EUR 8.4 billion) in 2024 (EBRD, 2022[15]; European Commission, 2025[5]). Further evidence shows that this share has remained similar throughout the past decade, with data showing little to no variation since 2016 (Pasovic and Efendic, 2018[16]). However, despite persistent levels of informality, data from business surveys point to an improving situation since the previous assessment (RCC, 2025[4]; World Bank, 2025[17]).
The large size of the informal economy is driven in part by a significant share of informal employment,2 currently estimated at 18.6% of the total employed population, despite being comparatively lower than the regional average of 20% (OECD, 2025[18]). This remains a structural feature of Bosnia and Herzegovina’s labour market, closely linked to the economy’s labour structure and its persistent unemployment3 (13.1% of the working-age labour force out of work) (Agency for Statistics of Bosnia and Herzegovina, 2025[19]).
This persistence is largely linked to the predominance of micro-firms and self-employment, which are more exposed to informality risks, as smaller firms often seek to reduce labour and compliance costs given their limited capital and administrative capacity. Microenterprises account for 81% of active firms economy-wide, while self-employed entrepreneurs represent 53.3% of all enterprises, reflecting an economy centred on own-account work rather than wage employment (Agency for Statistics of Bosnia and Herzegovina, 2025[19]; 2025[20]).
This strong concentration of small firms is evident in both entities, with approximately 41% and 48% of workers employed in microenterprises in the Federation of Bosnia and Herzegovina and Republika Srpska, respectively, with significant concentrations in trade, construction and small manufacturing (Government of Republika Srpska, 2024[21]; Government of the Federation of Bosnia and Herzegovina, 2024[22]).
In the context of a substantial informal economy, it is important for economies to adopt overarching strategies to guide policymaking. In Bosnia and Herzegovina, responsibilities for policies addressing the informal economy are shared across the entity levels, with both tax and employment policies co-ordinated primarily by the entities (OECD, 2024[23]). This, in turn, complicates the design of consistent measures and disproportionately affects SMEs, as differing rules and uneven enforcement across entities increase administrative burdens. This is especially the case for firms operating across both entities or seeking to do so. Despite the absence of a co-ordinated approach, however, economy-wide donor-funded initiatives remain in place. For instance, the Second Employment Support Project,4 a World Bank-financed initiative implemented in both entities, aims to increase formal private-sector employment, including among small employers (World Bank, 2024[24]). However, neither the Federation of Bosnia and Herzegovina nor Republika Srpska has adopted an overarching strategy to reduce informality, nor is the issue addressed in their respective strategies for SMEs, which instead rely on separate fiscal measures and labour policies.
Efforts to address informality have also concentrated on strengthening compliance mechanisms through fiscalisation, ultimately helping level the playing field for compliant SMEs. In 2025, the Government of the Federation of Bosnia and Herzegovina adopted the draft Law on Fiscalisation of Transactions. This law, which was adopted in January 2026, overhauled the fiscalisation system of the Federation of Bosnia and Herzegovina by introducing mandatory e-invoicing, a new centralised fiscalisation platform for invoice verification, and a series of stricter penalties for non-compliance (Federal Ministry of Finance, 2025[25]). This is expected to reduce the administrative burden for SMEs in registering their income and lower compliance costs, reducing the likelihood of unreported sales and revenues. In Republika Srpska, the introduction of new fiscal measures is outlined in the Economic Reform Programme 2024-2026, which sets the reduction of the informal economy as one of its key objectives (Government of Republika Srpska, 2024[26]). Core measures include the digitalisation of fiscal procedures through a proposed upgrade of tax and administrative systems, which may improve traceability and deter underreporting (Government of Republika Srpska, 2024[26]). Albeit full implementation extends into 2026, early evidence suggests that the programme has already entered a roll-out phase. For instance, the 2022 Fiscalisation Act entered into force in 2024, making the use of electronic fiscal devices mandatory, allowing for greater control by the authorities, thus decreasing the detection of non-compliant firms (Government of Republika Srpska, 2022[27]; EcoOne, 2025[28]).
To complement fiscal policy, both entities have put in place labour policies to support formalisation. The Federation of Bosnia and Herzegovina offers an employment-incentive scheme under which a firm hiring a new employee may deduct twice the amount of its gross annual salary from its taxable base, a measure designed to reduce informal employment by lowering the cost of formal hiring for employers (PWC, 2025[29]). In Republika Srpska, the SME Development Strategy for 2021-2027 outlines a measure seeking to increase formal employment in SMEs, hoping to increase formal employment in the target population by 5% in 2027, with implementation reports noting an additional 2 000 formally employed individuals in SMEs in two years (Government of Republika Srpska, 2024[21]). In parallel, the aforementioned World Bank-supported Second Employment Support Project entered implementation in 2024, with programme completion scheduled between 2025 and 2026 and funds disbursed to 182 different businesses (Government of Republika Srpska, 2025[30]). While implementation has advanced in Republika Srpska, it has yet to take place in the Federation of Bosnia and Herzegovina, with official reports noting slow and delayed progress5 (World Bank, 2024[24]).
Within this decentralised policy landscape, the design and administration of taxation systems are particularly relevant for SME formalisation, as compliance costs and labour-related contributions vary across entities. Bosnia and Herzegovina applies a low, flat tax rate of 10% for both CIT and PIT in the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brčko District (PWC, 2025[31]; 2025[32]). However, despite a low-tax regime, the economy has a decentralised tax structure for social contributions, with entities setting their own thresholds. For instance, SSC rates vary across entities and remain elevated, with 31% in Republika Srpska and up to 36% in the Federation of Bosnia and Herzegovina, despite the latter having decreased from 41.5% in 2025 (OECD, 2024[23]).
This creates multiple layers of complexity for SMEs, which must navigate different tax rules across jurisdictions and manage several parallel obligations, significantly increasing administrative burdens to which small firms are particularly vulnerable. While the Federation of Bosnia and Herzegovina has taken steps to reduce SSC in 2025, the overall contribution burden remains high, which can encourage informal employment, as the cost of formality may be prohibitive for many small businesses. In settings where labour and tax costs are relatively high, a simplified taxation regime for SMEs can encourage formalisation, thereby lowering compliance burdens. In Republika Srpska, a simplified presumptive tax regime applies to micro and small businesses, allowing them to pay 2% of total annual revenue and significantly reducing compliance requirements (PWC, 2025[32]). However, this framework does not extend to medium-sized enterprises, which remain subject to the standard tax system. In the absence of broader simplification measures across the SME segment, medium-sized firms may remain exposed to informality risks, even if these manifest differently than for micro and small enterprises. The Federation of Bosnia and Herzegovina does not have a simplified tax regime, with SMEs subject to the same tax and compliance requirements as larger companies, despite their limited administrative capacity.
Lastly, business registration remains a crucial entry point to formality for SMEs, and it is thus essential that the process be free of excessive administrative and financial barriers. In Bosnia and Herzegovina, however, the process remains complex for SMEs. A business survey conducted by the World Bank identified that in 2023, approximately 11.7% of small enterprises started their operations while being formally unregistered (World Bank, 2025[17]). This figure rises to 17.8% among medium-sized firms, suggesting that administrative hurdles increase with firm size and may discourage timely formalisation (World Bank, 2025[17]). Albeit business registration has increased since 2022, Bosnia and Herzegovina has a low business registration intensity, with 1.48 business units per 1 000 people, far below the Western Balkan average of 4.1 (OECD, 2025[8]). Registration laws are largely harmonised across the Federation of Bosnia and Herzegovina, Republika Srpska and the Brčko District, yet SMEs must still complete multiple sequential steps, such as notarisation, registration with courts, and obtaining tax and statistical numbers.
Efforts to simplify these procedures through one-stop-shops have progressed unevenly (see Section 2.1), (OECD, 2025[8]). As a result, Bosnia and Herzegovina does not yet have a functional e-registration system, and applicants must still visit multiple offices in person, with registration times often exceeding legal deadlines, (OECD, 2025[8]). Costs also vary sharply and can be prohibitively high for micro and small enterprises, potentially reducing the incentive to formalise and reinforcing the appeal of operating informally.
Additional challenges include double registration for firms operating across entities, a high number of inactive companies due to burdensome deregistration processes, fragmented information for entrepreneurs and the absence of mutual recognition of licences and permits (OECD, 2025[8]). In general, this creates a negative environment for SMEs wanting to formalise their businesses, as both administrative burdens and inconsistent procedures significantly outweigh the perceived benefits of operating formally.
2.2.2. Protecting and monitoring fair market competition
Ensuring a level playing field entails maintaining competitive neutrality, an essential task for governments in monitoring that firms do not unduly benefit from market distortions or preferential treatment through public resources. In Bosnia and Herzegovina, competition remains constrained by underfinanced competition institutions despite a solid legislative framework. In addition, public procurement, which represents a major opportunity for SME growth, continues to be affected by weak competitive dynamics, creating barriers to SME participation. Furthermore, fair and effective competition is undermined by the presence of state-owned enterprises (SOEs), which often operate with limited efficiency.
In Bosnia and Herzegovina, competition rules are governed by the Law on Competition No. 48/2005, which sets the general rules of competition and appoints the Competition Council of Bosnia and Herzegovina as the independent enforcement authority, covering both entities and the Brčko District (Parliament of Bosnia and Herzegovina, 2005[33]). The council’s mandate includes merger control above specified thresholds, the issuance of expert opinions on regulations affecting market competition, and advocacy activities to promote fair competition. The council currently has a budget of BAM 2.1 million (~EUR 1 million), a substantial increase over 2022, when it stood at BAM 1.3 million (~EUR 660 000), reflecting increased enforcement capacity (Competition Council, 2023[34]; 2023[35]).
While the Competition Council’s role is institutionally and legally neutral, which limits its ability to design or target support measures for specific categories of firms, including SMEs, some of its practices indirectly benefit SMEs by strengthening enforcement and fostering a more level playing field. For example, in 2023, the council adopted the Rulebook on Proactive Publication, aimed at improving transparency and increasing the accessibility of information for stakeholders, including SMEs, which often face challenges in staying informed about new regulations and decisions that could affect them (Competition Council, 2023[35]). In the same year, it also adopted the Rulebook on Public Procurement, reinforcing monitoring activities related to public tenders and thereby supporting more competitive market conditions for firms, including SMEs (Competition Council, 2023[35]). Overall, however, SMEs remain only marginally engaged by the Competition Council’s activities.6
Another fundamental aspect of fair competition is ensuring that the market for public contracts remains open and accessible to SMEs, allowing them to participate on equal terms and benefit from procurement opportunities.
Public procurement remains a significant part of the economy in Bosnia and Herzegovina, representing 9.8% of GDP in 2024 compared to 10.6% in 2022, and a significant opportunity for SME business development (PPA, 2025[36]). However, the data indicate that fair competition in the award of public contracts has weakened since the last assessment. The average number of bids per procedure fell from 2.14 in 2022 to 1.75 in 2024, and single-bid procedures remained high at 55.6% in 2023, an increase from 51% in 2022, suggesting a trend of declining competition (Figure 2.1).
Notes: Single-bid procedures are reported for 2022-2023; the average number of bids per procedure is reported for 2022 and 2024. Despite partial time coverage, both indicators point to declining competitive pressure.
Sources: PPA (2025[36]); OECD (2025[11]).
Taken together, these developments point to a market that is becoming increasingly challenging for SMEs, which captured 52.2% of contract value but participated in only 38.6% of tenders in 2024, despite making up the vast majority (98.3%) of active firms in the economy (PPA, 2025[36]; Agency for Statistics of Bosnia and Herzegovina, 2025[20]). Conversely, the share in negotiated procedures without prior publication, which generally restricts competition and limits SME access, declined from 6.69% in 2022 to 5.1% in 2024, marking a positive development in bidding competition.
To create a framework for future reforms and tackle its declining competition in public procurement, the Council of Ministers adopted in 2024 the Public Procurement Strategy 2024-2028, together with amendments to the Public Procurement Law in 2022 and 2024 (PPA, 2024[37]). The strategy identifies SMEs as key stakeholders and aims to introduce concrete mechanisms to make bidding more accessible to them, most notably by lowering the turnover required to participate and expanding digital procurement tools (PPA, 2024[38]). However, key EU provisions remain only partially transposed, including those on dynamic purchasing systems, which are particularly relevant for SMEs as they allow suppliers to easily compete for frequently repeated procurements, reducing administrative burdens and lowering entry barriers for smaller firms. In 2025, the draft of the new Law on Public Procurement was submitted to the Council of Ministers of Bosnia and Herzegovina and is currently under review.
Despite legislative changes, SMEs continue to face significant procedural and administrative barriers within public procurement. Bidders are required to submit original or certified documents for each procedure, and self-declarations still require notarisation, which increases costs for SMEs and represents an additional administrative barrier. Although the economy operates a public procurement portal, Bosnia and Herzegovina has not yet established a fully electronic procurement system, as all tender submissions remain paper-based. Consequently, these procedural rigidities contribute to declining competition and limit SMEs’ ability to meaningfully participate in bidding. This is further reflected in SIGMA’s 2024 business surveys, which show a large share of operators refraining from bidding due to perceptions of favouritism and excessive formalism, indicating low trust in the system (OECD, 2025[11]). SMEs are also constrained in their access to justice, as the Procurement Review Body (PRB), the institution responsible for protecting economic operators, has been affected by persistent inefficiencies, failing to meet the 30-day statutory deadline in 10.5% of cases in 2024 and still requiring paper-based submissions, which adds an additional administrative burden for smaller firms (PRB, 2025[39]).
In addition to strong competition institutions and fair public procurement, it is essential that SOEs are subject to appropriate oversight, so that their activities do not distort competition or undermine a level playing field.
In Bosnia and Herzegovina, SOEs are characterised by underperformance and limited improvements. The economy maintains an estimated 136 centrally-owned SOEs across its entities: 64 in the Federation of Bosnia and Herzegovina, 67 in Republika Srpska, and 5 in the Brčko District, accounting for approximately 9% of total employment and operating in systemically important sectors, including energy, telecommunications and transport (OECD, 2024[23]; 2025[8]). Although these sectors are not SME-intensive, SOE dominance can indirectly affect SMEs by shaping input prices and access to essential services. SOEs in Bosnia and Herzegovina continue to post negative returns on capital and assets, with approximately 12% operating at such persistent losses that they now hold negative equity (OECD, 2024[23]). In parallel, it is estimated that SOEs maintain wages roughly 40% higher than comparable private firms, a combination that distorts competition and places SMEs at a clear disadvantage (OECD, 2024[23]).
SOE policies and measures aimed at addressing SOE inefficiency have varied across entities. Since the last assessment, the Government of Republika Srpska has introduced a series of measures to improve and monitor SOE performance. In 2022, Republika Srpska established the Public Enterprises Oversight Co-ordination Department (OCD), responsible for SOE management, and, in 2023, developed a centralised SOE data collection platform that enabled it to produce a targeted report on SOE performance (Government of Republika Srpska, 2025[40]). In parallel, a World Bank-supported programme aims to strengthen the RS OCD’s capacity to collect and monitor SOE data through an information technology system for financial and non-financial reporting. As of mid-2025, implementation had been delayed, although preparatory procurement for the data platform had progressed (World Bank, 2025[41]). Furthermore, in 2025, Republika Srpska amended the Law on Public Enterprises by redefining SOEs and introducing stronger transparency and oversight requirements, thereby reducing market distortions affecting SMEs through the limitation of discretionary subsidies. Similarly, the FBiH authorities have initiated steps to strengthen SOE governance by establishing new monitoring and co-ordination units (although these remain at an early stage) and by adopting a Work Plan for 2026 on Public Enterprises (OECD, 2025[8]). In parallel, amendments to the Law on Public Enterprises of the Federation of Bosnia and Herzegovina are currently under review, with a preliminary draft adopted in 2025 (Government of the Federation of Bosnia and Herzegovina, 2025[42]).
2.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms
A fair business environment for SMEs relies on access to timely and efficient justice. SMEs are particularly exposed to delays in dispute resolution, as their limited financial and operational capacity makes it difficult to absorb long waiting times and the temporary losses associated with prolonged litigation. As a result, many SMEs may be discouraged from pursuing legal remedies, leaving them more vulnerable to unfair trading practices and non-compliance. This underlines the importance of developing a robust ADR system in parallel with court proceedings, offering SMEs more accessible and proportionate options in terms of cost and duration. In Bosnia and Herzegovina, however, the legal system continues to face challenges related to court backlogs and a very limited use of ADR mechanisms.
Access to justice for SMEs in commercial disputes varies across Bosnia and Herzegovina due to the territorially-organised structure of the judiciary, with the Federation of Bosnia and Herzegovina, Republika Srpska and the Brčko District each operating separate commercial court systems.7 This territorial decentralisation entails navigating different court structures, which may complicate SME access to justice, especially those operating across jurisdictions.
In addition to the territorially organised court system, SMEs in Bosnia and Herzegovina seeking legal remedies often face heavy court backlogs. Recent data suggest that courts remain the primary forum for business disputes, but are heavily overloaded. In 2023, the average time to dispose of first-instance civil and commercial cases was 538 days, one of the longest in Europe, despite the adoption of the Law on the Right to a Trial Within Reasonable Time in the Republika Srpska (OECD, 2025[8]). Additionally, more than 151 500 civil and business cases were unresolved in 2023, with recent data showing certain court cases could take over 1 600 days, raising serious concerns about predictability and fairness, two key factors for SMEs considering legal remedies (OECD, 2025[8]). While commercial courts achieved a substantial reduction in pending cases in 2022, with backlog falling by 65.5% at the Higher Commercial Court and by 14% at district-level commercial courts, recent data points to relative stagnation (HJPC, 2024[43]; 2022[44]). Nevertheless, litigation costs remain relatively modest, a key advantage for SMEs that could otherwise be deterred by high legal expenses, given their more limited capital. Still, lengthy court processes and fragmented jurisdiction remain a significant burden on small firms seeking timely resolution (OECD, 2025[8]).
ADR represents a useful solution for SMEs, with mediation and arbitration offering faster, less costly and more flexible ways to resolve disputes than traditional court proceedings. In Bosnia and Herzegovina, although ADR is formally available and legally enforced, evidence suggests it is used minimally and is not subject to a specific statute economy-wide.
Arbitration represents a potentially effective dispute resolution option for SMEs, as it can offer faster procedures, greater procedural flexibility, particularly in cross-border commercial disputes. In Bosnia and Herzegovina, however, arbitration is not governed by a single economy-wide law but is instead regulated through the civil procedure codes of the Federation of Bosnia and Herzegovina, Republika Srpska, and the Brčko District. All three federal jurisdictions reference the United Nations Commission on International Trade Law (UNCITRAL) Model Law in their Civil Procedure Codes for arbitration, which includes features that can benefit SMEs, such as the availability of interim measures. In practice, however, only two permanent arbitral institutions exist: the Foreign Trade Chamber’s Arbitration Court in Sarajevo and the RS Chamber of Commerce Arbitration Court in Banja Luka. These tribunals have adopted their own rules to fill legal gaps, creating a context in which SMEs may struggle to navigate arbitration effectively, potentially discouraging its use. Additionally, arbitration case statistics are not publicly reported, and the limited evidence available suggests very low domestic use (OECD, 2025[8]). No judicial strategy has been adopted in either entity to support the development of arbitration as a dispute resolution mechanism, suggesting that strengthening arbitration has not yet emerged as a policy priority and continues to offer only limited practical value for SMEs.
In parallel, mediation is an efficient and cost-effective way to resolve legal disputes below certain financial thresholds, especially for smaller firms constrained in both time and resources.
In Bosnia and Herzegovina, mediation processes are based on the Law No. 37/04 on Mediation Procedure of Bosnia and Herzegovina, with complementary legislation on the transfer of mediation functions to professional bodies, constituting a relatively comprehensive mediation framework (Government of Bosnia and Herzegovina, 2004[45]). However, evidence suggests that courts rarely propose or refer parties to mediation, outlining limited concrete use of the ADR mechanism (OECD, 2025[8]). Policy efforts to improve the situation are underway, with the High Judicial and Prosecutorial Council (HJPC) proposing in 2022 the adoption of a Mediation Strategy to improve its application across the economy. However, despite several requests from the Ministry of Justice of Bosnia and Herzegovina, the entity governments and the Brčko District did not provide their consent to the resulting Draft Strategy for Alternative Dispute Resolution, without which the Ministry was unable to submit it for adoption. Furthermore, monitoring systems do not systematically track the uptake or results of mediation, leaving limited evidence on how effectively it functions in practice.
The implications of limited ADR use are particularly visible in the enforcement of intellectual property rights (IPR), where SMEs remain largely dependent on the court system. In Bosnia and Herzegovina, IPR disputes are handled through the regular commercial court structure, with no dedicated IPR tribunal, and all IPR enforcement actions are processed as standard commercial litigation (OECD, 2025[8]). IPR protection is thus subject to the same lengthy procedures and backlogs that affect commercial cases more broadly, which can delay the enforcement of rights and increase vulnerability to infringement, a risk to which SMEs are particularly exposed. Smaller firms may also face higher uncertainty and procedural complexity, as fragmented jurisdiction across entities requires navigating different court systems without specialised judges or streamlined procedures tailored to IPR matters. As a positive development, the Institute for Intellectual Property of Bosnia and Herzegovina (IIVBH) introduced in 2023 an SME-specific, intellectual property pre-diagnostics service, which provides firms with an initial assessment of their intellectual property assets and potential opportunities for protection (IIVBH, 2025[46]). Early implementation data points to limited uptake, with only three companies using the service in 2023 (IIVBH, 2024[47]).
The way forward
Integrate informality reduction into entity-level SME policy frameworks. Each entity could integrate informality reduction into its SME policy framework, with clear objectives, targets and monitoring that build on measures already in place. In particular, the roll-out of fiscalisation reforms could be accompanied by practical guidance and support to help small firms adapt to e-invoicing and electronic fiscal devices, while formal employment incentives could be evaluated to inform their future design.
Complete the implementation of public procurement reforms to improve SME access and competition. Although Bosnia and Herzegovina has adopted a public procurement strategy and amended its legal framework, key EU instruments highly relevant to SMEs remain only partially implemented. Accelerating the operationalisation of these tools, simplifying documentation requirements, and reducing procedural formalism could lower entry barriers for SMEs.
Improve governance of state-owned enterprises and competitive neutrality to reduce market distortions affecting SMEs. Decentralised oversight and uneven progress in reform across entities continue to weaken competitive neutrality and allow inefficiencies in SOEs to spill over into SME-relevant markets. While recent initiatives in Republika Srpska and emerging reforms in the Federation of Bosnia and Herzegovina represent positive steps, improved harmonisation across entities could help limit distortions.
Increase the use and governance of alternative dispute resolution to ease court pressure and improve SME access to justice. While mediation and arbitration are legally available in Bosnia and Herzegovina, they remain underused, with courts continuing to serve as the primary forum for commercial disputes despite heavy backlogs and lengthy case durations. The introduction of additional incentives for mediation, systematic monitoring and the adoption of economy-wide measures could improve the use of ADR.
Access to finance is a critical enabler of SME establishment, growth and resilience, allowing firms to invest in innovation, expand operations, and manage cash flow, while limited access can disproportionately constrain smaller businesses compared with larger, better-capitalised firms. Overall, following recent policy rate cuts, SME borrowing costs have eased in most OECD Member countries, but they remain above pre-COVID levels: reflecting still-tight financing conditions, 25 of 39 OECD Member countries recorded a lower share of outstanding SME loan stocks in 2024 than in 2023 (OECD, 2026[48]). Although Bosnia and Herzegovina performs better than the Western Balkan average, access to finance continues to constrain parts of the business sector: in 2024, one in ten firms reported it as a significant obstacle to growth, compared with 17% across the region (RCC, 2024[9]).
Bosnia and Herzegovina’s SMEs remain constrained by limited access to corporate credit and, even more so, by the scarcity of non-bank alternatives, resulting in a particularly pronounced reliance on bank finance. Public authorities could help ease these constraints by improving lending conditions, for example, through credit guarantees and public credit lines, and by developing alternative financing channels to diversify funding options. Complementary targeted grant schemes for investment in innovation, internationalisation, greening and the digital transformation could further strengthen SMEs’ resilience and growth potential.
In this context, this section assesses the success of policies in enabling SME access to bank finance and alternative financing avenues, as well as the direct financial support implemented to encourage SME establishment, operations and growth.
2.3.1. Facilitating bank lending to SMEs
For SMEs in Bosnia and Herzegovina, access to bank finance remains crucial for sustaining business activity and growth. The banking sector largely dominates the financial system, accounting for 87.7% of total assets in 2024, followed by the insurance sector (5.4%), micro-credit organisations (3.4%), investment funds (2.3%) and leasing companies (1.2%) (Central Bank of Bosnia and Herzegovina, 2025[49]). The banking sector is generally well-capitalised: in 2024, the capital adequacy ratio8 was 18.7% (Central Bank of Bosnia and Herzegovina, 2025[49]), which is well above the Basel III minimum requirement of 10.5%.9 The sector is also broadly liquid and profitable. Non-performing loans declined to 3.15% of the total loan portfolio in 2024, the lowest level since 2008 (Central Bank of Bosnia and Herzegovina, 2025[49]).
Despite a well-developed banking system, access to bank finance in Bosnia and Herzegovina remains constrained. Outstanding loans represented 46.2% of GDP in 2024 (see Figure 2.2), below their 2019 level (53.4%) and significantly below the EU average of 74.6% (World Bank, 2025[50]).
Note: WBT: Western Balkans and Türkiye.
Source: World Bank (2025[50]).
In line with the surge of inflationary pressures from 2022 and the resulting tighter monetary policy, the average interest rates to non-financial businesses rose from 3.2% at the end of 2021 (Central Bank of Bosnia and Herzegovina, 2022[51]) to 4.5% at the end of 2024 (Central Bank of Bosnia and Herzegovina, 2025[52]), causing the relative decline of bank finance in Bosnia and Herzegovina. Nevertheless, the relatively low banking finance gap in Bosnia and Herzegovina also stems from several structural obstacles, including incomplete asset registration systems and challenges in insolvency procedures.
First, incomplete asset registration systems constrain the development of bank finance by limiting the available collateral base. The cadastre, which records real estate and land ownership, is not yet fully digitalised in both entities, with available data suggesting that around 20% of records in Republika Srpska remain outside the digital system,10 constraining commercial banks’ collateral assessment. In addition, asset registration remains incomplete: fewer than 50% of movable assets are formally documented, while fixed asset registration ranges from 75% to 99% (OECD, 2024[23]). These gaps disproportionately affect SMEs, which often lack the time and resources to navigate the registration process. Registering assets can take 7 to 14 days, and valuing movable assets can be costly, leading many SMEs to register only their fixed assets, further narrowing the range of collateral they can offer (OECD, 2024[23]). Finally, it should also be mentioned that both entities report that no external assessment of asset registration systems has been conducted, leaving the data quality and their overall effectiveness in supporting asset-based lending unverified.
As in most Western Balkan and Türkiye (WBT) economies, insolvency procedures in Bosnia and Herzegovina are lengthy and costly, thereby reducing expected recovery rates and making banks more cautious when lending to higher-risk borrowers, such as SMEs. For example, reorganisation takes an estimated 18 months and costs around 7% of the company’s market value (World Bank, 2024[53]) (see Cluster 2 for more information). However, beyond the overall cost and duration of insolvency procedures, banks also face uncertainty about how much control they retain over the recovery process, which varies across entities. In Republika Srpska, banks’ influence can be limited because SMEs can initiate restructuring without their prior approval, and banks may be prevented from immediately enforcing collateral after restructuring due to an automatic enforcement deferral. In the Federation of Bosnia and Herzegovina, the constraint is different: during a reorganisation, existing owners and directors generally remain in control of the firm’s assets and operations, rather than being automatically replaced by an insolvency administrator, which can reduce banks’ leverage over assets while the procedure is ongoing.
Overall, in the absence of minimum loan thresholds below which collateral rules could be applied more flexibly, the cumulation of these structural obstacles requires SMEs to provide collateral worth 100% to 200% of the loan amount, significantly constraining their access to bank finance (OECD, 2024[23]).11 However, Bosnia and Herzegovina implements a set of instruments which can compensate these structural obstacles, with nine operating credit guarantee schemes (CGS), six in the Federation of Bosnia and Herzegovina and three in Republika Srpska, in addition to two donor-funded scheme instruments – the European Investment Fund (EIF)’s Guarantee Facility 4 SME Resilience and the European Bank for Reconstruction and Development (EBRD)’s Risk Sharing Facility (Table 2.1).
Notes:
* The programmes for which SMEs are eligible are the Guarantee Line for Start-up Business Activities, the Guarantee Line for Registered Agricultural Holdings, the Guarantee European Investment Fund Line for Agriculture, the Guarantee Line for Entrepreneurs, and the Guarantee Line for Companies. For more details, see the Guarantee Fund of Republika Srpska (2026[54]). Moreover, the government has implemented two additional funds with local development agencies in Banja Luka and Prijedor.
** The programmes for which SMEs are eligible are the Credit Guarantee Programme for Exporters, the Credit Guarantee Programme for Micro, Small and Medium-Sized Enterprises, the Credit Guarantee Programme for Crafts and Other Self-Employed Activities and the Credit Guarantee Programme for Agriculture and the Food Industry. For more details, see Development Bank of the Federation of Bosnia and Herzegovina (2025[55]). Moreover, five other guarantee funds operate at the cantonal level: the Guarantee Fund within the North East Regional Development Agency; the Guarantee Fund within the Sarajevo Regional Development Agency; the Guarantee Fund of Canton Zenica-Doboj; the Guarantee Fund of Canton Una-Sana; and the Guarantee Fund within the Development Agency Link Mostar. Active CGSs also include the EBRD’s HI-BAR programme, the EBRD’s Risk Sharing for Environmental, Social and Governance (ESG) Projects programme, the EBRD’s Credit Enhancement of Green Bonds, the EBRD’s Growth for All programme, KfW, the German development bank’s micro, small and medium-sized enterprise (MSME) Guarantee Platform, and the EBRD’s Digital Transformation Platform Guarantee. For more details, see Western Balkans Investment Framework (2026[56]).
Sources :1. SRNA (2025[57]); 2. Information provided by the Development Bank of the Federation of Bosnia and Herzegovina for this assessment; 3. EIF (2024[58]) and EIF (2025[59]); 4. EBRD (2025[60]).
Bosnia and Herzegovina’s operating CGS are modest in scale and face concerns regarding their effectiveness. With a cumulated financial size of around EUR 30 million in 2024 (0.12% of GDP),12 the financial support provided by the state-level and entity-level CGS is limited. Moreover, stakeholder consultations have raised concerns about the effectiveness of these schemes. Businesses reported cumbersome, opaque application procedures, and some perceived that access may be influenced by political connections, raising potential concerns about the capacity of Bosnia and Herzegovina’s CGSs to improve SME access to bank finance (OECD, 2025[8]). Despite these limitations, available data suggest that SME access to credit in Bosnia and Herzegovina is relatively favourable within the WBT region. As in 2024, SMEs accounted for 44.0% of commercial banks’ outstanding loans, a figure higher than the WBT average of 35.5%13 (International Monetary Fund, 2025[61]), consistent with CGSs playing a supportive role in sustaining SME access to credit.
2.3.2. Providing alternatives to bank finance
In addition to maintaining an adequate supply of bank credit, governments need to facilitate SME access to a broader range of external financing options to support SME growth. The existence of alternatives to bank finance is particularly important in Bosnia and Herzegovina, given that few banks offer loans tailored to the needs of fast-growing SMEs, as a recent survey found that most start-ups in the economy seek funding between EUR 100 000 and EUR 1 million, beyond what traditional financial providers might be willing to offer (USAID, 2024[62]). Despite ongoing reforms, alternative financing channels remain underdeveloped in Bosnia and Herzegovina, due to gaps in the legal frameworks and limited government programmes to support their development.
Although Bosnia and Herzegovina's small economy, particularly given the presence of two separate stock exchanges, constrains the stock market's potential, capital markets remain an underused source of finance for businesses. Market capitalisation remains low, estimated at around 22.0% of GDP for the Sarajevo Stock Exchange in the Federation of Bosnia and Herzegovina and 30.6% for the Banja Luka Stock Exchange in Republika Srpska in 2024, while exceeding 60% in the European Union. Moreover, both stock exchanges exhibit relatively low liquidity, with turnover ratios of 10.4% in the Federation of Bosnia and Herzegovina and 14.3% in Republika Srpska in 2024, compared to 39% in the European Union (see Figure 2.3).
Notes: Turnover ratio: Data for the European Union are unavailable for 2018 and 2024. Market capitalisation: Data for the European Union are not available for 2024. To calculate the figures for both the Federation of Bosnia and Herzegovina and Republika Srpska, each entity’s market capitalisation as of December was divided by its respective annual GDP.
Sources: Market capitalisation: OECD calculations based on CEIC (2025[63]) for the EU average values; OECD calculations based on Central Bank of Bosnia and Herzegovina (2025[64]), Federal Bureau of Statistics of the Federation of Bosnia and Herzegovina (2024[65]) and CEIC (2024[66]) for the BiH values. Turnover ratio: World Bank (2025[67]) for the EU average values; Central Bank of Bosnia and Herzegovina (2025[68]) for the BiH values.
Capital market development in Bosnia and Herzegovina remains constrained, although Republika Srpska has partly streamlined its legal frameworks in recent years.14 While the legal frameworks in both entities permit the issuance of various securities and require disclosure of key terms, the remaining compliance and disclosure obligations can still impose costs that may discourage smaller issuers. In Republika Srpska, amendments to the Law on the Securities Market adopted in 2021 introduced simplified conditions for listing debt securities on a regulated public market, including the possibility of listing without publishing a formal prospectus, provided that issuers make available to investors information equivalent to that normally contained in a prospectus. Although these amendments reduced some procedural barriers, access to capital markets may still be demanding for smaller firms. Trading is further restricted by rules that limit bond transactions to brokers, preventing institutional investors from trading directly and thereby reducing market liquidity (OECD, 2025[8]).
An additional regulatory barrier preventing the development of capital markets, and especially their use by smaller firms, is that neither the Sarajevo nor the Banja Luka Stock Exchange operates a dedicated SME or small-capitalisation market segment. In Sarajevo, the Free Market ST2 segment still requires meaningful financial and operational history, such as audited statements,15 which may limit its accessibility for SMEs at an earlier stage of development. In Banja Luka, the Entry Market List C segment provides a simplified entry route, with lower thresholds for company size, shareholder base and free float than the main market segments. However, its admission criteria, including minimum requirements for operating history, capitalisation, free float and shareholder base, remain more demanding than those of some dedicated SME growth markets in OECD Member countries.16 Finally, as of the time of writing, no proactive policy measures or incentives have been introduced to encourage equity listings or corporate bond issuance in either entity, further limiting incentives for SMEs to use capital markets to access finance.
As capital markets remain underdeveloped, alternative sources of finance have likewise seen limited development.
Early-stage businesses still have very few alternatives to bank financing. Expressed in purchasing power parity in 2021 prices, available data indicate that venture capital (VC) operates but at a limited scale, with VC investment amounting to EUR 2.6 million in 2024, compared to EUR 56.8 million in Bulgaria and EUR 115.3 million in Croatia (Dealroom, 2025[69]). One of the key barriers to the development of private equity (PE) and VC is the lack of a robust, cohesive regulatory framework for alternative investment funds (AIFs).
At the entity level, PE and VC are governed by a patchwork of laws,17 which can create inconsistencies and legal uncertainty for investors.18 In the Federation of Bosnia and Herzegovina, equity financing is governed by the Law on Investment Funds, which does not explicitly cover VC activities. The entity has not yet adopted legislation on AIFs nor amended existing laws to accommodate PE instruments. Additionally, only legally recognised qualified investors may establish and manage investment funds. While this restriction serves important investor-protection and market-integrity objectives, it may also limit diaspora investors' ability to create and operate local investment vehicles, thereby reducing opportunities to mobilise external capital and deepen the PE market. In contrast, Republika Srpska has made some progress in reforming its regulatory environment. In 2022, the entity amended its Law on Investment Funds to permit the creation of AIFs, including PE and VC funds, under private placement arrangements. By the end of 2025, two AIF management companies had been established, and three AIFs were operating in the market, with total assets under management of around BAM 10 million (~EUR 5 million).
Yet, despite this advancement, full alignment with the acquis has not yet been achieved, as gaps remain in investor protection and transparency, limiting the potential to attract investment from the EU capital market (OECD, 2024[23]). In terms of policies supporting the development of PE and VC, Bosnia and Herzegovina currently lacks domestic instruments that provide direct equity financing, aside from a few donor-funded initiatives (see Table 2.2). Finally, despite some modest developments in recent years, including the establishment of the BiH Business Angel Network in 2022 and the launch of Vrbas Capital in 2023, neither has so far resulted in any realised investments (OECD, 2025[8]).
Notes: The data on private capital raised and the number of private investors are as of the end of 2024. While the Western Balkans Enterprise Development and Innovation Facility provides equity investment, no transaction has been registered in Bosnia and Herzegovina for the year 2023 (EIF, 2024[58]) and 2024 (EIF, 2025[59]).
Sources: 1. EIF (2025[70]); 2. EBRD (2025[60]) and EBRD (2025[71]); 3. Western Balkans Investment Framework (2026[56]).
In line with the limited development of early-stage financing avenues in Bosnia and Herzegovina, crowdfunding is another underused financing channel that could support young businesses by mobilising small-scale investments from individuals and the diaspora. This is particularly relevant given that remittances represented 11.0% of Bosnia and Herzegovina’s GDP in 2024, the second-highest level among the WBT economies after Kosovo* (17.3%) (World Bank, 2025[72]). Overall, SMEs in Bosnia and Herzegovina cannot fully benefit from crowdfunding to finance their investments because there is no systematic, government-backed approach or legal framework to regulate such activities. As of the time of writing, no concrete steps have been taken to establish a legal framework for crowdfunding.
Factoring is also used only marginally by SMEs in Bosnia and Herzegovina and has lost steam in recent years. Operated by six companies in Republika Srpska19 and three companies in the Federation of Bosnia and Herzegovina, factoring volumes decreased from EUR 91 million in 2019 (0.5% of GDP) (FCI, 2020[73]) to EUR 69 million in 2024 (0.2% of GDP), a level far below the EU average of 11.8% in 2024 (FCI, 2025[74]). Despite a legal framework that is increasingly aligned with the acquis,20 the factoring market in Bosnia and Herzegovina faces legal inconsistencies that limit its development. In particular, although the factoring laws allow the financing of receivables with maturities of up to 180 days, broader payment-deadline rules appear to impose shorter limits in practice. In the Federation of Bosnia and Herzegovina, the Law on Financial Operations sets a 60-day limit, while Republika Srpska applies a similar 60-day rule for business-to-business transactions, under the Law on Deadlines for the Settlement of Monetary Obligations in Commercial Transactions. This contradiction restricts the scope of eligible receivables, constraining the uptake of factoring. Finally, the absence of active policy measures, such as tax incentives, promotional programmes, measures to introduce dedicated digital tools and dedicated training opportunities, constrains the further development of factoring, reflecting the lack of initiatives that encourage businesses to use this alternative financing avenue.
Leasing is one of the more developed forms of alternative finance in Bosnia and Herzegovina,21 although its overall use remains limited. In 2024, four leasing companies, all registered in the Federation of Bosnia and Herzegovina, were active and reported BAM 314 million (~EUR 160 million) in new leasing contracts, marking a 60% increase compared with 2019 (Banking Agency of the Federation of Bosnia and Herzegovina, 2020[75]; 2025[76]). Despite this growth, leasing still accounts for only 0.66% of GDP, well below the EU average of 2.05% in 2023 (Leaseurope, 2024[77]). Available data for Republika Srpska show that leasing is mainly concentrated in passenger vehicles (42.6%) and commercial vehicles (34.4%), followed by machinery and equipment (13.8%) (Banking Agency of Republika Srpska, 2024[78]), suggesting a relatively limited use by businesses. The leasing market’s expansion is constrained by several factors, including the application of 17% VAT on financial leases and the requirement for dual supervision for firms operating in both entities, which raises compliance costs and reduces competitiveness. Encouragingly, both Republika Srpska and the Federation of Bosnia and Herzegovina have proposed reforms to exempt interest calculated under financial leasing contracts from VAT to help stimulate market growth. This reform momentum is also reflected in the Federation of Bosnia and Herzegovina’s broader effort to update its leasing framework, with a draft law amending the Leasing Law submitted to parliament in February 2026.
2.3.3. Providing direct financial support to SMEs’ operations and growth
When SMEs struggle to obtain affordable external financing, public support plays a vital role in maintaining entrepreneurship, stimulating investment and driving key structural transitions. Instruments such as grants, dedicated funds, and co-financing schemes enable SMEs to offset the constraints of underdeveloped capital markets and a banking sector still reluctant to finance riskier ventures. Beyond providing temporary liquidity, these tools can support enterprise growth, including promoting international expansion, fostering research and innovation, and advancing the twin transitions.
Aside from donor-funded initiatives, the only entity-level programme providing direct support for SME establishment in Bosnia and Herzegovina is the FBiH Start-up Self-Employment Co-Financing Programme. With a 2024 budget of BAM 15 million (~EUR 7.7 million), the scheme offers subsidies, along with training and mentoring, to registered unemployed persons, including youth, women and the long-term unemployed, who seek to start a business (Table 2.3).
Direct support becomes more developed once firms enter the growth phase, although its provision remains uneven across areas. In particular, Bosnia and Herzegovina has strengthened its financial support for SME digital transformation, but assistance for the green transition is less widespread, and support for innovation and internationalisation remains limited.
Direct funding opportunities to accelerate SMEs’ digitalisation in Bosnia and Herzegovina have expanded over recent years, with both entities developing targeted initiatives. Despite being labelled as financial tools supporting competitiveness in general, the Federation of Bosnia and Herzegovina’s Supporting the Competitiveness of SMEs and the RS Granting Incentives for Improving SME Competitiveness grant programmes include a focus on the digital transformation of SMEs (OECD, 2025[8]), with strong support for SMEs to develop digital strategies and procure software solutions in the case of Republika Srpska’s programme (TREDEA, 2025[79]). In addition to these grant schemes, the FBiH Development Bank runs the Credit Lines for Long-Term Lending to the IT Sector and Digital Transformation programme, and the RS Investment and Development Bank (RSDB) runs credit lines for start-ups. The entity-level initiatives contributing to the digital transformation of SMEs are further complemented by the EBRD’s Go Digital in the Western Balkans initiative (Table 2.3) (see Cluster 3 for more details).
While direct financial support for digital transformation has expanded, SMEs in Bosnia and Herzegovina have fewer instruments to support their green transition. Grant-based assistance is limited to schemes offered by the FBiH Environmental Protection Fund, while the RS Fund for Environmental Protection and Energy Efficiency provides only modest support to businesses. These grants are complemented by the FBiH Development Bank’s credit lines, including the Credit Line for Long-Term Lending of Renewable Energy Projects and the Credit Line for Long-Term Lending for Energy Efficiency Improvements, although no information is publicly available on their financial scale or uptake. In the context of limited domestic support, SMEs can rely on donor-funded programmes, such as the EBRD’s Go Green in the Western Balkans and the European Investment Bank (EIB)’s Innovation and Green Transformation Facility (Table 2.3) (see Cluster 2 for more details).
Notes: The non-listed programmes include the EBRD’s Western Balkans Women in Business and Youth in Business programmes, the European Investment Fund (EIF)’s and the German development bank (KfW)’s European Fund for Southeast Europe SA SICAV-SIF fund, KfW’s EU Market Creation Facility, the EBRD’s Green Economy Financing Facility, the EBRD’s Risk Sharing for Environmental, Social and Governance (ESG) Projects, the EBRD’s Credit Enhancement of Green Bonds, the EBRD’s Global Green Bond Initiative, the KfW’s MSME Guarantee Platform, the EBRD’s Enterprise Expansion Fund, the EBRD’s Single Market Ready programme, the EBRD’s Growth for All programme, the EBRD’s Direct Financial Framework, the EBRD HI-BAR programme, the EIF and KfW Green for Growth Fund, and the United Nations Development Programme (UNDP)/Swedish International Development Cooperation Agency (Sida) credit line to Union Bank Bosnia and Herzegovina. More details are provided by Western Balkans Investment Framework (2026[56]).
Sources: 1. Sum Sova (2024[80]); 2. Austrian Development Agency (2025[81]); 3. IFC (2025[82]); 4. OECD (2025[8]); 5. Information provided by Republika Srpska to the OECD for this assessment; 6. Western Balkans Investment Framework (2026[56]); 7. FBiH Development Bank (2025[83]); 8. EBRD (2025[84]); 9. FBiH Development Bank (2025[85]); 10. FBiH Development Bank (2025[86]); 11. EBRD (2025[84]); 12. FBiH Development Bank (2025[87]); 13. FBiH Development Bank (2025[88]).
Dedicated financial support schemes for SME innovation remain very limited in Bosnia and Herzegovina, making this one of the weakest areas of targeted public financial support for SMEs. At the time of writing, there is no operational entity-level innovation fund supporting SME innovation on a sustained basis. A recent exception is the 2024 BAM 1 million (~EUR 510 000) Applied R&D (research and development) call, co-financed equally by the FBiH Ministry of Education and Science and the United Nations Development Programme (UNDP), which provides collaborative grant funding for general applied R&D projects. Beyond this one-off call, progress on structural funding instruments remains limited. In Republika Srpska, authorities have for several years reported plans to establish an Innovation Fund to centralise and manage innovation financing. This objective is now underpinned by the Law on Innovation Activity, adopted in July 2025, which provides the legal basis for the fund and foresees its establishment by 2026. In the Federation of Bosnia and Herzegovina, the Development Strategy 2021-2027 envisages the creation of a Fund for Technology Development, Research and Innovation. Although the fund is not yet operational, a government-established working group has been drafting a Law on Innovation Activity since late 2023, including provisions to establish an Innovation Activity Fund with specified sources of financing. However, while recent data on business expenditure on R&D (BERD) are unavailable after 2021 (Eurostat, 2025[89]), evidence suggests a relatively positive trend in SME innovation activity, with the economy ranking fifth among EU and neighbouring economies in product innovation,22 despite a gradual decline in business process innovation (European Commission, 2025[90]) (Figure 2.4).
Direct support for SMEs’ internationalisation is also scarce in Bosnia and Herzegovina, with the only identified programme being a credit line provided by the Development Bank of the Federation of Bosnia and Herzegovina (Table 2.3).23
Notes: “SME product innovation” measures the frequency of SMEs that introduced at least one product innovation, either new to the enterprise or new to their market. “SME process innovation” measures the frequency with which SMEs introduce at least one business process innovation, either new to the enterprise or new to their market. For more information, see European Commission (2025[91]).
Source: European Commission (2025[90]).
The way forward
Establish a comprehensive legal framework for early-stage financing and complement it with targeted policy instruments to foster market development. At present, PE is governed by a patchwork of entity-level laws, creating inconsistencies and legal uncertainty for investors, while crowdfunding and business angel activity remain outside any dedicated regulatory framework. Bosnia and Herzegovina is therefore encouraged to adopt clear legislation covering key early-stage instruments and introduce targeted incentives to stimulate their use, helping young, innovative SMEs address early-stage financing gaps (see Box 2.1). Given the thin domestic VC market, public intervention may also be needed to crowd in private investors. This could include both direct instruments, such as public co-investment funds or co-investment alongside private VC and business angel investors, and indirect instruments, such as public fund-of-funds.
Continue efforts to strengthen capital markets. While the relatively small size of Bosnia and Herzegovina’s economy may limit the development of a highly advanced capital market, both entities are encouraged to modernise and align their legislation with EU standards and international best practices, removing legal ambiguities to facilitate compliance and cross-border investment. Special attention can also be given to adjusting primary market procedures, regulations and fees to better accommodate small-cap firms and SMEs, thereby making equity and debt instruments more viable financing options. To support this process, a task force composed of representatives from the securities commissions, ministries of finance, banking authorities, regulatory agencies, and stock exchanges can be established to co-ordinate legislative reforms and policy development. Another potential avenue for strengthening these markets could involve regional co-operation with neighbouring economies to facilitate cross-border capital market integration.
Assess the credit guarantee schemes’ performance to maximise their impact on SME access to bank finance. While Bosnia and Herzegovina operates multiple CGSs, local stakeholder consultations report cumbersome and opaque application procedures and perceptions that access may be influenced by political connections, thereby undermining the schemes’ ability to expand SME lending. While regular monitoring is conducted, the authorities could go one step further by prioritising regular external evaluations to test additionality, targeting, and cost-effectiveness, and using the findings to streamline and standardise procedures, reinforce objective eligibility and selection criteria, and strengthen transparency, ensuring that guarantees reach financially constrained SMEs. Following these actions, the schemes’ scale should also be increased to generate a more substantial, systemically relevant impact on SME access to finance.
Romania’s legal and fiscal framework for incentivising business angel finance
Romania has introduced a dedicated legal framework to encourage angel investment in SMEs, recognising the critical role that private investors play in financing early-stage companies with high growth potential. Adopted in 2015, the Law on Angel Investing allows any individual to invest in an SME under specific conditions: the company must be a limited liability company; the investor must not have a prior connection to the company; the value of the investment must fall between EUR 3 000 and EUR 200 000; and the angel investor’s shareholding cannot exceed 49% of the company’s capital.
To compensate for the high risks typically associated with early-stage investments, the Romanian framework introduces a set of tax incentives. Angel investors are exempt from income tax on dividends for a period of three years following the acquisition of shares. Additionally, they are exempt from capital gains tax on the sale of shares, provided that the shares are held for at least three years.
Policy outcomes
Available evidence suggests that Romania’s business angel market has expanded markedly since the adoption of the Law on Angel Investing. While the European Business Angel Network reports no activity in Romania in 2015 (European Business Angels Network, 2016[92]), EUR 2.9 million was raised in 2018 (European Business Angels Network, 2019[93]) and EUR 10 million in 2024 (European Business Angels Network, 2025[94]).
Policy relevance for Bosnia and Herzegovina
This approach is highly relevant for Bosnia and Herzegovina, where a specific legal status for angel investors does not yet exist and where administrative barriers can discourage participation in early-stage financing. Romania’s experience demonstrates that a clear legal and fiscal framework can effectively mobilise private capital for innovation and entrepreneurship.
Source: OECD (2025[8]).
Support services for SMEs play an important role in fostering productivity, competitiveness and long-term resilience, typically combining advisory measures, mentoring, consultancy, and managerial training, often alongside financial support instruments (OECD, 2021[95]). When co-ordinated and predictable, such support helps SMEs overcome capability gaps that limit innovation, growth and internationalisation.
In Bosnia and Herzegovina, the overall system for business support services (BSSs) has continued to evolve since 2022, though progress varies across governance levels. At the state level, no comprehensive SME, export, or GVC strategy is in force, and delivery remains limited to recurring grant decisions that support SME participation in domestic and international trade fairs, currently the only operational state-level export promotion instrument.
By contrast, entity-level frameworks are more advanced and continue to guide programme development, implementation and budget allocations. Both the Federation of Bosnia and Herzegovina and Republika Srpska report strengthening their support systems through structured programmes, thematic support schemes and alignment with EU-oriented priorities, such as digitalisation, competitiveness upgrading, mentoring and internationalisation. Chambers of commerce also play a significant role in export-related support across both entities.
While accessibility and thematic scope have expanded, challenges persist, including differences in institutional arrangements across levels of government, disparities in access across administrative areas, reliance on donor-funded mechanisms, and limited monitoring and evaluation practices, particularly in impact assessment and programme continuity.
This section, therefore, examines the design, delivery, and effectiveness of BSSs in Bosnia and Herzegovina, distinguishing between foundational services and instruments that target SME expansion and upgrading.
2.4.1. Foundational SME business support services
The policy framework for BSSs in Bosnia and Herzegovina has shown some progress toward a more structured and diversified system of SME business support, driven by reforms at the entity level in the Federation of Bosnia and Herzegovina and Republika Srpska. Strategic and legal frameworks are largely in place; institutional networks of public and semi-public providers are extensive; and programme portfolios increasingly reflect EU-aligned priorities on digitalisation, innovation and inclusiveness. The main challenges are common across entities: formalising and depoliticising co‑ordination mechanisms; reducing territorial disparities in access; strengthening monitoring, evaluation and data systems; and ensuring predictable, domestically anchored funding beyond donor cycles. Deepening co-operation with private providers, establishing transparent accreditation and co-financing schemes, and developing unified digital entry points for SMEs would help translate existing institutional progress into more tangible and widespread competitiveness gains for businesses across both entities.
The strategic and legal frameworks underpinning BSS provision have strengthened across both entities, though they are evolving along different trajectories. In the Federation of Bosnia and Herzegovina, the 2022-2027 Small Business Development Strategy,24 together with the Law on Fostering Small Business Development and the Law on Entrepreneurial Infrastructure, provides a modernised and legally anchored system for SME support. In Republika Srpska, the SME Development Strategy 2021-2027 and the Action Plan for Innovation in SMEs 2024-2027 frame BSS priorities in alignment with innovation and competitiveness policies. Inclusiveness measures, targeting women and youth, are present in both entities, reflected in incentive regulations in Republika Srpska (Government of Republika Srpska, 2022[96]) and strategic objectives in the Federation of Bosnia and Herzegovina. Despite different institutional histories, both entities converge around EU-aligned priorities, such as digital transformation, sustainability and SME internationalisation.
Institutional arrangements for BSS delivery are comparatively extensive across the economy; however, they are characterised by varying co-ordination models and uneven institutional capacity, which affect the coherence and effectiveness of support. In the Federation of Bosnia and Herzegovina, the FMRPO formally leads the BSS framework, with support from regional development agencies and innovation centres.25 In practice, co-ordination relies largely on project-based co-operation and memoranda of understanding, resulting in fragmented delivery and limited strategic alignment across institutions. In Republika Srpska, RARS operates as the key implementing body, complemented by a more clearly articulated network of local development agencies and support institutions, including the Chamber of Commerce, Chamber of Sole Proprietors, Innovation Center Banja Luka (ICBL) and the Science and Technology Park of Republika Srpska. Co-ordination in Republika Srpska is facilitated through the Council for the Development of SMEs and Entrepreneurship, contributing to greater operational coherence. Nonetheless, despite more structured co-ordination mechanisms, both entities face persistent human and financial resource constraints at decentralised levels, particularly within municipal development agencies, limiting their ability to deliver consistent, high-quality BSSs across all administrative levels.
Despite these shortcomings, the delivery of BSS programmes has continued to expand at the entity level, with greater thematic diversity and more structured support instruments, though largely donor-supported. In the Federation of Bosnia and Herzegovina, support remains primarily grant-based and oriented towards early-stage entrepreneurship, with 31 beneficiaries participating in BSS programmes26 in 2025, supported through BAM 1.64 million (~EUR 838 553) in non-repayable grants allocated via a public call (FMRPO, 2025[97]). In Republika Srpska, BSS delivery between 2022 and 2024 amounted to approximately BAM 336 million, financed through a combination of budgetary allocations, financial instruments and donor-supported programmes (Government of Republika Srpska, 2022-2024[98]). Key delivery instruments included structured acceleration, mentoring and training schemes, such as the RARS Accelerator27 (36 start-ups supported), the Japan International Cooperation Agency (JICA) Mentoring Programme (24 SMEs), and Enterprise Europe Network (EEN)-supported training for more than 400 enterprises between 2022 and 2025 (Government of Republika Srpska, 2026[99]). Building on this implementation framework, the 2025 budget introduced a dedicated Ministry of Economy and Entrepreneurship incentive envelope of BAM 25.5 million (~EUR 13.04 million) for the first time, strengthening grant-based incentives with a focus on digital transformation and the green transition (Government of Republika Srpska, 2026[99]). However, while BSS delivery in both entities has intensified, with a wider range of instruments and more structured programme design, they both remain reliant on donor support, which limits long-term continuity.
Coverage and outreach of BSSs have improved economy-wide, but continue to exhibit geographic disparities. In the Federation of Bosnia and Herzegovina, activity is concentrated in Sarajevo Canton and Herzegovina-Neretva Canton due to the presence of major institutions providing BSSs, such as the INTERA Technology Park (INTERA TP) Mostar and the Center for Advanced Technologies (CNT) Sarajevo, while northern and rural regions lag behind despite efforts by the Regional Economic Development Agency for Central Bosnia and Herzegovina (REZ) and the Zenica Development Agency (ZEDA). Republika Srpska benefits from a wider network of local development agencies, yet participation still clusters around Banja Luka and other urban centres. Positively, both entities have expanded thematic outreach to underserved groups: the Federation of Bosnia and Herzegovina through projects supporting rural businesses and vulnerable categories through local partnerships such as Partnerstvo.ba28 and ADRURAL,29 and Republika Srpska through the Women’s Entrepreneurship Development Strategy 2025-2031 and youth-oriented accelerator programmes. Digital information portals (institutional and agency-led portals in the Federation of Bosnia and Herzegovina, and more centralised portals and chamber-managed platforms in Republika Srpska30) have significantly improved access to information on available BSSs, though the absence of a unified portal for accessing information across entities limits SME visibility and comparability of services.
While the thematic scope and structuring of BSS instruments have improved, monitoring and evaluation has not evolved at the same pace, remaining largely procedural, fragmented and focussed on outputs (e.g. number of supported firms, grants awarded or activities delivered) rather than outcomes (e.g. changes in firm performance, productivity, employment or export capacity) across both entities. In the Federation of Bosnia and Herzegovina, oversight is ensured through annual audits by the Office for Audit of the Institutions of the Federation of Bosnia and Herzegovina and progress reporting by the FMRPO, with newly introduced indicators on job creation, revenue growth and SME participation still in a pilot phase. In Republika Srpska, implementing bodies report annually to their founders, with consolidated reporting presented in the Ministry of Economy and Entrepreneurship's Annual SME Report. However, neither entity has established a unified indicator framework or systematic impact evaluation.
Private-sector participation in BSS provision remains limited and is not yet fully institutionalised across Bosnia and Herzegovina. The Federation of Bosnia and Herzegovina’s 2022-2027 strategy foresees an accreditation system for private providers by 2027, backed by a BAM 5 million budget (FMRPO, 2025[100]). Republika Srpska’s Regulation on Incentives for Improving SME Competitiveness (2025) opens co-financing to chambers and associations and requires ISO 17024-certified consultants for digital transformation strategies (Government of Republika Srpska, 2025[101]). Donor-driven initiatives31 foster cross-entity collaboration between SMEs, technology providers and research institutions.32 Still, the private BSS market remains small, urban-centred and underdeveloped, with limited uptake of consultancy services and no system of vouchers or structured cost-sharing. A harmonised approach to accreditation, quality assurance and co-financing would strengthen private-sector participation and enhance complementarities between public and private BSS provision across the two entities.
2.4.2. Support services for SMEs’ expansion and growth
A comprehensive mix of BSSs is necessary to help SMEs access strategic resources such as knowledge, technology, finance and skills. In Bosnia and Herzegovina, however, support services have evolved incrementally since 2022 and remain primarily centred on early-stage entrepreneurship. While the range of available instruments has expanded, most continue to support firm creation and basic upgrading, with limited focus on later-stage growth, productivity upgrading and systematic preparation for international markets.
Within this context, innovation support provides a useful lens for assessing the extent to which the business support system enables SMEs to move beyond early-stage development towards scaling, technology upgrading and commercialisation. In Bosnia and Herzegovina, public efforts remain largely focussed on incubation,33 offering limited assistance for firms seeking to scale and commercialise innovations. Overall, acceleration and technology-extension services remain scarce in Bosnia and Herzegovina: the only structured offering is RARS’s accelerator programme, which provides time-bound training and mentoring for early-stage entrepreneurs, complemented by support for accessing additional financing and business networks.34 In terms of technology-extension services, the RS Chamber of Commerce, through its Centre for Digital Transformation, offers the only structured support of its kind, enabling firms to develop new products using 3D scanning technologies in co-operation with the Faculty of Mechanical Engineering in Banja Luka. Positively, the Science and Technology Park of Republika Srpska was established in 2024 to accelerate technology development and commercialisation, and is expected to support SME innovation and business expansion through innovation. However, these initiatives remain in their early stages, and the overall development of business innovation support services continues to be constrained by scarce, fragmented funding. In the Federation of Bosnia and Herzegovina, under the Law on Entrepreneurial Infrastructure, a minimum of 0.3% of the entity budget is earmarked for entrepreneurial infrastructure,35 complemented by canton-level allocations such as the planned BAM 3.4 million (~EUR 1.7 million) for incubator infrastructure in Sarajevo Canton in 2025. In Republika Srpska, public funding is concentrated on the ICBL, which receives annual funding from the entity and municipal levels.36
Beyond incubation and early-stage innovation support, measures targeting more advanced capabilities, including digital transformation, innovation upgrading and the green transition, remain fragmented and largely donor-driven (see Clusters 2 and 3). While both entities have begun integrating sustainability and digital tools into competitiveness measures, consistent with priorities set out in their respective SME strategies and broader development, innovation and science and technology policy frameworks (see Dimension 8b), implementation remains uneven and dedicated, scalable instruments are still lacking. This gap is most evident in the way advanced priorities are embedded only indirectly within general competitiveness schemes, notably in the Federation of Bosnia and Herzegovina, where digital and energy efficiency investments are eligible under competitiveness schemes, and through recent RS incentive amendments for efficient production systems. Most operational support continues to stem from foreign direct investment (FDI) and donor-funded programmes, including EBRD-EU-GIZ programmes involving GIZ, the German development agency, as well as chamber-led initiatives, such as WE Circular,37 digital advisory platforms and emerging Carbon Border Adjustment Mechanism (CBAM)-readiness services. However, these initiatives remain limited in scope and are mostly accessed by already competitive firms. As a result, although awareness of digitalisation and sustainability requirements is gradually increasing, support for business expansion and growth remains uneven, with limited continuity beyond project-based interventions and uneven diffusion across the wider SME base.
Given that internationalisation is a key pathway for SME extension, emerging support tools represent an important complement to capability upgrading. In this respect, some progress has been made. The Foreign Trade Chamber of Bosnia and Herzegovina (FTC)/Bosnia and Herzegovina Export Promotion Agency (BHEPA)’s Internationalisation Portal38 and related e-learning platforms provide SMEs with information on export procedures, standards and EU requirements, including CBAM. In the Federation of Bosnia and Herzegovina, digitalisation, green transition and inclusion criteria are reflected in competitiveness schemes that indirectly support export readiness, whereas in Republika Srpska, similar advisory and incentive-based support is delivered through chamber-managed platforms. However, these tools remain modular and limited in scale and are not embedded in integrated, end-to-end export promotion programmes, thereby limiting their role in systematically guiding SMEs from capability upgrading to sustained international market entry.
These structural weaknesses become particularly evident when examining Bosnia and Herzegovina’s broader internationalisation and value chain support system. At the state level, the Ministry of Foreign Trade and Economic Relations continues to rely on annual fair participation grants as its primary export promotion instrument. While these grants reduce initial entry costs for firms, they offer limited support for deeper upgrading, and the absence of a state-level export promotion strategy or GVC strategy results in a largely event-driven and uncoordinated approach. The planned state-level GVC support programme remains non-operational, and no new export-related instruments have been introduced since 2022, reinforcing a reliance on event-based rather than systematic, capability-building support.
At the entity level, internationalisation frameworks and delivery arrangements differ, but neither translates strategic intent into sustained changes in export structure. Internationalisation has been more clearly embedded in the FBiH Development Strategy 2021-2027 and the Small Business Development Strategy 2022-2027, which identify priority sectors such as metal processing, agri-food chains, information and communication technology and renewable energy based on relatively advanced criteria and signal a move towards a smart specialisation approach. Implementation in the Federation of Bosnia and Herzegovina relies heavily on the flagship Strengthening the Competitiveness of SMEs programme,39 which co-finances technological upgrading, quality certification, digitalisation and energy efficiency investments, with 193 SMEs supported in 2024 alone (Government of the Federation of Bosnia and Herzegovina, 2024[102]). While effective in reducing investment barriers, the programme operates more as a general upgrading tool than part of a structured export-readiness pathway. A similar pattern is observed in Republika Srpska. Internationalisation objectives are embedded in the SME Development Strategy 2021-2027 and the Industrial Development Strategy 2021-2027, with implementation centred on horizontal incentive schemes supporting technology and equipment upgrades, digital transformation, green investments and participation in and organisation of trade fairs and conferences. Advisory, matchmaking and training services delivered by RARS and chamber-led initiatives complement these measures, yet they remain weakly integrated into a coherent progression from firm upgrading to export diversification and value chain integration. As a result, in both entities, internationalisation support prioritises input-level upgrading over outcome-oriented export transformation, limiting its effectiveness in driving export upgrading.
In practice, the limited export impact of entity-level internationalisation frameworks is reinforced by the concentration of export promotion delivery at the state level, where BHEPA (which operates within the FTC) has emerged as the primary operational instrument for supporting SME internationalisation across both entities. In 2023 and 2024, the chamber implemented 398 and 428 export promotion activities, respectively, engaging more than 1 100 companies through trade fairs, advisory services, market intelligence and networking (Foreign Trade Chamber of Bosnia and Herzegovina, 2026[103]; Bosnia and Herzegovina Export Promotion Agency, 2023-2024[104])
This reflects a relatively high level of operational activity provided by a single institution, compared with the more fragmented export promotion arrangements observed across several Western Balkan economies (OECD, 2022[7]). In both entities, these arrangements contribute to individual firms' capacity upgrading but provide limited policy leverage over SME export trajectories, as support measures are not systematically differentiated by firm maturity or internationalisation stage, thereby reinforcing an activity-driven rather than a sequenced support model.
These delivery arrangements have not yet translated into a sustained increase in SMEs’ role in export activity. In Bosnia and Herzegovina, the contribution of SMEs to total exports declined from 48.0% in 2018 to 42.1% in 2022, falling below the Western Balkans and Türkiye average (47.56%) while remaining above the EU average (37.0%) (Figure 2.5). The decline indicates that existing support mechanisms have not translated into stronger SME export performance or a broader export base, suggesting limited structural upgrading.
Note: The WBT average does not include Kosovo as no data were available for 2022. The WBT average does not include Montenegro as no data for this indicator are available.
Sources: Eurostat (2025[1]); OECD ([7]; 2019[105]). Additional data for Albania are from INSTAT (2024[106]) and information provided by the government for this assessment. Additional data for Bosnia and Herzegovina from the Agency for Statistics of Bosnia and Herzegovina (2020[107]; 2023[108]; 2024[109]) and the European Commission (2025[110]). Additional data for North Macedonia from MAKSTAT (2024[111]; 2024[112]). Additional data for Serbia from SORS (2024[113]).
This stagnation is most evident in the limited progression from general growth support to deeper internationalisation and value chain integration. GVC-related support largely builds on existing export promotion and competitiveness measures rather than dedicated supplier-development instruments. In practice, delivery in both entities is channelled mainly through complementary mechanisms rather than dedicated supplier-development programmes: Digital Innovation Hubs (e.g. Digital Storm, Industrial Automation HUB Tuzla, INTERA in the Federation of Bosnia and Herzegovina, and HUB IDEMO in Republika Srpska) provide complementary support, while BHEPA, notably through its implementation of EEN, and related EU-funded projects, support firms from both entities connect with multinational companies and EU partners. However, the absence of systematic value chain mapping, weak links among SME support, innovation policy, and investment promotion, and institutional silos across agencies limit the translation of contacts with multinational firms into sustained supplier upgrading, technology transfer, or long-term contracting. As a result, FDI- and donor-led initiatives generate only limited spillovers into local SME upgrading, constraining the use of internationalisation as a driver of structural transformation.
These limitations ultimately reflect deeper institutional constraints. The absence of integrated SME-level export data and weak monitoring frameworks constrain policy learning, prevent systematic assessment of firm-level upgrading and internationalisation outcomes, and limit the ability to adapt instruments beyond activity-based delivery. While chamber satisfaction surveys remain consistently high (above 4.3/5), they assess user experience rather than firm-level upgrading or GVC-integration outcomes. Without unified performance indicators or routine evaluation of internationalisation and supplier-development programmes, and of competitiveness, policymakers cannot assess effectiveness, identify capability gaps, or recalibrate interventions to support more structural improvements in SME performance.
The way forward
Stabilise and systematise public business support service provision through structured cross-entity harmonisation. Building on existing entity-level frameworks, a limited number of multi-annual, entity-led backbone instruments, combined with voluntary co-ordination between the Federation of Bosnia and Herzegovina and Republika Srpska on eligibility criteria, service standards and monitoring practices, would improve predictability for SMEs and strengthen coherence across the support landscape, without introducing new state-level competences or delivery structures.
Gradually institutionalise private business support service participation through quality assurance and demand-side pilots. Private business support providers remain engaged primarily as implementing partners in public- or donor-funded programmes, with limited scope for SMEs to independently select and procure services. While co-financing mechanisms exist, they remain programme-specific and supply-driven. Advancing accreditation frameworks, piloting voucher-style or SME-choice co-financed advisory schemes, and harmonising quality requirements across entities would strengthen service quality, expand market diversity and reduce reliance on public delivery (Box 2.2).
Rebalance SME support portfolios toward structured growth and scale up pathways. BSSs remain concentrated on start-ups and basic competitiveness measures, with limited instruments targeting later-stage SMEs. Both entities should strengthen growth-oriented support, including post-incubation acceleration, productivity upgrading, and scale up advisory services, moving beyond standalone grants toward sequenced support that accompanies firms from capability upgrading to sustained market expansion.
Reduce reliance on donor-driven support by scaling domestically anchored instruments for advanced capabilities. Support for digital transformation, green transition and innovation upgrading remains dependent on project-based interventions, limiting continuity and diffusion. Scaling domestically funded instruments, building on existing competitiveness schemes, with clear eligibility criteria and multi-year funding, would improve predictability and uptake among firms with growth potential beyond donor cycles.
Shift from output-based reporting to outcome-oriented monitoring across the business support service system. Monitoring of BSSs remains focussed on financial execution and activity counts, with limited insight into firm-level outcomes. Introducing regular training needs assessments, alongside independent evaluations of selected BSS instruments, and embedding a small, common set of outcome indicators across entities would strengthen policy learning, support evidence-based adjustment, and improve accountability without overburdening implementing institutions.
The SME Wallet voucher scheme
The Flemish Region of Belgium operates the KMO-portefeuille (SME Wallet), a voucher-based scheme that enables SMEs to obtain financial support for external training, coaching and strategic advisory services delivered by private providers. The SME Wallet is a digital platform through which eligible SMEs can access support for services such as management training, market studies, investment analysis, internationalisation advice and technology-related advice.
The scheme is based on a voucher mechanism through which SMEs purchase services from registered providers. Public support is provided through co-financing of eligible expenditures, while service delivery is undertaken by private-sector providers.
Policy outcomes
The SME Wallet is a large-scale instrument for non-financial support to SMEs. The scheme operates with an annual budget of approximately EUR 50 million and supports around 30 000 SME projects per year, providing vouchers ranging from EUR 100 to EUR 25 000 for training, coaching and strategic advisory services. Eligible services include management and skills training, market studies, investment analysis, internationalisation advice and technology-related insights.
A key reform introduced in 2016 restricted voucher use to registered and accredited business development service providers, strengthening quality assurance mechanisms and increasing trust in publicly supported advisory services. By separating public financing and oversight from private service delivery, the system institutionalised SME choice while maintaining accountability through standardised rules and digital administration.
Policy relevance for Bosnia and Herzegovina
This experience is highly relevant to Bosnia and Herzegovina, where private BSS providers are primarily engaged as implementing partners in public- or donor-funded programmes, and where SMEs have limited scope to independently select and procure publicly co-financed business support schemes. The Flemish model demonstrates how voucher-based, demand-side instruments, combined with clear accreditation and quality assurance requirements, can strengthen service quality, diversify the BSS market and reduce reliance on direct public delivery. Piloting similar SME-choice co-financing schemes could support the gradual institutionalisation of private BSS participation in both entities.
Sources: OECD (2023[114]; 2021[95]).
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← 1. Republika Srpska has made more structured efforts in simplifying procedures through the Optimisation of Administrative Procedures and Formalities project, which led to the creation of a comprehensive register of formalities and an action plan for the abolition of 42 procedures and the simplification of 243 of them (OECD, 2025[8]).
← 2. The share of informal employment in the total population declined to 18.6% in 2024, continuing a downward trend from around 19.7% in 2022 and 30% in 2016, and remains around the WB6 average of 19.2% (OECD, 2025[18]).
← 3. Elevated levels of unemployment are closely associated with informality, with evidence showing that many workers leaving unemployment enter informal rather than formal jobs, making informality a frequent entry point into the labour market (OECD, 2024[118]).
← 4. The Second Employment Support Project is a World Bank-financed programme supporting labour market recovery and formal job creation in Bosnia and Herzegovina. It was approved in July 2022 and set to run until February 2026. It is financed through a loan of approximately EUR 61.6 million. The project aims to increase formal private-sector employment by financing active labour market programmes and wage subsidies (World Bank, 2024[24]).
← 5. For more information on the Second Employment Support Project’s implementation, see World Bank (2024[24]).
← 6. The merger control thresholds, of BAM 100 million in combined turnover (~EUR 50 million) or a combined market share exceeding 40%, are well above approximate SME revenue levels, meaning that such transactions rarely, if at all, fall under the Competition Council’s review (Parliament of Bosnia and Herzegovina, 2005[33]). In addition, although the Competition Council’s enforcement has improved in its monitoring, with a stark increase in activity from 2022 to 2025 (11 decisions in 2022 vs. 48 in 2024; 13 expert opinions in 2022 vs. 18 in 2024; in the first half of 2025 alone, the Competition Council had already issued 7 decisions), much of the activity remains focussed in sectors with low SME prevalence, such as energy and telecommunications (Competition Council, 2025[119]).
← 7. In the Federation of Bosnia and Herzegovina, commercial disputes are handled by specialised commercial departments within designated cantonal or municipal courts, which have jurisdiction covering an entire canton (BiH Law, 2025[120]). In Republika Srpska, commercial disputes fall under the competence of dedicated district commercial courts (Department of Legal Affairs, 2012[121]). In the Brčko District, commercial cases are handled within the basic court (BiH Law, 2025[120]). These divisions are responsible for a broad range of business cases, including intellectual property, bankruptcy, unfair competition and trade disputes (BiH Law, 2025[120]).
← 8. The capital adequacy ratio refers to a measurement of a bank's available capital expressed as a percentage of the bank's risk-weighted credit exposures.
← 9. The Basel Framework, composed of three agreements (Basel I, II and III), serves as the international regulatory framework for banks. For an overview of the framework, as well as deeper insights into what is outlined in Basel III, see https://www.consilium.europa.eu/en/policies/basel-iii/.
← 10. Information provided by Republika Srpska as part of the assessment.
← 11. However, firms with more substantial fixed assets, especially in sectors like metal and wood processing, may benefit from lower requirements, closer to 100%. Similarly, long-established clients tend to receive more favourable terms, while start-ups face the greatest challenges, reaching or exceeding 200% of the loan value.
← 12. OECD calculations based on World Bank (2024[117]).
← 13. The WBT average does not include Montenegro due to a lack of data availability.
← 14. While little progress has been made in strengthening the capital market legal framework in the Federation of Bosnia and Herzegovina, Republika Srpska has initiated steps to improve its securities market. These include amendments to the Law on the Securities Market, aimed at simplifying the capital-raising process and increasing flexibility for companies issuing public securities. Additionally, the Republika Srpska Securities Commission is drafting a new Capital Market Act to further harmonise regulations with the acquis. If adopted, this could positively impact market activity and begin to address fundamental issues such as liquidity and investor confidence.
← 15. For more details, see Sarajevo Stock Exchange (2025[122]).
← 16. Examples include the Euronext Growth segment, where no minimum market capitalisation is required, and the minimum free float is 2.5% (Euronext, 2025[116]) or the London Stock Exchange Alternative Investment Market, where there is no minimum market capitalisation, no minimum free float, and no profitability or track record requirement (London Stock Exchange, 2010[123]).
← 17. These laws include, but are not limited to, the Laws on Investment Funds, Laws on Securities, and Laws on Foreign Exchange Operations. For a more complete list, see USAID (2024[62]).
← 18. Another constraint across both entities is the absence of clear legal definitions tailored to the specific features of private equity. Key terms remain undefined in existing legislation, e.g. “start-ups” in the Federation of Bosnia and Herzegovina and “angel investing/investor” in both entities, leading to divergent interpretations among domestic and international investors (OECD, 2025[8]).
← 19. The list of factoring companies operating in Republika Srpska is provided at https://www.secrs.gov.ba/Ucesnici/Faktoring.aspx.
← 20. At the time of writing, the Federation of Bosnia and Herzegovina is preparing amendments to its factoring legislation.
← 21. Micro-credit organisations also constitute a relatively developed form of alternative finance in Bosnia and Herzegovina, operating in both Republika Srpska and the Federation of Bosnia and Herzegovina. For further details, see the Bosnia and Herzegovina profile under Dimension 6.
← 22. This result should be interpreted with caution, as the European Innovation Scoreboard’s product innovation indicator does not reflect the scale or novelty of innovations and may therefore be driven mainly by “new-to-firm” incremental product upgrades, rather than sustained R&D-based innovation.
← 23. No further information is available on the credit conditions or the programme’s uptake.
← 24. Adopted in March 2025.
← 25. There include the Sarajevo Regional Development Agency (SERDA), the Regional Economic Development Agency for Central Bosnia and Herzegovina (REZ), the Regional Development Agency for Herzegovina (REDAH), ZEDA, LINK Mostar, the INTERA Technology Park, and the CNT Sarajevo. For more details, see the FMRPO 2024 Programme Reports.
← 26. Programmes span incubation, mentoring, digital transformation, financial literacy, legal compliance and operational optimisation, frequently implemented through donor partnerships.
← 27. For more details, see https://www.rars-msp.org/lat/poslovna-podrska-lat/akcelerator/.
← 28. For more details, see https://www.partnerstvo.ba/.
← 29. For more details, see https://intera.ba/projekti/adrural/.
← 30. Examples include fmrpo.gov.ba and fzzz.ba in the Federation of Bosnia and Herzegovina and the Entrepreneurial Portal RS (https://www.preduzetnickiportalsrpske.net/) and InfoBiz (https://infobiz.komorars.ba/) in Republika Srpska.
← 31. These include BOOST, CODES, DIGIMET, IDEMO and EEN.
← 32. For more details, see the programme factsheets for BOOST, CODES, DIGIMET, IDEMO and EEN.
← 33. In 2025, 19 business incubators operated across the economy, 15 in the Federation of Bosnia and Herzegovina and 4 in Republika Srpska, reflecting a slight expansion since 2022 following the establishment of PINT Novi Travnik and DEKAMAS Sarajevo in the Federation of Bosnia and Herzegovina.
← 34. See RARS (2026[124]) for more details.
← 35. This minimal threshold is indicated in Article 30 of the Law on Business Infrastructure in the Federation of Bosnia and Herzegovina. For more details, see Government of the Federation of Bosnia and Herzegovina (2024[6]).
← 36. The ICBL receives funding from the Ministry of Scientific and Technological Development and Higher Education, as well as BAM 10 000 (~EUR 5 100) from the City of Banja Luka.
← 37. For more details, see https://interreg-danube.eu/projects/wecircular.
← 38. For more information, see https://komorabih.ba/bhepa-agencija-za-promociju-izvoza/.