Sec. 2. Purpose and findings
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The purpose of this Act is to support economic opportunity and political progress in Bosnia and Herzegovina through the creation of an enterprise fund that will provide financial investment and technical assistance to small and medium-sized enterprises. Congress makes the following findings: The United States has a strong interest in ensuring the gains in stability and reconciliation made since the end of the Bosnian War in 1995 are not overtaken by difficult economic conditions.
In 2014, protests broke out across Bosnia and Herzegovina as a result of widespread frustration among the populace regarding the economy, which is currently experiencing an unemployment rate of more than 40 percent. A crucial element for economic progress in Bosnia and Herzegovina is robust growth among small and medium-sized enterprises (SMEs), which have struggled to access necessary financing. Although the private sector credit-to-GDP ratio in Bosnia and Herzegovina grew from 25 percent in 2001 to over 65 percent in 2008, it has failed to grow in the years since, and is significantly less than the average for advanced economies.
Bank lending, which grew similarly rapidly before 2008, has grown barely more than 1 percent per year since then. International financial institutions and foreign-owned private investment funds active in Bosnia and Herzegovina have provided growth finance for larger companies and infrastructure project financing, but have not substantially invested in SMEs. Bosnia and Herzegovina’s demographic, income and geographic characteristics are promising for SME growth. Bosnia and Herzegovina is a market of almost 4,000,000 people, whose per capita income has grown by almost 50 percent in less than a decade, and substantial growth remains in order to achieve income parity with its Balkan neighbor economies.
Bosnia and Herzegovina currently imports almost $10,000,000,000 of goods per year, a substantial portion of which could be substituted for by domestic SME production. To help foster and support the fledgling private sector in Central and Eastern Europe after the fall of the Berlin Wall, Congress, through enactment of the Support for East European Democracy
(SEED)Act of 1989 ( 22 U.S.C. 5401 et seq.) and the FREEDOM Support Act ( 22 U.S.C. 5801 et seq.), authorized nearly $1,200,000,000 for the United States Agency for International Development (USAID) to establish 10 new investment funds (collectively known as the Enterprise Funds ) to both support economic development objectives and realize substantial financial returns. The Enterprise Funds— channeled approximately $10,000,000,000 of public and private funding into more than 500 enterprises in 19 countries; leveraged $6,900,000,000 in private investment capital from outside the United States Government; provided substantial development capital where supply was limited; created or sustained more than 300,000 jobs through investment and development activities; funded $80,000,000 in technical assistance to strengthen the private sector; and are expected to recoup 177 percent of the original USAID funding. Enterprise funds established in partnership with United States partners, such as Poland, Hungary, Albania, Russia, and other European countries, have proven beneficial to the economies of such countries. Creating a similar fund in close partnership with the people of Bosnia and Herzegovina would help sustain and expand economic reform efforts in Bosnia and Herzegovina and empower entrepreneurs to create urgently needed employment opportunities. Establishing an enterprise fund for Bosnia and Herzegovina would— help improve financial institutions within the country; provide debt, equity, and other investment vehicles for commercially viable SMEs; and make the investment environment more attractive to domestic and international investors.
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